US contractor pleads guilty for defrauding government using veterans scheme

13 Jun 19

The owner of a US contractor has pleaded guilty to helping defraud the government of $346m in a major ‘rent-a-vet’ scam case.

Kansas man Matthew McPherson entered his plea on Monday last week over his involvement in a nine-year scheme to fraudulently win federal contracts intended for veterans and minorities.

He admitted one count of conspiracy to commit ‘wire fraud’ – fraud using telecommunications or IT - and ‘major programme fraud’ – or ‘rent-a-vet’ - fraud.

McPherson and two co-conspirators set up Zieson Construction Co in 2009 with an African-American disabled veteran Stephon Ziegler as the nominal owner, according to the US Attorney’s Office in the Western District of Missouri.

Prosecutors said the three men “actually controlled and operated Zieson, and received most of the profits from Zieson through the respective business entities”.

Zieson’s main business was obtaining federal government construction contracts reserved for award to small businesses owned and controlled by service-disabled veterans or certified minorities.

Between 2009 and 2018 it won some 199 such contracts, for which the government paid Zieson around $335m.

After Zieson began to grow too big to compete for the contracts, the trio used the minority status of an employee to set up another company, Simcon Corp, as a small business in the state of Missouri in 2014. Simcon won two contracts worth $11m in total from the US Air Force and the US Army.

Through various business entities McPherson and his co-conspirators received almost $5m each from Zieson and Simcon using fake invoices.

Ziegler pleaded guilty in May to making a false statement to the US Department of Veteran Affairs. The federal government has also filed a lawsuit against McPherson and his co-conspirators over the fraud scheme.

The case is believed to be one of the largest of its kind. A Boston man was found guilty of fraud in 2016 over a scheme recruiting veterans as figurehead owners of a construction company to win similar contracts worth $100m.

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