Edgewater Couple Indicted in $50 Million Fraud Scheme Involving Gov’t Contracts
The US Attorney for the State of Maryland announced on Thursday that an Edgewater couple, Vernon J. Smith III, 61, and his wife, Georgia Smith, 52, were indicted by a federal grand jury in a theft scheme involving $50 million in falsifying ownership of their business to get government contracts that are set aside for disadvantaged business owners.
United States Attorney for Maryland Rod J. Rosenstein announced the indictment along with Small Business Administration Inspector General Peggy Gustafson and representatives of the IRS and Government Services Administration (GSA).
The indictment, 11 counts in all, spelled out that Smith incorporated a roofing and construction business, Platinum One, in the fall of 1999. The indictment said that he then fraudulently sought federal contracts under a Small Business Administration (SBA) program that helps socially and economically disadvantaged small businesses. The indictment also alleges that the Smiths filed false tax returns.
According to a news release from Rosenstein’s office, Smith incorporated Platinum One Contracting while also owning less than 50 percent of Capitol Contractors, another roofing and construction company.
The indictment said that Smith arranged for Anthony Wright, a former roofer and project manager at Capitol Contractors to own 60 percent of Platinum One. Wright is African-American. Smith’s son would own the remaining 40 percent of the corporation. The indicted couple assumed managerial roles.
The indictment alleges that between April 1999 and June of this year, the Smith’s conspired to defraud the SBA by concealing that they—not Wright—controlled Platinum One’s operations.
“For example, the indictment alleges that Platinum One’s Section 8(a) application did not reveal that Vernon and Georgia Smith had personally guaranteed bonding, bank loans and lines of credit for Platinum One and that Platinum One paid millions of dollars to the Smiths,” a media release stated.
The indictment said that the payments included salary, payments to Smith’s other business (Capitol Contractors), payments to casinos and personal charges on company credit cards.
The indictment alleges that Platinum One received more than $50 million in contracts to which it was not entitled.
“The 8(a) Business Development Program offers significant benefits to eligible small businesses and helps small, disadvantaged businesses compete in the marketplace,” said Gustafson. “Preferences for federal contract awards must not be given to persons who lie in order to claim eligibility. We appreciate the support of our law enforcement partners to bring this indictment forward.”
On Tuesday (June 18), Wright, 42, of Bowie, pleaded guilty to his role in the scheme and is scheduled to be sentenced on September 30, 2013.
The Smiths face a maximum sentence of five years in prison for the conspiracy; and three years in prison for making and subscribing a false tax return and for aiding and assisting in the preparation of false tax returns. Vernon J. Smith III also faces a maximum of 20 years in prison for each count of wire fraud. No court appearance has been scheduled.
Rosenstein said in the announcement that an indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.
Smith was previously named in a 2010 case, settled for $200,000, involving Capitol Contracting and Platinum One, where SBA contracts were illegally begotten using the “Historically Underutilized Business Zone” program.