Two New York companies and their executives ran an eight-year scheme to steal federal contracts reserved for service-disabled veterans, the Justice Department announced June 9.
For eight years, Broadway Electric Inc. and Cornerstone Contracting Inc. ran federal contracts they were never entitled to, cheating the service-disabled veterans those set-asides were designed to benefit. The Justice Department announced June 9 that the two New York companies, along with CEO John Oehler and President Christian Blake, agreed to pay $21.3 million to settle False Claims Act allegations.
Neither Oehler nor Blake is a service-disabled veteran, and neither qualified to own or control a service-disabled veteran-owned small business under federal procurement rules. The SDVOSB designation requires that a service-disabled veteran hold majority ownership and day-to-day control of the firm. According to DOJ, from approximately April 2017 through May 2025, the two men used front companies to capture contracts the government had reserved for qualifying veterans and funneled the revenue back to Broadway and Cornerstone.
The mechanics were deliberate. Broadway and Cornerstone identified contracting opportunities, prepared and priced bids submitted under the front entities' names, secured bonding, selected subcontractors, and controlled project execution and payroll, according to the settlement agreement. The front companies collected roughly one to three percent of total contract value in fixed payments with no connection to work actually performed. To complete the illusion, Broadway and Cornerstone staff used small-business email domains and exercised signature authority in communications with federal agencies under the fronts' names.
"Broadway, Cornerstone, and their executives engaged in a multi-year scheme to exploit federal contracting programs set aside for small businesses owned and controlled by service-disabled veterans," said First Assistant U.S. Attorney John A. Sarcone III of the Northern District of New York. "When contractors circumvent eligibility rules through misrepresentation and undisclosed control arrangements, they undermine the integrity of federal procurement."
The case began with two people willing to come forward. A U.S. Air Force veteran and an executive at a legitimate SDVOSB firm filed separate qui tam complaints under the False Claims Act's whistleblower provisions, alerting the government to a scheme that had run undetected for years. Under the settlement, the two relators will share $3,674,250 of the government's recovery, the share federal law sets aside for those who expose fraud against the public.
Assistant Attorney General Brett A. Shumate of DOJ's Civil Division drew a direct line between the fraud and the veterans it hurt. "Congress intended certain federal contracts to be set aside for small businesses and for service-disabled veterans who sacrificed for this country," Shumate said. "We will hold accountable those who fraudulently obtain, or assist others in fraudulently obtaining, these set-aside contracts."
The VA Office of Inspector General worked the investigation alongside DOJ and the SBA. Special Agent in Charge Gregory Billingsley said his office "will continue to vigorously pursue unscrupulous government contractors who attempt to profit from programs intended for qualifying service-disabled veteran business owners."
The SDVOSB program directs federal contracting dollars to businesses owned by veterans disabled in service, part of a broader set of federal preferences built to give veteran-owned firms a fair shot at government work. Pass-through schemes like this one crowd out those legitimate companies when they compete for the same set-asides on their own terms. The $21.3 million recovery is among the larger False Claims Act settlements in this space in recent years, and the three-agency coordination among DOJ, the SBA, and the VA OIG signals enforcement that is deliberate and systematic rather than isolated.
Whether Broadway Electric or Cornerstone Contracting face debarment proceedings, which would bar them from future federal contracts, has not been announced. That determination rests with the contracting agencies involved, and it will be the next test of how firmly the administration intends to close the door on companies that defraud programs built for those who served.
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