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Wright-Patt contractor suspended in fraud investigation

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By John Nolan, Staff Writer Updated 9:43 PM Tuesday, September 29, 2009

WRIGHT-PATTERSON AIR FORCE BASE — The company that handles a variety of infrastructure projects worth tens of millions of dollars for Wright-Patterson Air Force Base is among 19 companies the Air Force has suspended from doing business with the government on suspicion of fraud.

The Air Force’s Sept. 23 directive raises questions about the fate of ongoing projects that the contractor, APM LLC, is doing at Wright-Patterson, including demolition projects, construction enhancements planned at base entry gates, building renovations, painting and general repairs.

The suspension means that APM will complete its current contracts but no new contracts will be awarded to the company, the Air Force said.

The $20 million that the Air Force already has paid or committed to California-based APM this year includes about $12 million in economic stimulus funds distributed under the American Recovery and Reinvestment Act of 2009, according to base records. The $20 million far exceeds the contract’s stated annual maximum spending limit of $12 million for each year of the five-year agreement.

From 2004 through mid-2008, APM was awarded more than $383 million in Defense Department construction and maintenance contracts at various U.S. military installations across the United States, including Wright-Patterson, the Air Force said.

“At present, it is estimated that the suspended companies received more than $700 million in government contracts to which they may not have been legally entitled,” according to the directive signed by Steven A. Shaw, an Air Force deputy general counsel responsible for overseeing companies that work for the government under contracts.

According to the Air Force, a federal audit and criminal investigation has found that APM, its chief executive officer and his brother “conspired to hide” APM’s ineligibility for a U.S. Small Business Administration set-aside program restricted to minority-owned companies bidding for federal contracts.

The brothers appear to have concealed relationships between APM and the other companies, through ownership or management, that would have made APM ineligible for the SBA’s 8(a) minority contracting program and would make the other companies ineligible for programs they may try to compete for, the Air Force said in the directive that suspended the companies from working for the government.

The brothers, Craig and Townsend Jackson, appear to have used the companies to commit “fraud or criminal offenses in connection with obtaining, attempting to obtain, and performing public contracts or subcontracts through the 8(a) program,” according to the Air Force directive.

The federal investigation has found evidence that the two brothers, through the companies, falsified records and made false statements to the government, Shaw wrote.

Craig Jackson controls the suspended companies and has received earnings from them, according to the Air Force.

“Craig Jackson engaged in a pattern and practice of establishing various small businesses owned by friends and family, but managed and, in effect, controlled by either Craig Jackson or companies controlled by Craig Jackson, including the suspended companies,” Shaw wrote. “The various small businesses then applied for inclusion into the 8(a) program to benefit from sole-source contracting, and diverted significant percentages of their earnings back to Craig Jackson and/or companies owned or controlled by Craig Jackson and/or his family.

“Had the suspended companies disclosed their ownership and management structure, they would have been deemed affiliates under the SBA rules and been ineligible for the 8(a) program,” Shaw wrote.

Craig Jackson held daily management responsibility for APM as its then-CEO while the company applied for and was accepted into the 8(a) program in December 2003, the Air Force lawyer wrote.

Craig Jackson then acquired a 45 percent ownership interest in APM, violating SBA rules which limited him to a maximum of 20 percent ownership, and did not disclose that change in ownership to the SBA, Shaw wrote.

Craig Jackson also provided APM with a $1.9 million loan, Shaw wrote. He and APM submitted a false promissory note to the SBA to hide his supply of the loan, and APM falsely identified the source of the loan in other documents filed with the SBA to remain in the 8(a) program, Shaw wrote.

The criminal investigation is ongoing and may lead to criminal proceedings, according to the Air Force. The government also could seek to debar the companies from the privilege of competing for future federal contracts.

Among the companies the Air Force suspended is All Cities Enterprises, of Ontario, Calif., APM’s predecessor on the Wright-Patterson base infrastructure contract. All Cities and APM teamed to bid on the current contract, according to records on file with the 88th Contracting Squadron, the base contracting unit at Wright-Patterson.

The Air Force identified the other suspended companies as 1CI-All Cities JV; 1CI Inc. (doing business as 1st Cousins Inc.); Advanced Business Management Services Inc.; All Cities Information Technologies; APM Construction Management Inc.; APM LLC of Alaska; Butler Marketing and Consulting Group Inc. (also known as Butler Management Services); Cherokee Chainlink & Construction Inc.; Chung & Associates; Coleman Construction Inc.; Homerun Construction Inc.; S.M. Partnership; SMS Co. Inc.; Sanders Construction Inc.; Sanders Engineering Co. Inc.; Sanders Management Services (doing business as SMS), and Sanders Management Services Co. Inc.

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The whole point of this is:

1. The company is not a small business like they are supposed to be.

2. The ceiling on the contract they hold was 12 million and they are already over it by double that amount which they can't and aren't supposed to do.

3. It isn't just this company that is dirty, but people connected with the government also who helped facilitate this.

knows
4:45 PM, 10/3/2009

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Former- Did you work for APM or one of the others listed? It's possible that you might have important info.
Snifin- Maybe you can enlighten us about the problems? If you work closely with them you must have intimate knowledge. I agree about the compensation, but I doubt it will happen. Too much for them to lose.
Know too, knows- From my understanding if the work goes through that program it has to be given to that contractor. Is that right or am I being mislead by my sources?

namevak
8:02 PM, 10/2/2009

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Toney, Dayton Dem- These people ARE minorities; they are all African-American. Furthermore, a woman-owned business DOES qualify for minority status. Sub- As a Federal Contractor they have no choice. That is why they are required to provide payment bonds. If all else fails go against their bond. The C.O. should have all the information in their files. Karazme- Do you work for them? Maybe you can provide a little insight into what is happening and how long it has been going on. Or are you a poser?

namevak
7:39 PM, 10/2/2009

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You have no idea dude. These guys had civil engineering and contracting telling people that they had to use them, period. Then they would give them a cost for the job that was double what some one else would charge. Finally, someone decided to turn them in for it. The only question is whether they are going to do something about the illegal actions of the government employees, meaning civil engineering and contracting, also. It doesn't just stop at this company and their sub-contractors.

knows
8:32 PM, 10/1/2009

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Concering these type of contracts, some of statements are incorrect as to the
limitations.My concenses after readng most of the comments is that people are confused to reason for the Investigation.None of these Companies have cost the tax payer nor have they been accused of stealing anthing from the Govement.LOOK deeper Yes;These guys art'nt doing any thing different than other companies that have graduated from the 8A program are. .They have helped thousands of small business make a living.

know too
3:22 PM, 10/1/2009

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