North Florida Shipyards pays $1M over false claim

U.S. Justice Department says shipyard created front company to get contract designated for businesses owned by disabled veterans

WASHINGTON – According to the Justice Department, the Jacksonville Shipyards created front company to win a Coast Guard contract designated for businesses owned by disabled veterans.

North Florida Shipyards and its president, Matt Self, will pay the United States $1 million to resolve allegations that they violated the False Claims Act by creating the front company, Ind-Mar Services Inc., in order to win the contract.

"Those who expect to do business with the government must do so fairly and honestly," said Acting Assistant Attorney General Joyce R. Branda for the Justice Department's Civil Division. "We will not tolerate contractors who seek to profit at the expense of our veterans and taxpayers."

To qualify as a Service Disabled Veteran-Owned Small Businesses on Coast Guard ship repair contracts, a company must be operated and managed by service disabled veterans and must perform at least 51 percent of the labor.

The government alleged that North Florida created Ind-Mar merely as a contracting vehicle and that North Florida performed all the work and received all the profits. The government further alleged that if the Coast Guard and the Small Business Administration had known that Ind-Mar was nothing but a front company, the Coast Guard would not have awarded it contracts to repair five ships. 

In December 2013, the SBA suspended North Florida, Matt Self, Ind-Mar and three others from all government contracting. In April 2014, North Florida and Matt Self entered into an administrative agreement with the SBA in which they admitted to having created and operated Ind-Mar in violation of its Coast Guard contracts and SBA statutes and regulations. 

"Special programs to assist service disabled veterans are an important part of the SBA's business development initiative," said A. Lee Bentley III, U.S. Attorney for the Middle District of Florida. "False claims such as this undermine the integrity of this vital program and, where found, will be vigorously pursued by our Office."

The settlement resolves allegations originally filed in a lawsuit by Robert Hallstein and Earle Yerger under the whistleblower provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. The act also allows the government to intervene and take over the action, as it did in this case.

Hallstein and Yerger will receive $180,000. 

The claims resolved by the settlement are allegations only, except to the extent that North Florida and Matt Self have admitted to the conduct in their agreement with the SBA.