Government Contractor Charged in Scheme to Defraud U.S. Department of Veterans Affairs

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Anchorage, Alaska – U.S. Attorney Bryan Schroder announced that Dale Johnson, 57, of Anchorage, has been charged with one count of conspiracy for his role in a scheme to defraud the U.S. Department of Veterans Affairs (VA) into issuing Service-Disabled Veteran-Owned Small Business (SDVOSB) government “set-aside” contracts to unqualified private contractors.  A plea agreement has also been filed in this case, and Johnson is currently awaiting his Change of Plea hearing to be scheduled.

Johnson’s co-conspirators, Richard Vaughan, 72, and Donald Garner, 47, have been charged in a separate 31-count indictment with bribery and wire fraud charges in connection with the scheme.

Vaughan was a VA contract officer representative and was responsible for awarding and managing numerous contracts awarded by the VA, including certain SDVOSB “set-aside” contracts.  Johnson was the owner of ADALECO General LLC, and Garner was the owner of Veteran Ability, which were both government contractors that provided various services to the U.S. government, including the VA in Anchorage.

The United States Small Business Administration (SBA) is an independent agency of the federal government responsible for aiding, counseling, assisting and protecting the interests of small business concerns.  The SBA and VA administered a program to award SDVOSB “set-aside” contracts, which could only be awarded to small business concerns owned and controlled by qualified Service-Disabled Veterans (SDVs).

In October 2014, ADALECO had an SDVOSB certification, while Veteran Ability did not.  According to court documents, Johnson falsely certified to the VA that his company ADALECO would perform a majority of the work on a snow removal contract awarded in October 2014, which was a “set-aside” contract for a certified SDVOSB contractor.  The investigation revealed, however, that it was actually Garner and Veteran Ability, along with other non-SDVOSB companies, who performed 100% of the work under the snow removal contract.  Johnson received 5-10% of every payment under the contract as a “kickback” for allowing Garner to use ADALECO’s SDVOSB certification, which amounted to approximately $54,302.  Johnson also made other misrepresentations to the VA in furtherance of the fraudulent scheme.

The Federal Bureau of Investigation (FBI), the U.S. Department of Veterans Affairs Office of the Inspector General, Small Business Administration Office of the Inspector General, and General Services Administration Office of the Inspector General, conducted the investigation leading to the charges in this case.  This case is being prosecuted by Assistant U.S. Attorneys Ryan D. Tansey and Kyle Reardon.

The charges against Johnson are merely allegations, and he is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.