Are you a business owner who’s fallen on hard times? Having trouble getting those juicy government contracts? There may be a solution. Try enlisting a veteran, and you’ll see your bids skyrocket to the top of the list. It’s easy: Just hire a service-disabled vet to “run” daily operations — on paper only — and you’ll soon be able to beat legitimate veteran-owned businesses for big government contracts in no time.
Not sure if this is entirely legal? Well, no, it’s not. That’s why Jeffrey Wilson, a 53-year-old business owner from Belton, Missouri, recently pleaded guilty to government program fraud. His partner in crime, a 57-year-old service-disabled vet named Paul Salavitch, pleaded guilty to a misdemeanor charge for his role in the $13.8 million “rent a vet” scam, according to a Jan. 31 Department of Justice statement.
Here’s how the scheme worked: Between May 2005 and January 2014, Salavitch was listed as running the day-to-day operations of Patriot Company, a Kansas City-based front for a Greenwood, Missouri, construction business Wilson owned at the time.
However, Salavitch’s operations role was a farce — which makes sense, since he had no experience managing a construction company and limited government contracting experience. Because of his status as a service-disabled veteran, Patriot Company was able to access special (and lucrative) contracts that it otherwise wouldn’t qualify for. These contracts were then passed to Wilson’s real businesses. According to the Department of Justice release, Wilson admitted to using Salavitch’s disabled veteran status in a “rent a vet” scheme to net the company 20 government contracts worth almost $14 million, with some worth as much as $4.3 million apiece.
The scheme was uncovered in September 2013, when the Department of Veterans Affairs conducted an unannounced site visit to Patriot Company’s headquarters in Kansas City. When the site inspectors arrived, Salavitch was nowhere to be found — surprising, considering his role in the day-to-day ops are what qualified the business for all those contracts. Instead, Salavitch was at his real job, 40 miles away... working as a federal employee with the Department of Defense in Leavenworth, Kansas.
That November, when Salavitch was pressed by the Missouri Division of Purchasing and Materials Management about whether Patriot Company was in fact a “legitimate service-disabled veteran-owned small business,” he falsely claimed that it was, knowing that wasn’t the case. By December of that year, the business was de-certified by the VA.
As for the money Wilson and Salavitch unjustly got their hands on? Wilson wired roughly half a million for use as a down payment on a home purchase — $250,000 of which originated from Patriot Company’s bank account. He also used $175,000 to pay for a residence in Mesa, Arizona, and $400,000 from the shell business to cover the premiums for life insurance policies, according to a Jan. 13, 2017, indictment.
Under the terms of their plea agreement, Wilson and Salavitch must consent to forfeit roughly $2.1 million, and Wilson faces up to a year and a half in federal prison without parole. Salavitch faces up to a year behind bars in the big house.