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Navy Contractor Admits Minority Fraud

Friday, July 20, 2012

More items for Program/Project Management

The owner of a Pennsylvania environmental company is facing several years in prison after he admitted misusing his minority business status to obtain a Navy contract, then padding the bill.

Michael Fullard, president of Fullard Environmental Controls (FEC) in Ford City, PA, waived indictment and pleaded guilty Tuesday (July 17) to two federal charges of wire fraud before U.S. District Judge Terrence F. McVerry in Pittsburgh.

U.S. Marine Corps

The Navy was duped into paying $2.2 million for an $800,000 demolition job at Marine Corps Air Station Beaufort, prosecutors said.

Fullard, 51, of Apollo, PA, faces 21 to 46 months in prison. He will also forfeit the $772,000 he pocketed from the contract.

$2.2M Contract

Prosecutors said Fullard Environmental provided demolition services in 2007 at Marine Corps Air Station Beaufort (SC).

The Navy awarded Fullard a $2.2 million contract for the work through the Small Business Administration’s minority-firm set-aside program. The Navy paid the bill in five installments in 2007 and 2008.

What the Navy did not know, according to prosecutors, was that Fullard had already hired a subcontractor, Yannuzzi & Sons Wrecking & Recycling, of Hillsborough, NJ, to do the actual work for $800,000.

Prosecutors said Fullard and company vice president B. Kent Peterson provided the Navy with false figures in 2006 about their profit on the job and the number of workers required.

Neither Peterson nor Yannuzzi was charged in the scheme, which was investigated by the Department of Defense, Office of Inspector General and Naval Criminal Investigative Service.

Prosecutors were unavailable to discuss the case.

Minority Business Enterprise

Fullard, who is black, started his company in 2000 as an asbestos- and lead-paint removal firm, according to the Pittsburgh Post-Gazette.

He has been awarded many contracts as a minority enterprise and worked on numerous government projects in the Pittsburgh area, including the Department of Veterans Affairs medical centers in Oakland and Butler, the Children’s Museum of Pittsburgh, and the Pittsburgh School District, the newspaper reported.

Fullard, who remains free on $25,000 bond, is scheduled to be sentenced Nov. 16. He could not be reached for comment.

Comment from Shari Maxwell, (7/23/2012, 7:59 AM)

This is not minority fraud. This is just plain fraud. From reading the article, I don't understand why the minority details were thrown in, other than to make a political statement about the minority contracts program.

Comment from Josh Inklovich, (7/23/2012, 3:47 PM)

I disagree. The whole set-aside program is rife with fraud. This "pass through" just got too greedy and got caught. I think it is important to identify the weaknesses of the program and the individuals taking unfair advantage of programs meant to help small business. The link below outlines the arrest and conviction of another local fraud. Fortunately for my last employer, this putz couldn't paint PNC Park (though he bid it and was awarded the work), so all 3 coats were applied in the shop in Ambridge, PA. http://www.post-gazette.com/stories/local/neighborhoods-south/3-contractors-sentenced-in-pentagon-rebuilding-fraud-338414/

Comment from M. Halliwell, (7/24/2012, 11:05 AM)

Depends on how he got the job, Shari. If he applied to the program under the pretense that he was a minority firm doing the work himself, and then farmed the work out to another firm (which I'm assuming wasn't a minorty firm) then the minority program is certainly relavent. Sure, it's still fraud...but the minority issue becomes very pertinent. If it were a regular contract (i.e. no minority set-aside) then he'd be a shrewd businessman and have made a chunk of cash with no fraud involved.

Comment from John Fauth, (7/25/2012, 8:34 AM)

There are two elements that make this (and other, similar set-aside projects) of concern to me. First, the fact that these set-asides are judged and awarded on such a different scale that the "winning" bid was nearly three times the actual cost of the work (including that contractor's profit). It seems as though any government program has become a bureaucracy grown so large it is nearly devoid of ration, and thus rife with fraud. What else can explain the enormous "waste, fraud and abuse" that exists on a scale in government never found in private industry? And a scale that seems immune to decline despite the (laughably) repititious promises to root it out. The second thing that bothers me about these set-asides is the inherently soft racism that implies minorities are unable to compete without someone placing a finger on the scales.