Construction Companies Guilty Of Defrauding Service-Disabled Veteran-Owned Business Program

Two Texas construction company owners have pleaded guilty in a long-running scheme to defraud the United States, reported the US Department of Justice (DOJ).

Michael Wibracht of San Antonio, Texas, the former owner of several companies in the construction industry, conspired to defraud the United States in order to obtain valuable government contracts under programs administered by the US Small Business Administration (SBA) for which neither his nor his co-conspirators’ companies were eligible. One co-conspirator, Ruben Villarreal, also of San Antonio, pleaded guilty on November 20, 2020, to participating in the same conspiracy.

“For many years, this conspiracy undermined the integrity of the federal procurement process,” said Acting Assistant Attorney General Richard A. Powers of the Department of Justice Antitrust Division. “This conduct robbed opportunities from honest businesses, especially those owned by historically disadvantaged individuals and service-disabled veterans.”

According to court documents filed in the Western District of Texas in San Antonio, Wibracht, Villarreal, and other co-conspirators conspired to defraud the United States by interfering with the function of the SBA and fraudulently obtaining money from agencies of the United States as early as 2004 continuing at least through 2017. As part of this scheme, the conspirators installed Villarreal, a service-disabled veteran, as the ostensible owner of a general construction company held out as a Service-Disabled Veteran-Owned Small Business (SDVOSB). Wibracht and other co-conspirators, however, exercised disqualifying financial and operational control over the construction company. The conspirators concealed that control in order to secure over $250 million in government contracts that were “set aside” for SDVOSBs in order to benefit their larger, non-qualifying businesses. The SBA administers the SDVOSB program, which is designed to increase the number of government contracts awarded to small businesses owned and controlled by service-disabled veterans. To qualify as an SDVOSB, a company, among other things, must be owned and controlled by a service-disabled veteran.

“Conspiring to fraudulently gain access to federal contracts set aside for small businesses owned and operated by disadvantaged individuals or service-disabled veterans is unacceptable,” said Inspector General Hannibal “Mike” Ware. “The guilty pleas send a strong message that those responsible will be held accountable. I want to thank the Antitrust Division and our law enforcement partners for their support and dedication to pursuing justice in this case.”

“These plea agreements showcase the unique expertise of the U.S. Army CID’s specialized unit, the Major Procurement Fraud Unit,” said Special Agent in Charge Ray A. Rayos of the Southwest Fraud Field Office of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit. “Together, with our partner agencies and the Department of Justice Antitrust Division, those individuals responsible for engaging in a complex and long running scheme to defraud the United States government have been brought to justice.”