ALBANY, N.Y. (LN) — Broadway Electric Inc., Cornerstone Contracting Inc., CEO John Oehler, and President Christian Blake agreed to pay $21.3 million to resolve False Claims Act allegations that they improperly obtained federal contracts reserved for service-disabled veteran-owned small businesses from approximately April 2017 through May 2025.
According to the settlement agreement, the defendants identified contracting opportunities and prepared and priced bids submitted of purported small businesses, including through teaming agreements, joint ventures, and mentor-protégé structures. They secured bonding, selected subcontractors and personnel to perform contract work, and primarily controlled project execution and financial administration, including payroll. Neither Oehler nor Blake is a service-disabled veteran and neither qualified to own or control a service-disabled veteran-owned small business.
The purported small businesses received fixed payments, typically approximately one to three percent of total contract value and not tied to the scope of work performed, while the remaining contract revenue flowed to Broadway, Cornerstone, and contractors they selected. Broadway and Cornerstone personnel used small-business email domains and exercised signature authority in communications with federal agencies on behalf of the purported small businesses.
“Congress intended certain federal contracts to be set aside for small businesses and for service-disabled veterans who sacrificed for this country,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “We will hold accountable those who fraudulently obtain, or assist others in fraudulently obtaining, these set-aside contracts.”
“When contractors circumvent eligibility rules through misrepresentation and undisclosed control arrangements, they undermine the integrity of federal procurement,” said First Assistant U.S. Attorney John A. Sarcone III for the Northern District of New York. “These programs are designed to aid our nation’s heroes; it is unfortunate that these defendants sought to exploit the sacrifices our service members have made.”
The civil settlement includes the resolution of claims brought under the qui tam provisions of the False Claims Act by two whistleblowers, a veteran of the United States Air Force and an executive with an SDVOSB firm. Under the settlement agreement, the relators will receive $3.67 million.
“The favorable settlement in this case is the product of enhanced efforts by President Trump’s Small Business Administration, working with the Department of Justice and other federal law enforcement partners, to uncover misconduct in SBA’s contracting assistance programs and hold wrongdoers to account,” said SBA General Counsel Wendell Davis.