Federal criminal investigators are looking into whether North Charleston-based Brantley Construction Co. defrauded the U.S. Department of Veterans Affairs out of more than $17.5 million by setting up a sham corporation to qualify for special contracts earmarked for businesses owned by disabled veterans.
Among the contracts Brantley Construction obtained, according to court documents, was the $10.2 million construction of the Fort Jackson National Cemetery in Columbia. The remaining money was spread across six other projects.
The criminal investigation was revealed in a court filing this month by lawyers representing Brantley Construction in a separate whistleblower lawsuit over the allegations.
Eric Cottrell, a Charlotte, N.C. lawyer representing Brantley Construction, declined to comment on the criminal investigation and civil lawsuit. A court filing by Cottrell says Brantley Construction is talking with investigators to determine the best way to proceed with the parallel actions.
Brantley Construction has not filed a response to the whistleblower lawsuit, which was filed by Landmark Construction Co. owners Frederick and Cynthia Mixson. Landmark Construction, also based in North Charleston, was a subcontractor on the cemetery project.
According to the lawsuit and interviews, Brantley Construction conspired with an employee, Louis White, to create LW Construction of Charleston LLC for the sole purpose of qualifying for contracts under the VA’s Service-Disabled Veteran Owned Business program. Under that program, only businesses majority owned by disabled veterans can bid on and qualify for contracts.
Although White is a disabled veteran, Brantley Construction was actually in charge of LW Construction’s day-to-day operations and handled all of its finances and business matters, according to the lawsuit and Henry Wall, a Columbia lawyer representing the Mixsons.
“People want to qualify for these contracts even if they aren’t legally allowed to bid on them,” Wall said. “So they bend the rules to become eligible.”
William Scott, a Charleston lawyer representing White, could not be reached for comment.
A federal Government Accountability Office report shows the VA’s program is susceptible to fraud because the government does little to verify up front that a business is eligible.
The program “remains particularly vulnerable since it relies on an honor system-like process whereby firms self-certify their eligibility,” the GAO report states.
Since 2008, the VA has indicted 44 individuals and businesses, resulting in 33 convictions and $13.9 million in fines and court-ordered seizures. There are 81 open investigations, the agency said.
Wall, who has represented whistleblowers in similar procurement-fraud lawsuits nationwide, said the practice is hard to detect or enforce.
According to the lawsuit, the alleged fraud took place between June 2009, when LW Construction entered into the cemetery contract, and June 2011, when the company signed a contract to renovate an unnamed VA supply, processing and distribution center. Among the other projects was a $5.5 million boiler replacement at a VA medical center in Asheville, N.C.
The whistleblower lawsuit seeks triple damages under the federal False Claims Act, with proceeds to be split between the Mixsons and the government. In addition to Brantley Construction, the whistleblower lawsuit names as defendants the company’s founder, Sidney Brantley, company President Gary Brantley and Sidney Brantley’s brother, Ron.
Brantley Construction’s website describes the company as one of the largest commercial contractors in the Charleston area, with nearly 40 years of experience specializing in retail and industrial projects.
Reach David Wren at 937-5550 or on Twitter at @David_Wren_