An Alden company used a figurehead to qualify for contracts set aside for disabled veteran-owned small businesses and on Tuesday agreed to pay $3 million to settle a whistleblower’s lawsuit, according to federal prosecutors.
The monetary settlement ends a civil suit that accused Zoladz Construction Company, Arsenal Contracting LLC and Alliance Contracting, all of Alden, of recruiting a service-disabled veteran to serve as a front for Arsenal, a sham company controlled by two other individuals.
Those two men, John Zoladz of Darien and David Lyons of Grand Island, also were named in the suit and in the agreement settling allegations that they violated the federal False Claims Act. Neither Zoladz nor Lyons is a service-disabled veteran.
The government, in its suit, claimed Arsenal was a front company that had few employees of its own and relied almost exclusively on Zoladz Construction and Alliance to operate.