Construction Company Owner, KC Veteran Indicted in $13.8 Million ‘Rent-A-Vet’ Scheme
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that the former owner of a local construction company and a Kansas City, Mo., veteran were indicted by a federal grand jury today for their roles in a “rent-a-vet” scheme to fraudulently obtain more than $13.8 million in federal contracts.
Jeffrey K. Wilson, 51, of the Village of Loch Lloyd in Belton, Mo., Paul R. Salavitch, 56, of Kansas City, Mo., and Patriot Company, Inc., a business located in Kansas City, Mo., were charged in an eight-count indictment returned by a federal grand jury in Kansas City, Mo.
Today’s indictment alleges that Wilson, Salavitch and the Patriot Company participated in a conspiracy to defraud the government by falsely representing Patriot Company as a veteran-owned or service-disabled veteran-owned small business in order to fraudulently obtain approximately $13.8 million in federal government construction contracts for work in nine states.
According to the indictment, Patriot Company was a pass-through or front company for a Greenwood, Mo., construction company owned by Wilson during the scheme. Conspirators allegedly used Salavitch’s veteran and service-disabled veteran status in a “rent-a-vet” scheme to bid on at least 20 government contracts and receive approximately $13.8 million to which Patriot Company would not have otherwise been entitled to receive because those contracts were set-aside exclusively for legitimate veteran-owned or service-disabled veteran-owned small businesses. As a result of the fraud scheme, legitimate veteran owned and run businesses were not awarded these contracts.
Today’s indictments cites 20 contracts with the U.S. Department of Veterans Affairs and the U.S. Army, totaling $13,819,522, which allegedly were fraudulently obtained by Wilson, Salavitch and Patriot Company. The contracts, which ranged as high as $4.3 million, included construction projects in Missouri, South Dakota, Texas, Nebraska Oklahoma, Michigan, Indiana, Tennessee, Iowa, Illinois and North Dakota.
According to the indictment, Salavitch, a service-disabled veteran, worked full-time as a federal employee with the Department of Defense in Leavenworth, Kan., and did not work full time for Patriot Company. Salavitch nominally served as president of Patriot Company from July 14, 2005, to April 1, 2014. Salavitch did not actively control the day-to-day management, daily operation or long-term decision making of Patriot Company. Salavitch never managed a construction company prior to his involvement with Patriot Company, the indictment says, and he had limited government contracting experience.
For example, the indictment cites an e-mail exchange in which Wilson discusses leasing an office for Patriot Company and writes, “I would like for you to get a thing or two from Paul (Salavitch) to put in that office that is personal. Anything from his military. Any plaques, or US ARMY stuff or anything that if one stepped into it, it would look and feel like Patriot …” The indictment also refers to a series of e-mails in which Salavitch was still contemplating the start date of his work with Patriot Company after the firm had already obtained 10 of the government contracts.
During the fraud scheme, the indictment says, Wilson wired $449,321 as down payment for his Village of Loch Lloyd home purchase, of which $250,000 originated from Patriot Company’s bank account. Wilson financed the balance of the purchase price with funds from the sale of his previous home and a $240,000 mortgage. Wilson used $225,000 in Patriot Company funds, the indictment says, to pay off the mortgage.
Wilson used $175,000 in Patriot Company funds for the purchase of a residence in Mesa, Ariz., the indictment says. Wilson allegedly also used $400,000 of Patriot Company funds to pay two annual premiums for life insurance policies.
In addition to the conspiracy, Wilson, Salavitch and Patriot Company are charged with four counts of major government program fraud. Wilson is also charged with one count of wire fraud and two counts of money laundering.
Today’s indictment also contains forfeiture allegations, which would require Wilson and Salavitch to forfeit to the government any property derived from the proceeds of the fraud scheme, including $2,152,189 that has been seized by law enforcement from various financial accounts, Wilson’s residences in Village of Loch Lloyd and Mesa as part of the money judgment of $13,819,522.
Dickinson cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorneys Jane Pansing Brown and Stacey Perkins Rock. It was investigated by the Department of Veterans Affairs – Office of Inspector General – Criminal Investigation Division and the General Services Administration – Office of Inspector General.