IN THE DISTRICT COURT OF THE UNITED STATES FOR THE EASTERN DISTRICT OF NORTH CAROLINA SOUTHERN DIVISION United States, ex rel. RICKEY HOWARD, BRINGING THIS ACTION ON BEHALF OF THE UNITED STATES OF AMERICA, Plaintiff, Case No. :7:1 V. SECOND AMENDED COMPLAINT CADDELL CONSTRUCTION and JURY DEMAND COMPANY, INC., an Alabama Corporation; W.G. YATES SONS CONSTRUCTION COMPANY, a Mississippi Corporation; JULIAN MARIE BRESLOW, and DAVID J. VALDINI ASSOCIATES, PA, a Florida Professional Association, Defendants. SECOND AMENDED COMPLAINT OF RELATOR RICKEY HOWARD Case Document 190 Filed 07/17/17 Page 1 of 84 TABLE OF CONTENTS I. Introduction 11. Parties 3 Jurisdiction and Venue 4 IV. Respondeat Superior and Vicarious Liability 5 V. Background on Government Contracting 5 A. Federal Contracting Process for Construction Projects Generally 5 B. Subcontracting Plans to Bene?t Small Business 7 C. Small Business Concerns and Af?liation 11 D. Post?Award Responsibilities and Obligations Regarding Subcontracting l. Duty to Comply in Good Faith With a Subcontracting Plan 12 2. Duty to Submit Truthful Reports l4 3. Certi?cations Made in Progress Payment Requests Include Certi?cation of Good Faith Compliance 16 VI. Factual Allegations 17 A. Overview of Relator 17 B. Overview of Defendants and Certain Former Defendants 18 C. Defendants' Fraudulent Scheme to Create Sham Small Businesses to Falsely Represent Complaince with Subcontracting Plan Goals in the Wallace Creek Phase I Project 20 1. Scope of Wallace Creek Project and Award to Caddell Yates JV 20 2. Caddell Yates JV Awards Masonry Subcontract to Pompano Masonry .. 26 3. Caddell Yates JV Requests that Pompano Masonry Create a Sham "Small Business (Breslow Construction) to meet Subcontracting Plan Requirements 30 ii Case Document 190 Filed 07/17/17 Page 2 of 84 4. Caddell Yates JV Issues a "Substitute" Masonry Subcontract to the Sham Small Business, Breslow Construction, with Pompano Masonry Continuing to Perform All the Work 37 5. Defendants Continue to Conceal Their Fraudulent Scheme of Creating a Sham Small Business to Hold the Masonry Contract for Wallace Creek Phase I As Evidenced in Pleadings in Breslow Construction?s Miller Act Claim Against Caddell Yates JV 45 6. Defendants Julian Marie Breslow and David Valdini and Associates Plead Guilty to Federal Crimes for Their Conduct, and Pompano Masonry and Breslow Construction Are Excluded From Government Work 49 7. Caddell Yates JV Made False Statements and Submitted False Claims for Payment in Connection with the Wallace Creek Phase I Project 50 a. Caddell Yates JV Did Not Comply in Good Faith with its Subcontracting Plan on the Wallace Creek Phase I Project 50 b. Caddell Yates JV Made False Certi?cations in Progress Payment Requests 51 c. Caddell Yates JV Made False Statements in Subcontracting Plan Reports 53 D. Caddell Yates ?Pass-Through? Scheme As Implemented With Regard to.. 57 Other Subcontracts VII. Actionable Conduct by Defendants Under the False Claims Act 69 A. The False Claims Act 69 B. Defendants Submitted False and/or Fraudulent Claims for Payment to the Federal Government and/or Caused Entities to Submit False and/ or Fraudulent Claims for Payment 70 C. Defendants Made, Used, or Caused to be Made or Used False Records and/or Statements to Receive Payment 71 D. Defendants Conspired to Commit Violations of the False Claims Act 72 E. Defendants Failed to Disclose Their Obligation to Repay the Federal Government in Violation of the Reverse False Claims Provisions of the False Claims Act 73 Case Document 190 Filed 07/17/17 Page 3 of 84 First Claim for Relief (False Claims 31 U.S.C. 3729(a)(1)(A)) 74 Second Claim for Relief (False Statements 31 U.S.C. 3729(a)(1)(B)) 74 Third Claim for Relief (Civil Conspiracy to Commit Violiations of the False Claims Act 31 U.S.C. 3729(a)(1)(C)) 75 Fourth Claim for Relief (Reverse False Claims 31 U.S.C. 3729(a)(1)(G)) 76 Fifth Claim for Relief (False Claims Arising Out of Violations of the Anti-Kickback Act, 41 U.S.C. 53) 77 Prayer for Relief 78 iV Case Document 190 Filed 07/17/17 Page 4 of 84 NOW COMES PLAINTIFF-RELATOR, Rickey Howard, by and through his attorneys, Charles H. Rabon, Jr., Daniel J. Finegan and Gregory D. Whitaker of Rabon Law Firm, Joel M. Androphy, Sarah M. Frazier, and Rachel L. Grier of Berg Androphy, Matt Abbott of Abbott Law Firm, and James A. Roberts, 111 of Lewis Roberts, on behalf of the United States of America, and brings this action under 31 U.S.C. 3729?3732 (the ?False Claims Act?) to recover all damages, penalties and other remedies established by the False Claims Act on behalf of the United States and himself, alleging and stating his First Amended Complaint against Defendants by way of restatement, and shows the Court as follows: 1. 3. I. INTRODUCTION Relator Rickey Howard is a former Estimator and Project Manager and President of Operations for Pompano Masonry Corporation (?Pompano Masonry?), previously based in Pompano Beach, Florida, and with an of?ce in Charlotte, North Carolina. Pompano Masonry has been administratively dissolved and is no longer in business, At all times relevant herein, Pompano Masonry was a large commercial masonry contractor. The False Claims Act violations described in this Complaint concern a large military construction project at MCB Camp Lejeune in North Carolina, known as the Wallace Creek Regimental Complex. The contract for Wallace Creek Phase I was awarded to Caddell Yates Joint Venture (?Caddell Yates a partnership between Caddell Construction Company, Inc. and WC. Yates Sons Construction Company. Naval Facilities Engineering Command awarded the Wallace Creek Phase I contract to Caddell Yates JV based, in part, on promises and representations made in its Small Business Subcontracting Plan which was incorporated into and made a material part of the contract. In performing this contract, Caddell Yates JV knowingly and inappropriately engaged in a 1 Case Document 190 Filed 07/17/17 Page 5 of 84 fraudulent ?pass-through? scheme in order to create the illusion of compliance with its Subcontracting Plan. Speci?cally, Caddell Yates JV solicited the creation of Breslow Construction, LLC (?Breslow Construction?), an unquali?ed small business that was af?liated with Pompano Masonry, a large business. Caddell Yates JV then subcontracted with Breslow Construction, and claimed the subcontract toward compliance with its Subcontracting Plan. The work on this subcontract was performed entirely by Pompano Masonry. Because of the af?liation between Pompano Masonry and Breslow Construction (which was known by Caddell Yates JV), Breslow Construction did not qualify as a ?small business? under the controlling statutes and regulations. . In addition, Caddell Yates ?pass-through? scheme extended to its using numerous other small businesses on other subcontracts, whereby the small businesses, which otherwise may have quali?ed under the small business subcontracting standards, were, in reality, nothing more than mere conduits between Caddell Yates JV and the large businesses of Defendants? choosing who in actuality held and performed the subcontracts. For the ?rental? of their small business status, these ?pass-through? entities were paid a fee of approximately 1% to 2% of the value of the subcontract being performed by the large business. In each ?pass- through? subcontract, the full scope of work was actually performed by the large business and Caddell Yates JV sidestepped its promised Small Business Subcontracting Plan requirements. Caddell Yates JV then falsely represented to the United States that it was in compliance with its Subcontracting Plan because it claimed the full value of the large business subcontracts as having been awarded to the ?pass-through? small businesses. . In perpetuation of its fraudulent conduct in the performance of the contract for Wallace Creek Phase I, Caddell Yates JV made numerous material false statements and certi?cations 2 Case Document 190 Filed 07/17/17 Page 6 of 84 to the United States. The progress payment requests that Caddell Yates JV submitted to the Government on the contract were false because Caddell Yates JV represented, untruthfully, that it was ful?lling its material obligation to comply in good faith with its Subcontracting Plan. Further, Caddell Yates JV made materially false statements in mandatory reports to the Government regarding the utilization of small businesses in the contract. In addition, in these same reports, Caddell Yates JV made materially false statements to cover up its fraudulent conduct. 6. To summarize, the False Claims Act violations described in this Complaint include, but are not limited to: Submitting materially false progress payment requests to the Government; (2) Making materially false statements in mandatory reports and progress payment requests in order to elicit payment from the United States and/ or to conceal its conduct and avoid its obligation to repay money to the federal government; and (3) Conspiring with Pompano Masonry, Breslow Construction, their owner (Julian Marie Breslow), and certain of their agents and employees, to submit false claims and/or false statements to the United States. 11. PARTIES 7. Plaintiff-Relator Rickey Howard (?Relator Howard?) is a resident of State of North Carolina. 8. Defendant Caddell Construction Company, Inc. (?Caddell Construction?) is an Alabama corporation with its corporate headquarters in Montgomery, Alabama. 9. Defendant W.G. Yates Sons Construction Company (?Yates Construction?) is a Mississippi corporation with its corporate headquarters in Philadelphia, Mississippi. 10. Defendant Julian Marie Breslow is a resident of the State of Florida. 3 Case Document 190 Filed 07/17/17 Page 7 of 84 11. Defendant David J. Valdini Associates, PA. (?Valdini Associates?) is a Florida Professional Association that, at all relevant times, was engaged in the legal services profession. I JURISDICTION AND VENUE 12. This action arises under the False Claims Act, 31 U.S.C. 3729, m. 13. Jurisdiction over this action is conferred upon this Court by 31 U.S.C. 3732(a) and 28 U.S.C. 3130 in that this action arises under the laws of the United States. 14. Venue is proper in this district pursuant to 31 U.S.C. 3732(a), which provides that ?any action under 3730 may be brought in any judicial district in which the Defendant or, in the case of multiple Defendants, any one Defendant can be found, resides, transacts business, or in which any act proscribed by 3729 occurred.? A substantial part of the proscribed acts, which are the subject of this action, occurred in the State of North Carolina, within this judicial district. At all times material hereto, the corporate defendants, Caddell Construction and Yates Construction, regularly conducted business within the State of North Carolina, within this judicial district. Additionally, venue is proper in this district pursuant to 28 U.S.C. 1391(b)(2) and 15. There are no bars to recovery under 31 U.S.C. 3730(e). Speci?cally, this suit is not based upon prior public disclosures of allegations or transactions in a criminal, civil, or administrative hearing, lawsuit or investigation or in a Government Accounting Of?ce or Auditor General?s report, hearing, audit, or investigation, or from the news media. In the alternative, Relator Howard is an original source as defined therein. Relator Howard has 1 On August 18, 2014, the United States and the Relator entered into a settlement agreement with Valdini Associates. As a consequence, Valdini Associates has been released as to all claims, except for statutory attorneys? fees. 4 Case Document 190 Filed 07/17/17 Page 8 of 84 16. 17. 18. direct and independent knowledge of the information on which the allegations are based.2 Further, substantially the same allegations as those alleged in this suit were not publicly disclosed in a federal criminal, civil, or administrative hearing in which the Government or its agent was a party, or in a congressional, Government Accountability Of?ce, or other Federal report, hearing, audit, or investigation, or from the news media.3 In the alternative, Relator Howard is an original source as de?ned therein. Relator Howard has knowledge that is independent of and materially adds to any publicly disclosed allegations or transactions. Relator Howard has complied with all conditions precedent to the bringing of this action. IV. RESPONDEAT SUPERIOR AND VICARIOUS LIABILITY Any and all acts alleged herein to have been committed by the corporate defendants were committed by of?cers, directors, employees, representatives or agents, who, at all times relevant, were acting within the course and scope of their employment and on behalf of the corporate defendants and the corporate defendants? joint venture, such that the corporate defendants are jointly and severally liable under legal theories of respondeat superior and vicarious liability. V. BACKGROUND ON GOVERNMENT CONTRACTING A. Federal Contracting Process for Construction Projects Generally The United States Government, along with its departments and subdivisions, engages in contracting for goods, services, projects, and products on a daily basis. Included among these are Government contracts for construction projects at various locations such as military bases. 2 This re?ects the relevant language of 31 U.S.C. 3730(e) prior to amendments on March 23, 2010. 3 This re?ects the relevant language of 31 U.S.C. 3730(6) as of the date of this ?ling. 5 Case Document 190 Filed 07/17/17 Page 9 of 84 19. 20. 21. 22. 23. The Government generally obtains contracts for large construction projects through a competitive negotiation process that typically involves two phases. The process begins when the contracting of?cer issues a solicitation that delineates the scope of work and states the Government?s requirements, including but limited to design criteria, budget parameters, and schedule. FAR 36.302.4 In Phase I, the solicitation generally covers the technical aspects of the project. FAR 36.303?1. General contractors submit proposals for the project. The Government evaluates each offeror?s technical competencies and other non-price/cost-related factors against stated evaluation criteria. The Government then selects the most highly quali?ed offerors, which generally does not exceed a maximum number speci?ed in the solicitation and, in any case, does not exceed ?ve offerors. ig. In Phase II, the selected offerors submit proposals that expound upon the technical aspects and include cost proposal data. FAR 15.304, 36.303-2. If the amount of the construction contract at issue is expected to exceed $1,000,0005 the offeror?s Phase II proposal must include a Subcontracting Plan detailing the extent of participation of small business concerns, which constitutes the socioeconomic evaluation factor of the offeror?s proposal. FAR 19.702. Subcontracting Plans require large businesses to state the amount of planned subcontracting dollars that to speci?ed categories of small businesses. In awarding these large construction contracts, the Government is not seeking the lowest possible bidder to perform the work. Instead, the Government is seeking the contractor that can best deliver the full continuum of ?nal product, consistent with all goals, laws, rules and 4 The Federal Acquisition Regulations (FARs) govern executive agency acquisitions, including the Department of Defense. The FARs are codi?ed at Title 48, Chapter 1 of the Code of Federal Regulations. 5 The FAR acquisition thresholds for requiring subcontracting plans were adjusted effective October 1, 2010. The current threshold for requiring subcontracting plans in construction contracts is $1,500,000. 6 Case Document 190 Filed 07/17/17 Page 10 of 84 24. 25. regulations applicable to the product, which expansively include certain requirements for the participation of Small and/or Disadvantaged Business Enterprises through the requisite Small Business Subcontracting Plan. FAR 15.101. As established in various federal statutes and regulations, these include business concerns that are Women-Owned Small Business Veteran-Owned Small Business Service-Disabled Veteran?Owned Small Business and the like. B. Subcontracting Plans to Bene?t Small Business The Small Business Act, 15 U.S.C. 631?657s, governs the federal govemment?s procurement policy towards small businesses. 15 U.S.C. 631, in enumerating the purpose and policy of the Act, states as follows: The essence of the American economic system of private enterprise is free competition. Only through full and free competition can free markets, free entry into business, and opportunities for the expression and growth of personal initiative and individual judgment be assured. The preservation and expansion of such competition is basic not only to the economic well-being but to the security of this Nation. Such security and well-being cannot be realized unless the actual and potential capacity of small business is encouraged and developed. It is the declared policy of the Congress that the Government should aid, counsel, assist, and protect, insofar as is possible, the interests of small-business concerns in order to preserve free competitive enterprise, to insure that a fair proportion of the total purchases and contracts or subcontracts for property and services for the Government (including but not limited to contracts or subcontracts for maintenance, repair, and construction) be placed with small-business enterprises, to insure that a fair proportion of the total sales of Government property be made to such enterprises, and to maintain and strengthen the overall economy of the Nation. 15 U.S.C. 631 (emphasis added). 15 U.S.C. 637 provides the statutory authority for participation by small businesses in the performance of contracts let by any Federal agency, including the Department of Defense. This law speci?es that small businesses will have the ?maximum practical opportunity? to 7 Case Document 190 Filed 07/17/17 Page 11 of 84 participate in performing Government contracts. 15 U.S.C. 637(d)(1). Language re?ecting this policy ?shall be included? in the pertinent contracts. 15 U.S.C. The relevant language is set forth in FAR 52.219-8, ?Utilization of Small Business Concerns?, which states: (C) It is the policy of the United States that small business concerns, veteran-owned small business concerns, service-disabled veteran- owned small business concerns, small business concerns, small disadvantaged business concerns, and women-owned small business concerns shall have the maximum practicable opportunity to participate in performing contracts let by any Federal agency, including contracts and subcontracts for assemblies, components, and related services for major systems. It is further the policy of the United States that its prime contractors establish procedures to ensure the timely payment of amounts due pursuant to the terms of their subcontracts with small business concerns, veteran-owned small business concerns, service-disabled veteran-owned small business concerns, small business concerns, small disadvantaged business concerns, and women-owned small business concerns. The Contractor hereby agrees to carry out this policy in the awarding of subcontracts to the fullest extent consistent with ef?cient contract performance. The Contractor further agrees to cooperate in any studies or surveys as may be conducted by the United States Small Business Administration or the awarding agency of the United States as may be necessary to determine the extent of the Contractor?s compliance with this clause. De?nitions. As used in this contract? ?Small business concern? means a small business as defined pursuant to Section 3 of the Small Business Act and relevant regulations promulgated pursuant thereto. ?Women-owned small business concern? means a small business concern? (1) That is at least 51 percent owned by one or more women, or, in the case of any publicly owned business, at least 51 percent of the stock of which is owned by one or more women; and (2) Whose management and daily business operations are controlled by one or more women. FAR 52.219-8 (emphasis added); see also 15 U.S.C. 637(d)(3) (stating substantially same). 8 Case Document 190 Filed 07/17/17 Page 12 of 84 26. 15 U.S.C. 637 further provides the statutory authority for the FAR that implements the 27. 28. participation by small business concerns, FAR 19.7, which states, in part: Any contractor receiving a contract for more than the simpli?ed acquisition threshold must agree in the contract that small business, veteran-owned small business, service-disabled veteran-owned small business, small business, small disadvantaged business, and women-owned small business concerns will have the maximum practicable opportunity to participate in contract performance consistent with its ef?cient performance. . . . Except as stated in paragraph of this section, Section 8(d) of the Small Business Act (15 U.S.C. 637(d)) imposes the following requirements regarding subcontracting with small businesses and small business subcontracting plans: (1) In negotiated acquisitions, each solicitation of offers to perform a contract or contract modi?cation, that individually is expected to exceed $550,000 ($1,000,000 for construction) and that has subcontracting possibilities, shall require the apparently successful offeror to submit an acceptable subcontracting plan. If the apparently successful offeror fails to negotiate a subcontracting plan acceptable to the contracting of?cer within the time limit prescribed by the contracting of?cer, the offeror will be ineligible for award. FAR 19.702. Therefore, in accordance with the policy to provide small businesses with the maximum practicable opportunities to participate in the performance of Government contracts, the contractor must submit a Subcontracting Plan for the utilization of small businesses in construction contracts exceeding $1,000,000 (or $1,500,000 if awarded after October 1, 2010). Subcontracting Plan is a document setting forth how a contractor will provide [small business concerns, small disadvantaged business concerns, women-owned small business concerns, veteran?owned small business concerns, service-disabled veteran-owned small business concerns, and small business concerns] with the maximum practicable 9 Case Document 190 Filed 07/17/17 Page 13 of 84 29. 30. 31. 32. opportunity to participate in the performance of a contract or subcontract.? US. Small Business Administration, A Handbook for Small Business Liaison Of?cers, p. 6 (January 2005), [hereinafter SBLO Handbook].6 In its Subcontracting Plan, a contractor is required to include ?separate percentage goals for using small business (including ANCs and Indian tribes), veteran-owned small business, service-disabled veteran-owned small business, small business, small disadvantaged business (including ANCs and Indian tribes) and women-owned small business concerns as subcontractors.? FAR Additionally, in its Subcontracting Plan, a contractor must include a ?statement of the total dollars planned to be subcontracted and a statement of the total dollars planned to be subcontracted to small business (including ANCs and Indian tribes), veteran-owned small business, service-disabled veteran-owned small business, small business, small disadvantaged business (including ANCs and Indian tribes) and women-owned small business concerns.? I_d. A Subcontracting Plan must also include a ?description of the types of records that will be maintained concerning procedures adopted to comply with the requirements and goals in the plan.? Li A contractor who fails to submit a Subcontracting Plan when the threshold dollar amount is met is ineligible to be awarded the contract. 15 U.S.C. FAR 19.702. Further, contract shall be awarded to any offeror unless the procurement authority determines that the [small business subcontracting] plan . . . provides the maximum 6 The SBLO Handbook has been promulgated by the SBA since 2003 as a resource for prime contractors and their small business liaison of?cers. The handbook contains detailed information pertinent to a prime contractor?s small business subcontracting program. 10 Case Document 190 Filed 07/17/17 Page 14 of 84 33. 34. 35. 36. 37. practicable opportunity for small business concerns . . . to participate in the performance of the contract.? 15 U.S.C. For the successful bidder, the accepted Subcontracting Plan is ?included in and made a material part of the contract.? 15 U.S.C. 637(d)(4)(B) (emphasis added). C. Small Business Concerns and Af?liation A ?Small Business Concern? is de?ned as one that is independently owned and operated, is organized for pro?t, and is not dominant in its ?eld. 15 U.S.C. 632(a)(l); FAR 19.001. 15 U.S.C. 632 also authorizes the Small Business Administration (SBA) to promulgate more speci?c standards by which a business concern may be deemed to be a small business concern. 15 U.S.C. 632(a)(2). Pursuant to that authority, the SBA has issued speci?c size standards which determine whether a business is a small business concern. A Small Business ?size standard? is numerical and represents the largest a concern can be and still be considered a small business. 13 C.F.R. 121.101, 121.102. Depending on the industry, size standard eligibility is based on the average number of employees for the preceding twelve months or on average annual receipts. Receipts are averaged over a concem?s latest three (3) completed ?scal years to determine its average annual receipts. For concerns that have been in business for less than three complete ?scal years, the average annual receipts are the total receipts for the period the concern has been in business divided by the number of weeks in business, multiplied by 52. 13 C.F.R. 121 . 104(0). As of January 1, 2009, the SBA size standard limitation to qualify as a ?Small Business Concern? for businesses in the Specialty Trade Contractors, Masonry Contractors subsector, is $14 million in average annual receipts.7 13 C.F.R. 121.201. 7 Prior to January 1, 2009, the size limitation for a masonry contractor was $13 million. 11 Case Document 190 Filed 07/17/17 Page 15 of 84 38. 39. 40. 41. In determining whether an entity quali?es as a small business concern, the SBA counts the receipts of all of the entity?s domestic and foreign af?liates, regardless of whether those af?liates are organized for pro?t. C.F.R. ?Af?liation? exists between businesses when one business, directly or indirectly, controls or has the power to control another business, or when a third party, directly or indirectly, controls or has the power to control both businesses. 13 CPR. FAR 19.101; SBLO Handbook, supra, at 15. Control may arise through ownership, management, or other relationships or interactions between the parties. 13 CPR. 121 . 103(a). If one or more of?cers, directors, managing members, or general partners of a business control the Board of Directors and/or the management of another business, the businesses are af?liates. $13 C.F.R. ?Af?liation? also exists when there is an identity of interest between individuals or businesses, including family members. Individuals or ?rms that have identical (or substantially identical) business or economic interests may be treated as though they are af?liated unless they can demonstrate otherwise. Family members, persons with common investments, or ?rms that are economically dependent through contractual (or other) relationships, are among those treated this way. Si13 C.F.R. D. Post-Award Responsibilities and Obligations Regarding Subcontracting Plans 1. Duty to Comply in Good Faith With a Subcontracting Plan Each successful prime contractor with a Subcontracting Plan is required to make ?a good- faith effort to achieve the dollar and percentage goals and other elements in its subcontracting plan.? 13 C.F.R. 12 Case Document 190 Filed 07/17/17 Page 16 of 84 42. A contractor who fails to comply in good faith with its Subcontracting Plan, including the 43. 44. 45. 46. goals stated therein, or with FAR 52.219-8 (?Utilization of Small Business Concerns?) is in material breach of its contract. 15 U.S.C. 637(d)(8); FAR This good faith obligation is expressly incorporated into all construction contracts requiring a Subcontracting Plan. FAR (?As prescribed in insert the following clause . . . The failure of the Contractor or subcontractor to comply in good faith with?(l) The clause of this contract entitled ?Utilization Of Small Business Concems;? or (2) An approved plan required by this clause, Shall be a material breach of the contract.? (emphasis added)). FAR states as follows: Maximum practicable utilization of small business, veteran-owned small business, service-disabled veteran owned small business, small business, small disadvantaged business and women-owned small business concerns as subcontractors in Government contracts is a matter of national interest with both social and economic bene?ts. When a contractor fails to make a good faith effort to comply with a subcontracting plan, these objectives are not achieved, and 15 U.S.C. directs that liquidated damages shall be paid by the contractor. ?Failure to make a good faith effort to comply with the subcontracting plan means willful or intentional failure to perform in accordance with the requirements of the subcontracting plan, or willful or intentional action to frustrate the plan.? FAR 19.701. The liquidated damages provision provides a speci?c, agreed-upon measure for determining the damage to the Government when a contractor fails to comply in good faith with its Subcontracting Plan. Speci?cally, ?[t]he amount of damages attributable to the contractor?s failure to comply Shall be an amount equal to the actual dollar amount by which the contractor failed to achieve each subcontracting goal.? FAR (emphasis added). The liquidated damages provision, including the measure of damages stated therein, is 13 Case Document 190 Filed 07/17/17 Page 17 of 84 47. 48. 49. 50. required to be incorporated into solicitations and contracts with the Government.8 FAR 52.219-16. Further, ?[1]iquidated damages shall be in addition to any other remedies that the Government may have. FAR (emphasis added). Thus, pursuant to the above-referenced statutes and regulations, other-than?small contractor that fails to make a good faith effort to achieve the goals in its subcontracting plan may be found in material breach of contract and terminated for default, or liquidated damages may be imposed.? SBLO Handbook, supra, app?pass-through? arrangement, whereby a prime contractor subcontracts with a small business entity which then subcontracts all of the work under the contract to a large business, is not good faith compliance with a Subcontracting Plan. As stated by the SBA: pass-through . . . adds little or no value to the procurement. It does not comport with the Spirit or intent of the subcontracting program.? SBLO Handbook, supra, app. at 9. (emphasis added). 2. Duty to Submit Truthful Reports Throughout the contract, contractors must ?[s]ubmit periodic reports so that the Government can determine the extent of compliance by the offeror with the subcontracting plan.? FAR A prime contractor is responsible for submitting ?timely, accurate, and complete? reports. 13 C.F.R. Prior to October 1, 2008, contractors were required to submit reports using Standard Form 294 (?Subcontracting Report for Individual Contracts?) and Standard Form 295 (?Summary Subcontracting Report?). FAR (Oct. 1, 2007). 8 The liquidated damage provision is an explicit acknowledgement by the contractor that the social and economic objectives of the Subcontracting Plan have measurable value. When the contractor fails to comply in good faith with a Subcontracting Plan, and in particular when a contractor deceives the government, the United States suffers damages. 14 Case Document 190 Filed 07/17/17 Page 18 of 84 51. 52. 53. Since then, contractors have been required to electronically submit the Individual Subcontracting Report (ISR) and Summary Subcontracting Report (SSR). FAR 19.7 52219-90) (Oct. 1, 2008). The ISR collects prime contractor and subcontractor subcontract award data and is required to be submitted by the prime contractor twice a year (by April 30 and October 30 of each year). Electronic Subcontracting Reporting System Quick Reference Recommendation for Federal Government Prime Contractors: Submitting an Individual Subcontracting Report (ISR), pp. 3?4 (Updated Nov. 2, 2007), version as updated on September 29. 2010, available at In the ISR, the prime contractor must provide data showing its small business subcontracting goals versus its actual performance.9 at 12?16. Additionally, the prime contractor must ?[e]nter the name and contact information of the individual who is responsible for the contractor's compliance with the approved Individual Subcontracting Plan.? Li. at 16. If the prime contractor fails to meet the goals in its Subcontracting Plan, the contractor must ?explain the reason for any shortfalls? in the ?Remarks? section of the ISR. Li. When submitting the ISR, the contractor must certify that ?the data being submitted on the report is accurate and that the dollars and percentages reported do not include lower tier subcontracts? or the report will be rejected. I_d The SSR ?collects prime and subcontractors? subcontract award data for a speci?c Federal Government agency? and is required to be submitted twice a year for Department of Defense contracts in the same time frame as the ISR. Quick Reference for Federal Government 9 Subcontracting Plan performance is ?measured by applying the percentage goals to the total actual subcontracting dollars.? FAR 52.219-16. 15 Case Document 190 Filed 07/17/17 Page 19 of 84 54. Contractors: Filing a Summary Subcontracting Report (SSR) for an ?Individual? Subcontracting Plan, p. 4 (Updated Nov. 2, 2007), version as updated on September 30, 2010 available at dividual_Subcontract_Plan.pdf. In the SSR, the prime contractor must report all subcontract awards to small business concerns, including the awards to each speci?c category of small business concern woman-owned, service-disabled veteran-owned, etc.). at 11? 12. When submitting the SSR, the prime contractor must certify that ?the data being submitted on the report is accurate and that the dollars and percentages reported do not include lower tier subcontracts? or the report will be rejected. I_d. at 12. The chief executive of?cer (CEO) of the company submitting the SSR must approve and ?sign a paper print-out? of the report and keep the signed copy on ?le for four years. Id. at 13. The Government requires this approval and certi?cation to be made at the highest level of the company the CEO is not permitted to delegate these responsibilities. Li 3. Certi?cations Made in Progress Payment Requests Include Certi?cation of Good Faith Compliance with Subcontracting Plan In a ?xed?price construction contract, the Government makes progress payments to the contractor on a basis as the work proceeds. FAR Each time a contractor makes a request for progress payments, the contractor must make ?the following certi?cation, or payment shall not be made: I hereby certify, to the best of my knowledge and belief, that . . . The amounts requested are only for performance in accordance with the specifications, terms, and conditions of the contract . . . FAR (emphasis added). By making such certi?cation, the contractor attests that the amount of money requested is only for performance in accordance with the requirements of the contract, 16 Case Document 190 Filed 07/17/17 Page 20 of 84 55. 56. 57. including performance in accordance with the material contractual obligation to comply in good faith with its Subcontracting Plan and the goals therein. This mandatory certi?cation provision is required to be inserted into the contract between the contractor and the Government. FAR 52.232-5. If the agency discovers that a ?contractor?s request for . . . progress payments under a contract awarded by that agency is based on fraud? the agency head may ?reduce or suspend further payments to the contractor.? FAR 32.006-4. ?Such reduction or suspension shall be reasonably commensurate with the anticipated loss to the Government resulting from the fraud.? I_d. The ?[a]uthority to reduce or suspend payments . . . is in addition to other Government rights, remedies, and procedures.? FAR 32.006-1. Additionally, a contractor has an obligation to timely disclose to the agency when the contractor?s principal, employee, agent, or subcontractor has committed a violation of the False Claims Act. FAR 52.203-13 (?The Contractor shall timely disclose, in writing, to the agency Of?ce of the Inspector General (OIG), with a copy to the Contracting Of?cer, Whenever, in connection with the award, performance, or closeout of this contract or any subcontract thereunder, the Contractor has credible evidence that a principal, employee, agent, or subcontractor of the Contractor has committed . . . A violation of the civil False Claims Act (31 U.S.C. VI. FACTUAL ALLEGATIONS A. Overview of Relator Relator Howard is a former employee of Pompano Masonry, having been employed there from October 23, 2007, through approximately July 26, 2011, at its Charlotte, North Carolina of?ce. For most of the time he was employed at Pompano Masonry, Relator Howard was an 17 Case Document 190 Filed 07/17/17 Page 21 of 84 58. 59. Estimator and Project Manager. On January 11, 2010, Relator Howard was promoted to President of Operations of Pompano Masonry after his boss, Joseph Canitano, was ?red. Relator Howard has been involved in the masonry trade and construction industry his entire career. B. Overview of Defendants and Certain Former Defendants Caddell Construction and Yates Construction are large general commercial construction companies (general contractors) based in Alabama and Mississippi, respectively. Caddell Construction and Yates Construction have formed a Joint Venture, ?Caddell Yates by which together they have been awarded contracts on very large construction projects, including at least forty-three contracts for the federal government worth several hundred million dollars. Each member of Caddell Yates JV was, and continues to be, a large sophisticated, and highly experienced general contractor. Caddell Construction is ranked among the Top 100 construction companies in the United States. It is among the Top 10 largest private companies in Alabama. Its revenues in 2009 and 2010 topped $1 billion. Separate and apart from Caddell Yates JV, Caddell Construction earns substantial revenues in government contracting. It recently completed the US. Embassy in Kabul, Afghanistan, at a contract price of $416 million. Caddell Construction has performed government contracting work for the US. State Department all around the world, and has performed construction projects for many federal departments and agencies, such as the Department of Defense and the Veterans Administration, among others, throughout the United States, as well as substantial construction work for various state and local governments. 18 Case Document 190 Filed 07/17/17 Page 22 of 84 60. Yates Construction routinely exceeds $1 billion in annual revenues. Yates Construction is known as the largest casino and hotel builder in the State of Mississippi, and has also constructed casino and hotel projects in Louisiana and other states. In addition, and separate and apart from Caddell Yates JV, Yates Construction has constructed hundreds of millions of dollars worth of projects for the United States Government, including the recently completed Keesler Air Force Base military family housing construction project at a price of nearly $290 million, projects at Little Rock Air Force Base, and Redstone Arsenal. Yates Construction has also been the general contractor on large projects for the General Services Administration. 61. Julian Marie Breslow was the owner, Director, and Chairman of Pompano Masonry. Pompano Masonry was a full service masonry company specializing in brick, stone, and block structures. Pompano Masonry was incorporated in Florida in 1980, and, during the time of the events described herein, was one of the largest masonry companies in the United States. Julian Marie Breslow purchased the company from its original owner in 2007. On September 27, 2013, Pompano Masonry was dissolved. 62. Julian Marie Breslow had previously owned and controlled a healthcare related business which submitted claims to, and was paid by, Medicaid and Medicare. On February 10, 2004, Julian Marie Breslow was inde?nitely debarred, for cause, by the Department of Health and Human Services from participating in HHS health care programs, and all other Federal procurement and nonprocurement programs. On October 15, 2004, Julian Marie Breslow was inde?nitely debarred, for cause, by the Of?ce of Personnel Management from participating as a health care provider in the Federal Employees Health Bene?ts Program. Julian Marie Breslow remains on the Excluded Parties List System maintained by the Federal 19 Case Document 190 Filed 07/17/17 Page 23 of 84 63. 64. 65. Government. Breslow Construction, LLC (?Breslow Construction?) was a Florida limited liability company, having been organized as such on June 25, 2009. The company was dissolved on December 17, 2012. Breslow Construction purportedly had three managing members: Julian Marie Breslow, Jillian Breslow (Julian Marie Breslow?s oldest daughter), and Lauren Breslow (Julian Marie Breslow?s youngest daughter). During its existence, Breslow Construction represented itself as a woman-owned small business. Breslow Construction was owned by Julian Marie Breslow. C. Defendants? Fraudulent Scheme to Create Sham Small Businesses to Falsely Represent Compliance with Subcontracting Plan Goals on the Wallace Creek Phase I Project 1. Scope of Wallace Creek Project and Award to Caddell Yates JV Marine Corps Base Camp Lej eune Camp Lej eune?), which opened in September 1941, is the largest Marine Corps Base on the East Coast, and occupies approximately 246 square miles in Onslow County, North Carolina. MCB Camp Lejeune is home base for the 11 Marine Expeditionary Force, 2d Marine Division, 2d Force Service Support Group, and other combat units and support commands, which amount to some 47,000 active Marines and Sailors, exclusive of the dependent, retiree and civilian employee population which, altogether, totals nearly 150,000 people. On October 17, 2006, the United States Congress authorized an increase in end strength of the United States Marine Corps (USMC) personnel from 175,000 to 179,000 Marines. The majority of the personnel increase is to become permanently stationed at MCB Camp Lej eune. 20 Case Document 190 Filed 07/17/17 Page 24 of 84 66. 67. 68. 69. 70. In connection with that increase in force, and at the same time to upgrade the existing infrastructure at MCB Camp Lejeune, Congress authorized approximately $3.53 billion of military construction at the base, to be paid from ?scal year budgets 2008 through 2012, with completion of all scheduled construction by 2015. The majority of the new construction has taken place in the Wallace Creek area of MCB Camp Lejeune, and includes the design and construction of a four-battalion regimental complex to support 4,000 Marines, and consisting of twenty-one military construction projects. When completed, the Wallace Creek Regimental Area will occupy over 551 acres. In early 2008, Naval Facilities Engineering Command Mid-Atlantic in Norfolk, Virginia Mid-Atlantic?) issued ?Solicitation, Offer, and Award,? Solicitation Number: N4008508R1404, for the initial series of construction projects at MCB Camp Lejeune for what would become known as ?Wallace Creek Phase In the Original Synopsis for the solicitation, NAVFAC Mid-Atlantic stated in part: This is a Design/Build Best Value Source Selection solicitation to provide the design and construction of three FY 07 projects and three FY 08 projects, consisting of 20 new structures comprising nearly 570,000 square feet. These projects will construct the necessary administrative headquarters, operational, maintenance and mission support, training and housing facilities to support the 3000 Marines to be stationed at Wallace Creek. The synopsis continued: The magnitude of this construction solicitation is between $150,000,000 and $250,000,000. The North American Industry Classi?cation System (NAICS) Code for this project is 236220 with a Size Standing of $31 million. This project is not set-aside for small business. Large businesses shall submit a subcontracting plan prior to award of the contract. At least three large construction ?rms submitted proposals to NAVFAC Mid-Atlantic in response to Solicitation Number: N4008508R1404. One of the responses was by Defendants Caddell Construction and Yates Construction, which together submitted their responsive bid 21 Case Document 190 Filed 07/17/17 Page 25 of 84 by way of their Joint Venture business entity, Caddell Yates JV. A true copy of the successful Solicitation, Offer, and Award for NAVFAC Mid-Atlantic Solicitation Number: is attached hereto as Exhibit 1. . The Government was not seeking the lowest possible bidder to perform the work. Instead, the Government was seeking the contractor that could best deliver the full continuum of ?nal product, consistent with all goals, laws, rules and regulations applicable to the product, which expansively included certain requirements for the participation of small and/ or disadvantaged business enterprises through the requisite Small Business Subcontracting Plan. . Under the Instructions to Bidders section, the Solicitation, Offer, and Award document stated, in part, as follows: BASIS FOR AWARD This procurement will result in a ?rm, ?xed price contract for the design and construction of the Wallace Creek project at Marine Corps Base Camp Lejeune, North Carolina which will be negotiated and awarded using a two- phase design build and best source selection process as described in FAR Parts 36.3 and 15.3, respectively. Phase I of the process allows for the evaluation of each ?rm?s technical competencies and other non-price/cost related factors against stated evaluation criteria. Firms selected for Phase II will submit ampli?ed technical proposals and other information with separate price or cost proposal data. This process will be used to ensure selection of the source evidencing the best overall capability to perform the work in a manner most advantageous to the Government. Offerors are encouraged to demonstrate Corporate Experience, Management Approach to Quality Control, Past Performance, Safety, Small Business, Technical, Schedule and Price. The Government intends to award the contract to the offeror providing the best value, considering technical, price and other factors, in accordance with the criteria set forth in the approved sources selection plan and that which is included in the solicitation. The solicitation advises offerors that the best value source may not be the lowest priced proposal or the highest technically rated proposal. Offerors are advised that proposal evaluation and contract award may be made without discussion. Offerors are advised that they should not assume they would be contacted, or afforded the opportunity to qualify, discuss, or revise their proposal. The Government also reserves the right to enter into discussions if 22 Case Document 190 Filed 07/17/17 Page 26 of 84 deemed necessary, and if discussions are conducted, the offerors will be afforded the opportunity to revise their proposal. After evaluation of phase I, the most highly competitive offerors will be noti?ed regarding submission of Phase 11 proposals. a. Phase 1 written technical proposal will address Corporate Experience, Management Approach to Quality Control, Past Performance and Safety. The Phase 1 evaluation will result in a determination of the most highly quali?ed Offerors. These Offerors will be requested to submit a Phase II Proposal. The maximum number of Offerors that will be selected to submit a Phase II Proposal is ?ve (5). b. Phase II of the solicitation process shall be comprised of a written Small Business Subcontracting plan, Technical Approach, Schedule and Price, which will be evaluated in accordance with FAR 15.3 and the approved source selection plan. The Government reserves the right to eliminate from consideration for award any or all offers at any time prior to award of the contract, to negotiate with offerors in the competitive range, and to award the contract to that offeror submitting the proposal determined to represent the best value, most advantageous to the Government, price and other factors considered. The Government intends to evaluate proposal and award the contract without discussion with offerors. However, the Government reserves the right to conduct discussions upon the determination and recommendation of the Source Selection Authority. Therefore, each initial offer should contain the offerors best terms from a technical and price standpoint. The tradeoff process is selected as appropriate for this procurement. The Government considers it to be in the best interest to allow consideration of award to other than the lowest priced offeror or other than the highest technically rated offeror. Exhibit 1, p. 29 (emphasis added). . The Solicitation, Offer, and Award also included, comprehensively, 104 separate contract clauses in the form of various Federal Acquisition Regulations including, inter al?, Anti-Kickback Procedures (52.203 Utilization of Small Business Concerns (52.219- Small Business Subcontracting Plan (52219-9); Liquidated Damages-Subcontracting 23 Case Document 190 Filed 07/17/17 Page 27 of 84 74. 75. 76. 77. 78. Plan and Payments Under Fixed-Price Construction Contracts Exhibit 1, pp. 30-32. The Offer submitted by Caddell Yates JV was deemed suf?cient for Caddell Yates JV to proceed to Phase II of the solicitation process, and, therefore, it was required to present a Small Business Subcontracting Plan, which was sent to NAVFAC Mid-Atlantic on or about August ll, 2008. Caddell Yates Subcontracting Plan was a required, material and integral part of Caddell Yates Offer that it made to the Government (through NAVFAC Mid-Atlantic) in order for it to be considered for the Wallace Creek Phase I contract. Had Caddell Yates JV not submitted a Subcontracting Plan, it would have been ineligible to even bid on the contract. In its Subcontracting Plan for Wallace Creek Phase I, Caddell Yates JV represented that 77% of the total amount of the contract to be subcontracted ?will go to subcontractors who are small business concerns and contracts awarded under the avits?Wagner O?Day Contracts (JWOD) to National Industries for the Severely Handicapped (NISH) and to National Industries for the Blind Exhibit 1, p. 44 (emphasis added). Caddell Yates JV also expressly represented that 14% of the total amount to be subcontracted ?will go to subcontractors who are women owned small business concerns.? E, Exhibit 1, p. 45 (emphasis added). In its Subcontracting Plan, Caddell Yates JV was required to list its Subcontracting Program Administrator, who had ?general overall responsibility? for Caddell Yates subcontracting program. This individual (and thus Caddell Yates JV) ?should have knowledge of the federal small business programs and be knowledgeable about federal procurement practices.? The Subcontracting Program Administrator was ?responsible for the 24 Case Document 190 Filed 07/17/17 Page 28 of 84 79. 80. 81. 82. 83. development, preparation and execution of individual subcontracting plans, and for monitoring performance relative to contractual subcontracting plan requirements contained in [the] plan.? Caddell Yates JV listed Richard Gumer (Yates Construction?s Division Manager, Government Projects) as its Subcontracting Program Administrator. 10 By submitting its Subcontracting Plan and Offer, Caddell Yates JV agreed (and understood that it was required) to comply in good faith with the requirements of that plan, as well as with the applicable statutory and regulatory requirements, including, but not limited to 15 U.S.C. 637, FAR Subpart 19.7, and FAR 52.219-8 and 52.219-9. Further, by submitting its Small Business Subcontracting Plan, Caddell Yates JV understood that the United States would rely upon the statements in the Subcontracting Plan to determine whether the plan was bona ?de. Caddell Yates JV also knew and understood that if it was awarded the contract for construction of Wallace Creek Phase 1, its Subcontracting Plan would be included in and made a material part of that contract. Pursuant to Solicitation Number: N4008508R1404, the contract for construction at Wallace Creek Phase I was awarded to Caddell Yates JV on or about September 15, 2008, in the adjusted amount of $192,171,000 (hereinafter the ?Wallace Creek Phase I Contract?). Caddell Yates Subcontracting Plan that it submitted to the United States as part of its proposal for Wallace Creek Phase I which the Government approved and accepted was incorporated into and made a material part of the Wallace Creek Phase I Contract between Caddell Yates JV and the Government. According to subcontracting reports later submitted by Caddell Yates JV, Cleet McHenry (Project Executive of Yates Construction) was designated as the Subcontracting Plan 10 Caddell Yates JV was required to notify the Government if it decided to change the person in this position. 25 Case Document 190 Filed 07/17/17 Page 29 of 84 84. 85. 86. 87. Administrator for Caddell Yates Subcontracting Plan on the Wallace Creek Phase 1 project. As the Subcontracting Plan Administrator, McHenry was ?the individual who [was] responsible for the contractor's compliance with the approved Individual Subcontracting Plan.? ISR Quick Reference, supra, at 16. 2. Caddell Yates JV Awards Masonry Subcontract to Pompano Masonry Caddell Yates JV began to solicit potential subcontractors for the Wallace Creek Phase 1 Contract in late 2008 and early 2009. On approximately January 16, 2009, Pompano Masonry submitted a bid to Caddell Yates JV to be awarded the masonry work for the Wallace Creek Phase I Contract. A true copy of the Pompano Masonry base bid to Caddell Yates JV for the masonry subcontract on the Wallace Creek Phase 1 Contract is attached hereto as Exhibit 2. On February 6, 2009, as part of the bid process, Relator Howard sent Richard Gumer (Division Manager, Government Projects, for Yates Construction, and Subcontracting Program Administrator for Caddell Yates JV) the corporate structure of Pompano Masonry, which listed Julian Marie Breslow as a Director and the Chairman of the Board for Pompano Masonry and Jillian Breslow as the company?s Director and Vice President. Relator Howard further informed Gurner that Pompano Masonry would be bringing all of its current corporate and ?nancial information to the next meeting to take place on February 12, 2009. Also, on February 6, 2009, Pompano Masonry began the process of obtaining a bondability letter, a necessary step toward winning the masonry subcontract for Wallace Creek Phase I. This letter was provided to Caddell Yates JV on February 9, 2009. 26 Case Document 190 Filed 07/17/17 Page 30 of 84 88. Additionally, by February 6, 2009, Pompano Masonry had received a preliminary draft of a subcontract for the masonry work for the Wallace Creek Phase 1 Contract, which was forwarded to Pompano Masonry?s outside attorneys, Valdini Associates, PA, for review. 89. On February 12, 2009, a Post-Bid Interview was held between Caddell Yates JV and Pompano Masonry. Among the attendees at this meeting representing Caddell Yates JV were Cleet McHenry (Project Executive of Yates Construction) and Richard Gumer. Joseph Canitano, Vice President of Pompano Masonry, and Relator Howard, Estimator/Proj ect Manager, were present for Pompano Masonry. 90. At that meeting, Joseph Canitano provided Caddell Yates JV with current corporate and ?nancial information for Pompano Masonry. Like the corporate structure document previously provided to Caddell Yates JV, this information re?ected that Julian Marie Breslow and Jillian Breslow were of?cers and directors of Pompano Masonry. That information additionally showed that Pompano Masonry was in fact a large business, such that it could not qualify as a small business. The ownership of Pompano Masonry, and, speci?cally, that Julian Marie Breslow was the owner of the company, was also discussed at the meeting.11 91. Thereafter, on February 19, 2009, a follow-up meeting was held at Yates Construction?s of?ces in Mississippi between Joseph Canitano and Relator Howard, both representing Pompano Masonry, and Cleet McHenry, Clint Bledsoe (Project Manager of Yates Construction), and others representing Caddell Yates JV, to iron out the details of Pompano 11 The ownership structure of Pompano Masonry was discussed a number of times in meetings and conversations between Pompano Masonry employees and Caddell Construction and Yates Construction employees. The ownership of Pompano Masonry was discussed especially in detail because of the recent sale and purchase of the company in 2007. 27 Case Document 190 Filed 07/17/17 Page 31 of 84 92. 93. 94. 95. Masonry?s engagement to perform the masonry subcontracting work for the Wallace Creek Phase I Contract. By at least February 24, 2009, Caddell Yates JV had agreed in principal that Pompano Masonry would be contracted to perform the masonry subcontracting work for the Wallace Creek Phase 1 Contract, and Pompano Masonry was then in the process of ?nalizing changes to the subcontract. A true copy of the Caddell Yates JV February 24, 2009 cover letter transmitting the draft masonry subcontract to Pompano Masonry is attached hereto as Exhibit 3. A true copy of the February 24, 2009 email from Joseph Canitano informing Cleet McHenry that Pompano Masonry?s attorney (David J. Valdini) was reviewing the contact is attached hereto as Exhibit 4. On February 27, 2009, Clint Bledsoe, sent an email to Relator Howard seeking information to ?nalize the masonry subcontract, including making inquiry of the name and title of the person who would formally execute the subcontract for Pompano Masonry. Joseph Canitano responded that he would execute the subcontract. True copies of these emails are attached hereto as Exhibit 5. Over the course of the ?rst part of March 2009, minor adjustments were still being made to the masonry subcontract between Caddell Yates JV and Pompano Masonry. By approximately March 11, 2009, however, the subcontract was ?nalized and fully complete and executed copies were sent by Caddell Yates JV to Pompano Masonry. The ?nal masonry subcontract between Pompano Masonry and Caddell Yates JV was in the amount of $14,43 8,493 (hereinafter the ?Pompano Masonry subcontract?). The Pompano Masonry subcontract bore the date of March 2, 2009, even though in fact it was signed a few days later. The Pompano Masonry subcontract was signed by Joseph 28 Case Document 190 Filed 07/17/17 Page 32 of 84 96. 97. 98. 99. 100. 101. Canitano on behalf of Pompano Masonry and by Mark Smith (Vice President of Yates Construction) on behalf of Caddell Yates JV. A true copy of the fully executed Pompano Masonry subcontract is attached hereto as Exhibit 6. In connection with the Pompano Masonry subcontract, a Certi?cate of Liability insurance was issued by Seitlin Insurance in favor of Caddell Yates JV (as Certi?cate Holder), dated March 13, 2009. Internally within Pompano Masonry, the Wallace Creek Phase I masonry work was assigned Pompano Masonry Job Number 6179. Thereafter, Joseph Canitano and Relator Howard attended an April 1, 2009 Pre-Construction Meeting at MCB Camp Lejeune hosted by Caddell Yates JV. On April 6, 2009, Pompano Masonry sent a 154-page package to Caddell Yates JV, which contained material speci?cations data and certi?cations and LEEDS (Leadership in Energy and Environmental Design) data. Payment and Performance Bonds were issued bearing the dates of May 2, 2009, on behalf of Pompano Masonry (as Principal) and in favor of Caddell Yates JV (as Obligee), through Western Surety Company, as Surety, in the amount of $14,438,493. The Bonds were signed on behalf of Pompano Masonry by its Vice President, Joseph Canitano. On May 6, 2009, Frank Bean (Quality Control Of?cer for Caddell Yates JV) sent an email to Rodney Miles (Superintendent for Pompano Masonry), scheduling a Preparatory Meeting for masonry work under the Pompano Masonry subcontract. The meeting was scheduled for May 8, 2009, and was held that day. 29 Case Document 190 Filed 07/17/17 Page 33 of 84 102. Pompano Masonry then commenced performance of the Pompano Masonry subcontract on or about May 12, 2009.12 103. On May 17, 2009, Clint Bledsoe sent an email to Rickey Howard, of Pompano Masonry, inquiring as to whether Pompano Masonry would be submitting a draw request for May 2009. draw requests were due to be submitted by the 15th of each month. A true copy of Clint Bledsoe?s email regarding the May 2009 draw request is attached hereto as Exhibit 7. 104. Through May 2009, Pompano Masonry continued working on the Wallace Creek Phase I project, even issuing an Extra Work Order to Caddell Yates JV for extra work performed by Pompano Masonry. A true copy of Pompano Masonry?s Extra Work order dated May 25, 2009 is attached hereto as Exhibit 8. 3. Caddell Yates JV Requests that Pompano Masonry Create a Sham ?Small Business? (Breslow Construction) to Meet Subcontracting Plan Requirements 105. In June 2009, Pompano Masonry?s Vice President, Joseph Canitano, and Relator Howard attended a meeting at the jobsite requested by Cleet McHenry, Project Executive for Yates Construction and Subcontracting Plan Administrator for the Wallace Creek Phase I project the individual tasked with ensuring Caddell Yates compliance with its Subcontracting Plan). This meeting was held in one of the construction trailers leased by Caddell Yates JV. 106. By this time, Pompano Masonry had been working on the jobsite at MCB Camp Lej eune under the Pompano Masonry subcontract for several weeks, during which time its crews had not only built mock-up walls, but had also substantially completed work on Building K. 12 In a later lawsuit brought by Breslow Construction against Caddell Construction and Yates Construction under the Miller Act, Caddell Construction and Yates Construction asserted that the masonry work had begun on May 8, 2009. 11157 below, and 1140 of the referenced Answer of Caddell/Y ates. 30 Case Document 190 Filed 07/17/17 Page 34 of 84 107. During the aforesaid meeting, McHenry stated that Caddell Yates JV was ?having trouble meeting? the WOSB portion of its Subcontracting Plan under the Wallace Creek Phase 1 Contract, or words to that effect. McHenry further said to Canitano and Relator Howard that Caddell Yates failure to meet that part of the Subcontracting Plan would result in several million dollars of penalties to Caddell Yates JV. Knowing that Pompano Masonry was owned by a woman, but was not a ?small business,? McHenry then asked Canitano if Pompano Masonry would agree to set up a Women-Owned Small Business to act as the subcontractor on the masonry subcontract that is, to substitute this to-be-created entity as the subcontractor for the masonry work on the Wallace Creek Phase 1 project instead of Pompano Masonry. 108. At ?rst, Relator Howard did not understand McHenry?s request and the reasoning behind it and replied, ?You have [(in Pompano Masonry)] an Asian-American woman?owned business. What else do you need?? In response, McHenry emphasized that Caddell Yates JV did not just need a woman-owned business, it needed a small business. 109. Canitano responded to McHenry?s proposal by saying ?What?s in it for or words to that effect. 110. McHenry answered Canitano?s question by saying ?The going rate is 2% to 3% of the subcontract price,? or words to that effect. 111. Following that meeting, Canitano communicated McHenry?s proposal to the owner of Pompano Masonry, Julian Marie Breslow, and her husband, Stephen Siegel. Julian Marie Breslow was the Chairman and Owner of Pompano Masonry, and Stephen Siegel was its President. 31 Case Document 190 Filed 07/17/17 Page 35 of 84 112. Thereafter, in response to the request by Caddell Yates JV, Julian Marie Breslow and Stephen Siegel, with the knowledge, help and assistance of the other former defendants in this action, set forth with implementing the plan to create a sham company to assume the Pompano Masonry subcontract, and to help Caddell Yates JV represent that the new company was a legitimate WOSB that quali?ed under the SBA regulations for satisfying the Subcontracting Plan under Caddell Yates V?s Wallace Creek Phase I Contract. That new, sham company was formed as Breslow Construction, LLC. 113. Breslow Construction was organized as a limited liability company on June 25 2009. The Articles state that Breslow Construction had three Managing Members: Julian M. (Marie) Breslow, Jillian Breslow, and Lauren Breslow. A true copy of the Articles of Organization for Breslow Construction as ?led with the Florida Secretary of State is attached hereto as Exhibit 9. 114. In June 2009, Julian Marie Breslow was the sole owner of Pompano Masonry. At that time, Jillian Breslow, Marie Breslow?s oldest daughter, had just completed her first year of law school at Stetson University. Lauren Breslow, Marie Breslow?s youngest daughter, had just completed her sophomore year in high school.13 115. On June 25, 2009, Pompano Masonry?s Treasurer, Michael Ridgway, prepared Application for Payment, Draw No. 1, for Pompano Masonry?s work on the Wallace Creek Regimental Complex. This Draw Request was in the total amount of $233,765, and re?ected the original Subcontract Amount for the Pompano Masonry subcontract in the amount of $14,43 8,493. A true copy of Michael Ridgway?s June 25, 2009 transmittal email and 13 Neither Jillian Breslow nor Lauren Breslow were actively involved as Managing Members of Breslow Construction, nor have they ever been actively or meaningfully involved in any aspect of that company. 32 Case Document 190 Filed 07/17/17 Page 36 of 84 Pompano Masonry?s Application for Payment, Draw No. 1, to Joseph Canitano, is attached hereto as Exhibit 10. 116. On July 17, 2009, Pompano Masonry?s Treasurer, Michael Ridgway, prepared Application for Payment, Draw No. 2, for Pompano Masonry?s work on the Wallace Creek Regimental Complex. This Draw Request was in the total amount of $464,583, and re?ected the original Subcontract Amount for the Pompano Masonry subcontract in the amount of $14,438,493. A true copy of Joseph Canitano?s July 17, 2009 transmittal email and Pompano Masonry?s Application for Payment, Draw N0. 2, to Clint Bledsoe, is attached hereto as Exhibit 11. 117. Rather than pay either Draw Request No. 1 or No. 2 to the subcontract holder, Pompano Masonry, Caddell Yates JV continued with the scheme to issue a new masonry subcontract to the sham WOSB, Breslow Construction. 118. On July 17, 2009, Pompano Masonry Vice President Joseph Canitano sent an email to Cleet McHenry which stated: ?Per our conversation, I think it is a good idea to have our Attorney contact your council [sic] in regards to our Small Business Certi?cation. We want to make sure we are applying for correct type that bene?ts your proiect needs. Please have them call David Valdini.? (emphasis added). A true copy of Joseph Canitano?s July 17, 2009 email is attached hereto as Exhibit 12. 119. In response, Cleet McHenry or someone else on behalf of Caddell Yates JV directed Canitano to speak with Diana McGraw, the Marketing Information Coordinator at Yates Construction.14 As follow up to that conversation, McGraw sent Canitano an email stating as follows: 14 Diana McGraw is listed on Caddell Yates Individual Subcontracting Reports (ISRs) as its contact person ?the individual that can be contacted in the event that the government agency has questions regarding 33 Case Document 190 Filed 07/17/17 Page 37 of 84 Mr. Canitano, Per our conversation this afternoon, for [sic] the Wallace Creek project is a Federal project, speci?cally by the DOD agency - NAVY. To meet the requirements of this project - small business women owned business, you will need to provide Cleet with a self certi?cation. This self certification is a letter stating that you are in fact a small business and that you are women owned (more than 50% women owned). This letter must be signed by someone with signatory power and dated. Per your request, I have included several references for you. If you have any further questions, please let me know. Thanks, Diana This is a link for the SBA and it lists the small business size standards. If you look on page 4 near the bottom you will see that Masonry size standards are $14 Million. FAR 19.703 Eligibility requirements for participating in the program states the following: A contractor acting in good faith may rely on the written representation of its subcontractor regarding the subcontractor?s status as a small business, veteran-owned small business, service-disabled veteran-owned small business, or a woman-owned small business concern. Here is a link to the FAR. A true copy of this email is attached hereto as Exhibit 13. 120. On July 21, 2009, pursuant to Diana McGraw?s earlier email, Pompano Masonry?s outside attorney, David J. Valdini, sent a self-certi?cation letter addressed to Cleet McHenry of Yates Construction stating and declaring that Breslow Construction was a legitimate small [the] ISR Quick Reference, supra, at 10. The submitted by Caddell Yates JV on the Wallace Creek Phase I project are discussed in more detail below in 1111 182-200. 34 Case Document 190 Filed 07/17/17 Page 38 of 84 business and requesting that Breslow Construction ?be considered? for the Wallace Creek Phase I masonry subcontracting work despite the fact that Pompano Masonry had already been awarded that subcontract and had already been performing on the job for months. The body of the letter stated as follows: Dear Mr. McHenry: This law ?rm represents Breslow Construction LLC. Please be advised that Breslow Construction, LLC. is more than 51% women-owned. Breslow Construction, LLC. is a small business and its average annual receipts are less than $14 million. Enclosed please ?nd the corporate documents for Breslow Construction, LLC. Please allow this correspondence to serve as Breslow Construction, LLC's self? certi?cation [sic] and its intent to be considered for the above referenced project. A copy of the Articles of organization for Breslow Construction, which showed that Breslow Construction had just been formed on June 25, 2009, less than a month prior, and which showed that Julian Marie Breslow and her daughter, Jillian Breslow, were Managing Members, was enclosed with the letter. On July 22, 2009, this letter was additionally forwarded to Clint Bledsoe (Yates Construction Project Manager) from Pompano Masonry Vice President Joseph Canitano. A true copy of Valdini?s July 21, 2009 letter is attached hereto as Exhibit 14. 121. The letter was prepared and issued pursuant to the scheme to create a sham WOSB for the bene?t, and at the request, of Caddell Yates JV, and speci?cally to create a trail of paperwork to support the illusion that Breslow Construction was a legitimate small business, when in fact it was not. 122. The representations in the July 21, 2009 self-certi?cation letter were transparently false, and, all of the parties involved (including Caddell Construction and Yates Construction) knew that to be the case at the time the letter was sent. 35 Case Document 190 Filed 07/17/17 Page 39 of 84 123. As a result of the false representations made in the letter, David Valdini?s law ?rm, Valdini Associates, was later criminally charged with and pleaded guilty to ?Fraud Relating to Maj or Contract with the United States.? 124. At all times relevant, Breslow Construction was controlled by Pompano Masonry and its individual owner, Julian Marie Breslow. 125. Pompano Masonry and Breslow Construction were clearly af?liated companies, and, as such, under the SBA af?liation rules, a_ll of the revenues of Pompano Masonry would have to be counted in determining whether Breslow Construction was a legitimate small business. At all times relevant, Pompano Masonry itself did not qualify as a small business under SBA size standards, and, thus, Breslow Construction could not have quali?ed as a small business, either. 126. As noted above, Pompano Masonry was, at the time, one of the largest masonry subcontractors in the United States. Speci?cally, for the three-year period preceding the Wallace Creek Phase I work, Pompano Masonry?s billings were as follows: 2006 $53,189,081; 2007 $51,000,000; 2008 $33,878,210. Thus, Pompano Masonry?s revenues were far too high for it to qualify as a ?small business? under the relevant statutes and regulations. 127. As large, sophisticated general contractors which had performed numerous Government contracts, both Caddell Construction and Yates Construction, and thus Caddell Yates JV, were familiar with and had an understanding of the rules and regulations, including its af?liation rules. Additionally, as a prime contractor to the United States government on a project for which a Subcontracting Plan was required, Caddell Yates JV is charged with 36 Case Document 190 Filed 07/17/17 Page 40 of 84 knowledge of and the duty to comply with SBA rules and regulations, including the SBA af?liation rules. 128. By the time the July 21, 2009 self-certi?cation letter was sent, Caddell Construction and Yates Construction (through Caddell Yates JV) knew that Pompano Masonry could not qualify as a small business. Further, by this point, Caddell Construction and Yates Construction (through Caddell Yates JV) knew that Breslow Construction was controlled, directly or indirectly, by Pompano Masonry and Julian Marie Breslow and, therefore, that Pompano Masonry and Breslow Construction were af?liated, such that Breslow Construction could not qualify as a small business. 4. Caddell Yates JV Issues a ?Substitute? Masonry Subcontract to the Sham Small Business, Breslow Construction, With Pompano Masonry Continuing to Perform All the Work 129. In furtherance of the scheme to utilize a sham WOSB to ful?ll Subcontracting Plan requirements, Caddell Yates JV arranged to substitute the already-in-place Pompano Masonry subcontract and enter into a ?new? subcontract for the masonry work with Breslow Construction. 130. On July 23, 2009, Joseph Canitano sent an email to Clint Bledsoe, Project Manager of Yates Construction, which stated in part: ?Here is a copy of the schedule that we all agreed to. Please use this as your template for the new contract for Breslow Construction LLC. I assume you will be adding the 2% fee to our current contract amount of $14,438,493. The revised amount is $14,727,262.? A true copy of Joseph Canitano?s email dated July 23, 2009 is attached hereto as Exhibit 15. 131. On July 23, 2009, Clint Bledsoe sent to Joseph Canitano and Relator Howard a signed copy of the original Pompano Masonry subcontract, saying: need you to mark your 37 Case Document 190 Filed 07/17/17 Page 41 of 84 changes on this contract so I can put them on the new contract for Breslow.? It was never mentioned that the contract actually be sent to Breslow Construction for any reviews or changes because Caddell Yates JV knew that Breslow Construction essentially existed only on paper and was one and the same with and controlled by) Pompano Masonry. A true copy of Clint Bledsoe?s email dated July 23, 2009 is attached hereto as Exhibit 16. 132. On July 24, 2009, Clint Bledsoe emailed Joseph Canitano and asked whether he had gotten a ?fed id license and of?ce number? for Breslow Construction. Canitano responded that same day with the federal identi?cation number and telephone number (which rang through the Pompano Masonry telephone system) for Breslow Construction. With regard to the license number, Canitano stated: ?We do not have a license yet we have applied [sic]. As soon as I get it I will pass it on.? (emphasis added). 133. Also, on July 24, 2009, Clint Bledsoe emailed Canitano and asked who would be signing the Caddell Yates JV?Breslow Construction subcontract. Canitano who had also executed the original subcontract for Pompano Masonry responded that he would be signing the subcontract on behalf of Breslow Construction. He then emailed back and stated that he ?was incorrect? and that Julian Marie Breslow the owner of Pompano Masonry would be signing on behalf of Breslow Construction as the ?Managing Partner.? 134. Thereafter, the substitute subcontract for the masonry work in the name of Breslow Construction was ?nalized (hereafter referred to as the ?Breslow Construction subcontract?), and was sent by Caddell Yates JV to Pompano Masonry for execution. 135. The Breslow Construction subcontract was for a higher price ($14,702,263 vs. $14,438,493 for the Pompano Masonry subcontract an increase of $263,770), and ?included a deduct of $25,000? for the cost of a bulldozer (meaning that this cost would now 38 Case Document 190 Filed 07/17/17 Page 42 of 84 be borne by Caddell Yates JV). The difference between the two subcontracts (Pompano Masonry?s subcontract vs. Breslow Construction?s subcontract) amounted to 2% of the original contract price, which was the designated kickback amount being paid by Caddell Yates JV for the creation and ?use? of Breslow Construction, the new WOSB, as had been discussed going back to the June meeting between Cleet McHenry and Joseph Canitano and Relator Howard. 15 This kickback represents a fraudulent overpayment incurred by the United States, necessitated only by the scheme itself. 136. The substitute subcontract for the masonry work at Wallace Creek Phase I now naming Breslow Construction as the subcontractor was signed by Julian M. (Marie) Breslow, for Breslow Construction, and by Mark Smith, VP of Yates Construction, on behalf of Caddell Yates JV. The Breslow Construction subcontract bears the date of March 2, 2009, which is the same date as the Pompano Masonry subcontract, despite the fact that Breslow Construction had not even been formed and did not even exist until late June 2009. A true copy of the fully executed Breslow Construction subcontract is attached hereto as Exhibit 17. 137. In all discussions resulting in the formation of Breslow Construction and the ?negotiations? leading up to the execution of the Breslow Construction subcontract, Caddell Yates JV had dealt exclusively with Pompano Masonry employees, and, speci?cally, extensively with Pompano Masonry?s Vice President, Joe Canitano. Caddell Construction and Yates Construction knew of the af?liation between Pompano Masonry and Breslow Construction and that those two companies were essentially one and the same. 15 The $25,000 cost shift for the bulldozer in the Breslow Construction subcontract was included in an effort to disguise the 2% kickback paid by Caddell Yates JV by making the contract price differential appear to be something other than precisely 39 Case Document 190 Filed 07/17/17 Page 43 of 84 138. Throughout the entire time that masonry work was being performed on the Wallace Creek Phase 1 project extending back to the original bid package of Pompano Masonry in January 2009 and through to the conclusion of this project phase in late 2010, nearly all of the masonry work was in fact being done by Pompano Masonry masons, with some supplementation of work crews provided by two much smaller masonry companies (Houston Brothers Masonry and Rush Construction). During this time, all of the hundreds of masons who were on the job for Pompano Masonry were being paid by Pompano Masonry and had ?Pompano Masonry Corporation? stickers on their hard hats. 139. Further, the management of the masonry subcontract work at Wallace Creek Phase I was entirely done by Pompano Masonry employees. The only persons who were ever ?employed? by Breslow Construction, and on its payroll, were John Rawlings, who was listed ?Corporate Safety Director,? and Ty McDonough, who claimed in a Declaration later ?led in a federal lawsuit between Breslow Construction and Caddell Yates JV that he had been ?Project Manager? for Breslow Construction on the Wallace Creek Phase I project. At the same time as he ?held? the position with Breslow Construction, Rawlings also held the position of ?Safety Director? with Pompano Masonry. 140. That the entirety of the masonry work on Wallace Creek Phase I was performed by Pompano Masonry, and not Breslow Construction, is further made clear in an October 2010 email Julian Marie Breslow wrote to Stephen Arbogast, one of her bankers in South Florida. In the email, she boasted that Pompano Masonry had been listed as the #5 Masonry Contractor on a national ranking of Specialty Construction Contractors. That email states as follows: 40 Case Document 190 Filed 07/17/17 Page 44 of 84 Steve, I haven't heard from you; I wanted to share some great news with you. The ENR 2010 Report for the TOP 600 Specialty Contractors listed Pompano Masonry Corporation in the top 5 for Masonry, Yeah! Being certi?ed as both a Woman owned and Minority business, we are now recognized by the most distinguished general contractors, as the preferred commercial masonry company. In record time and with innovative thinking, probity, and pro?ciency, we took on and completed the largest military project that had ever been awarded to a masonry contractor [(referring to Wallace Creek Phase Honor, integrity and professionalism have propelled this ?rm forward and now our reputation is irrefutable and speaks for itself. We are in October and the back log is up to 50M with primarily zero retainage jobs. We are on a roll and can't be stopped! Thus, as of October 2010, Julian Marie Breslow was representing that Pompano Masonry (and not Breslow Construction) had been awarded the Wallace Creek Phase I project, and that it had been performed by Pompano Masonry, because the phrase ?the largest military project that had ever been awarded to a masonry contractor? plainly refers to the work done at Wallace Creek Phase I. 141. After Breslow Construction was formed in late June 2009, and purported to have executed the substitute subcontract dated March 2, 2009 for the masonry work, both Pompano Masonry and Breslow Construction, on the one hand, and Caddell Yates JV, on the other hand, made a poor attempt to create the illusion that Breslow Construction was a legitimate WOSB and that it (as opposed to Pompano Masonry) was actually performing the masonry subcontract. Pompano Masonry and Breslow Construction created a simple corporate logo for Breslow Construction, which they occasionally used, and obtained a website address so that they could utilize email addresses bearing the URL address @breslowconstructionllc.com.? True copies of the corporate email address listings for Breslow Construction and for Pompano Masonry are attached hereto as Exhibit 18. 41 Case Document 190 Filed 07/17/17 Page 45 of 84 142. In the hundreds of communications between Pompano Masonry/Breslow Construction, and Caddell Yates JV, employees of Pompano Masonry would sometimes send emails and letters on Breslow Construction stationery or email addresses, and then turn around and send other emails and letters on Pompano Masonry stationery or email addresses. See, Exhibit 19 (September 8, 2009 letter to Cleet McHenry on Breslow Construction letterhead from Joseph Canitano as Vice President), Exhibit 20 (December 7, 2009 email to McHenry from Canitano with Vice President of Pompano Masonry signature line), Exhibit 21 (March 23, 2010 email from John Rawlings forwarded to Dennis Molina of Yates Construction indicating that Rawlings is the Corporate Safety Director of Breslow Construction in the signature line, and then attachment to that email purportedly from Pompano Masonry, showing Rawlings signing as Corporate Safety Director of Pompano Masonry). 143. In one internal communication within Pompano Masonry, it was requested that Orlando Lagos, a Pompano Masonry of?ce employee in Florida, be given ?a second computer and email address for BOTH Breslow and PMC, as he is sending and responding to things for both companies.? He was apparently having dif?culty determining when he should appear to be wearing which company?s ?hat?. A true copy of this email from Tonya Tucker to Luis Torres, dated May 20, 2010, is attached hereto as Exhibit 22. 144. Likewise, Caddell Yates JV personnel frequently referred to these af?liated companies as simply ?Pompano/Breslow? or ?Breslow/Pompano?. See, Exhibit 23 (September 14, 2010 email from Mark Smith to Relator Howard referring to the af?liated companies as 145. Further, on June 11, 2010, Caddell Yates JV sent a mandatory EEOC noti?cation to its subcontractors, including the masonry subcontractor. This letter was ostensibly addressed to 42 Case Document 190 Filed 07/17/17 Page 46 of 84 Breslow Construction, but the addressee was Relator Howard, who had always and only (during the relevant time frame) worked for Pompano Masonry. Relator Howard signed this acknowledgement letter in his capacity as Vice President of Pompano Masonry, and returned it to Caddell Yates JV. A true copy of the Caddell Yates JV EEOC noti?cation dated June 11, 2010, and Howard?s response for Pompano Masonry, is attached hereto as Exhibit 24. 146. All of the back-of?ce management and paperwork that was done or issued for Breslow Construction was in fact done or issued by employees of Pompano Masonry. At one point, at the direction of Julian Marie Breslow, the Charlotte of?ce of Pompano Masonry was instructed to lease an of?ce for Breslow Construction. The sham of?ce with an unrepaired hole in the wall was secured for approximately $200 per month, and the of?ce was ?out?tted? with a broken down computer and some old construction drawings left on a planning table. In fact, the of?ce was never used and no telephone line or intemet connection was obtained for this of?ce. 147. Pompano Masonry owned three adjacent parcels of property in Pompano Beach (Broward County), Florida. There was only one of?ce building on these parcels, but there were two street addresses created for the three parcels. Both Pompano Masonry and Breslow Construction occupied the same of?ces, but had different addresses giving the false impression that they were physically separate businesses. In fact, even though Breslow Construction had a separate Florida telephone number, it rang through the phone system of Pompano Masonry. A true copy of the Broward County, Florida, Property Assessor?s records showing parcels owned by Pompano Masonry is attached hereto as Exhibit 25. The document has been marked to show that only one building exists on these parcels. 43 Case Document 190 Filed 07/17/17 Page 47 of 84 148. At some point, Julian Marie Breslow directed Michael Ridgway, the Treasurer of Pompano Masonry, to create documents purporting to Show that Pompano Masonry was itself a ?subcontractor? to Breslow Construction in the performance of the Breslow Construction subcontract. In late 2009, Breslow Construction ?issued? a series of change orders to Pompano Masonry. These documents were ?Accepted? by Michael Ridgway as ?Treasurer? of Breslow Construction and by Luis A. Torres Lopez as ?Assistant Treasurer? of Pompano Masonry. In fact, Ridgway was Treasurer of Pompano Masonry and Lopez worked as the Assistant Controller at Pompano Masonry, as well. True copies of these ?change orders? are attached hereto as Exhibit 26. 149. In February 2010, in connection with its seventh draw request to Caddell Yates JV, Breslow Construction through Michael Ridgway, who was also as the same time Pompano Masonry?s Treasurer submitted a Sworn Statement of Payment Obligations, which represented that there were eight (8) second-tier subcontractors to Breslow Construction, including Pompano Masonry. A true copy of Breslow Construction?s seventh draw request is attached hereto as Exhibit 27. 150. In fact, however, those other companies were second-tier subcontractors to Pompano Masonry, not Breslow Construction, and many of these second-tier subcontractors were already subcontractors/ suppliers to Pompano Masonry before Breslow Construction was even formed. See, Exhibit 28 (May 2009 invoices to Pompano Masonry from two of these purported Breslow Construction second-tier subcontractors/suppliers). 151. Throughout the performance of the Wallace Creek Phase I project, Caddell Yates JV submitted certified progress payment requests pursuant to FAR 52.232-5, which the Government paid. Those progress payment requests were submitted to the 44 Case Document 190 Filed 07/17/17 Page 48 of 84 Government by Cleet McHenry on behalf of Caddell Yates JV. In submitting each progress payment request, McHenry (and thus Caddell Yates JV) certi?ed that ?[t]he amounts requested are only for performance in accordance with the speci?cations, terms, and conditions of the contract.? FAR 5. Defendants Continue to Conceal Their Fraudulent Scheme of Creating a Sham Small Business to Hold the Masonry Subcontract for Wallace Creek Phase I As Evidenced in Pleadings in Breslow Construction?s Miller Act Claim Against Caddell Yates JV 152. During the performance of the masonry subcontract, Pompano Masonry was often short of manpower, which caused delays to other trades. Caddell Yates JV responded by holding back monies. Breslow Construction, in turn, ?led a lawsuit under the Miller Act (40 U.S.C. 3131?3134) styled United States of America, for the Use of Breslow Construction, LLC V. Caddell Construction Co., Inc.; W.G. Yates Sons Construction Company; Caddell Yates Joint Venture; Travelers Casualty and Surety Company of America; Fidelity and Deposit Company of Maryland; and Zurich American Insurance Company, Case (EDNC) (the ?Breslow Construction Miller Act Lawsuit?). 153. In the lead up to the ?ling of the Breslow Construction Miller Act Lawsuit on November 12, 2010, Pompano Masonry?s (and Breslow Construction?s) outside attorneys, Valdini Associates, sent a letter to Caddell Yates JV demanding a copy of the prime contract so that a claim under the Miller Act could be prepared. The letter actually states that Pompano Masonry provided labor, services, and material on the project. A true copy of David Valdini?s November 12, 2010, letter to Caddell Yates JV is attached hereto as Exhibit 29. 154. Based on information that had been gathered and provided by Pompano Masonry, Breslow Construction, and its owner, Julian Marie Breslow, on November 19, 2010, Breslow 45 Case Document 190 Filed 07/17/17 Page 49 of 84 Construction?s North Carolina attorneys delivered a Notice of Default and Claim to the joint venture partners of Caddell Yates JV. 155. The Notice of Default and Claim contains numerous falsehoods and representations with regard to the Breslow Construction subcontract, including stating that the sham WOSB contractor (Breslow Construction) had entered into the subcontract on March 2, 2009, and falsely stating the date that masonry subcontracting work had begun on the project. A true copy of the Notice of Default and Claim dated November 19, 2010 to Caddell Yates JV is attached hereto as Exhibit 30. 156. Caddell Yates JV did not substantively deny the aforesaid falsehoods and inaccuracies contained in the Notice of Default and Claim. 157. Thereafter, on December 23, 2010, Breslow Construction ?led its Miller Act Lawsuit. Breslow Construction made several false representations in this lawsuit, including the false representation that it entered into the masonry subcontract on March 2, 2009 (months before Breslow Construction even existed). A true copy of the Complaint asserting Breslow Construction?s Miller Act claim against Caddell Yates JV and others is attached hereto as Exhibit 31 [exhibits to Complaint omitted]. 158. On March 28, 2011, with the knowledge and assistance of Julian Marie Breslow, a Declaration was filed in the Breslow Construction Miller Act Lawsuit by Ty McDonough, who declared that he had been an employee of Breslow Construction continuously since it was ?rst formed, which was false. During the performance of the masonry subcontract work, however, McDonough wrote numerous emails which he signed on behalf of, and as an employee of, Pompano Masonry. The McDonough Declaration contains other false statements in regard to the Breslow Construction subcontract, including the false statement 46 Case Document 190 Filed 07/17/17 Page 50 of 84 that Breslow Construction had submitted a bid for the Wallace Creek Phase I masonry subcontract work, and that Breslow Construction entered into the subcontract on or about March 2, 2009 (again, well before Breslow Construction was formed). A true copy of Ty McDonough?s March 28, 2011 Declaration is attached hereto as Exhibit 32. 159. The Caddell Yates JV Defendants failed to deny the material allegations regarding when in fact Breslow Construction had ?entered? into the masonry subcontract and when work had begun. In fact, the Caddell Yates JV Defendants pleaded that ?m [emphasis added] started work on Building foundations on May 8, 2009,? (Caddell Construction and Yates Construction Answer, 1140), even though they knew this to be utterly false. Breslow Construction was not even formed until late June 2009. A true copy of the Caddell Construction and Yates Construction Answer to Breslow Construction?s Miller Act Claim is attached hereto as Exhibit 33. 160. Neither Breslow Construction, nor Caddell Construction and Yates Construction, spoke the truth in their pleadings with regard to the fact that Breslow Construction was a sham, af?liated company formed only for the purpose of claiming ful?llment of Caddell Yates Subcontracting Plan requirements, and that Pompano Masonry had been the de facto masonry subcontractor and performed the work. 161. On May 25, 2011, the Breslow Construction Miller Act Lawsuit against Caddell Construction and Yates Construction was stayed and the parties were ordered to arbitrate their dispute. 162. On December 9, 2013, the arbitration panel denied Breslow Construction?s claims and awarded Caddell Yates JV approximately $1.3 million (Caddell Yates JV had asserted claims 47 Case Document 190 Filed 07/17/17 Page 51 of 84 against Breslow Construction as well). A true copy of the Award of the Arbitrators is attached hereto as Exhibit 34. 163. The arbitration panel denied Breslow Construction?s claims in part because there was ?no showing that Breslow suffered any damages in the project.? Exhibit 34 at 3. Rather, ?[t]he evidence Breslow. . . presented [was] based on the cost records of Pompano.? Li. 164. The evident reason that Breslow Construction could not present evidence of any damages, was because Breslow Construction did nothing on the project other than having existed on paper as the sham WOSB for Caddell Yates JV. 165. The arbitration award further noted that ?Pompano Masonry was the original masonry subcontractor? but that the written subcontract agreement between Pompano Masonry and Caddell Yates JV was only executed by Pompano Masonry and not Caddell Yates JV. at 3 n. 7. 166. In fact, both Pompano Masonry and Caddell Yates JV did execute the original masonry subcontract under date of March 2, 2009. 1111 93?94, m, and Exhibit 6. 167. Upon information and belief, Caddell Yates JV and Breslow Construction, in a further attempt to cover up their fraudulent scheme, falsely represented to the arbitration panel that the Pompano Masonry subcontract had not been executed by Caddell Yates JV in order to mislead the panel into thinking that Caddell Yates JV never had a formal subcontract with Pompano Masonry and that, instead, Breslow Construction was the only contracted subcontractor and that it began work in early May 2009, despite the fact that Breslow Construction had not even been in existence at that time. 168. The arbitration award further states that was presented in the evidence that Pompano then became a subcontractor of Breslow [after the Breslow Construction subcontract was 48 Case Document 190 Filed 07/17/17 Page 52 of 84 executed], but the evidence indicated that Pompano and Breslow were essentially one and the same.? Exhibit 34 at 3 n. 7 (emphasis added). 169. Thus, even though the parties to the arbitration had deceived the panel about the execution of the original subcontract, the arbitration panel nonetheless recognized that Breslow Construction was merely a sham company. 6. Defendant Julian Marie Breslow and Valdini Associates Plead Guilty to Federal Crimes for Their Conduct and Pompano Masonry and Breslow Construction Are Excluded from Government Work 170. On February 11, 2014, Julian Marie Breslow was criminally charged in a twenty?count federal indictment related to her conduct with Breslow Construction on the Wallace Creek Phase I project and other government projects. Speci?cally, with regard to Wallace Creek Phase 1, Julian Marie Breslow was charged with a violation of 18 U.S.C. 1031 and 2 (?Maj or Fraud Relating to the Wallace Creek Phase I Subcontract?), multiple Violations of 18 U.S.C. 1001 and 2 (?False Statements to the United States?), and multiple violations of 18 U.S.C. 1343 and 2 (?Wire Fraud?). On September 17, 2014, Julian Marie Breslow pleaded guilty to one count of ?False Statements to the United States? for her conduct on the Wallace Creek Phase 1 project. 171. On February 14, 2014, Valdini Associates was criminally charged by Criminal Information with a violation of 18 U.S.C. 1031 (?Fraud Relating to Major Contract with United States?) for its conduct in the creation of Breslow Construction and its use on the Wallace Creek Phase I project. On May 22, 2014, Valdini Associates pleaded guilty to that charge. 49 Case Document 190 Filed 07/17/17 Page 53 of 84 172. On July 28, 2014, as a consequence of their conduct described herein, Pompano Masonry, Breslow Construction, and Julian Marie Breslow were inde?nitely excluded from procurement and non?procurement Government programs by the US. Navy. 7. Caddell Yates JV Made False Statements and Submitted False Claims for Payment in Connection with the Wallace Creek Phase I Project a. Caddell Yates JV Did Not Comply in Good Faith with its Subcontracting Plan on the Wallace Creek Phase I Project 173. At all times relevant, Breslow Construction was controlled by Pompano Masonry and Julian Marie Breslow. At all times relevant, Breslow Construction was not, and could not qualify to be, a ?small business? for purposes of Subcontracting Plan compliance because of the ?Af?liation Rules,? including during the duration of performance of the Wallace Creek Phase I. 174. Caddell Yates JV conspired with Pompano Masonry, Breslow Construction, and Julian Marie Breslow to create Breslow Construction. Then, knowing that Breslow Construction was controlled by Pompano Masonry and Julian Marie Breslow, and therefore af?liated with Pompano Masonry, Caddell Yates JV subcontracted with Breslow Construction in order to create the illusion of compliance with its Subcontracting Plan goals for Wallace Creek Phase I. 175. The scheme employed by Caddell Yates JV conspiring to create a sham small business and then knowingly using that af?liated subcontractor that could not qualify as a small business in order to pass through the work to a large business and, thereby, to falsely certify compliance with Subcontracting Plan goals was not good faith compliance with its Subcontracting Plan or FAR 52.219-8 under the relevant regulations and statutes. 50 Case Document 190 Filed 07/17/17 Page 54 of 84 176. Caddell Yates JV clearly had knowledge of the af?liation between Pompano Masonry and Breslow Construction, and, thus, that Breslow Construction could not qualify as a small business. However, even without such knowledge, its conduct still would not amount to good faith compliance under the relevant regulations and statutes because Caddell Yates JV used Breslow Construction as a mere ?pass-through? and claimed the value of the Breslow Construction subcontract toward its Subcontracting Plan goals. 177. Knowingly using small businesses as mere ?pass-throughs? is not a legitimate means of complying with a Subcontracting Plan and is not good faith compliance with a Subcontracting Plan or FAR 52.219-8 under the relevant regulations and statutes. As stated by the SBA, a pass-through arrangement ?does n_0t comport with the Spirit or intent of the subcontractingprogram.? SBLO Handbook, supra, app. at 9. (emphasis added). b. Caddell Yates JV Made False Certi?cations in Progress Payment Requests 178. The mandatory certi?cations made in connection with Caddell Yates progress payment requests for Wallace Creek Phase I between June 2009 and the conclusion of the project were false. 179. When submitting its payment requests, Caddell Yates JV expressly certi?ed that l] he amounts requested [were] only for performance in accordance with the Specifications, terms, and conditions of the contract . . . (emphasis added). The amounts requested by Caddell Yates JV were not for performance in accordance with the terms and conditions of the contract because Caddell Yates JV was acting in direct contradiction of its material contractual obligation to comply in good faith with its Subcontracting Plan and FAR 52.219- 8. 51 Case Document 190 Filed 07/17/17 Page 55 of 84 180. Instead of complying in good faith, Caddell Yates JV was subverting the purposes and goals of its Subcontracting Plan and the Small Business Subcontracting Program by conspiring with Pompano Masonry, Breslow Construction, and Julian Marie Breslow to use a Pompano Masonry?af?liated company and therefore an unquali?ed small business, Breslow Construction to feign compliance with Caddell Yates Subcontracting Plan goals. In other words, even while certifying that the payments requested were ?for performance in accordance with the . . . terms[] and conditions of the contract?, Caddell Yates JV was in fact performing in a way that was in direct and material breach of its contract with the Government. 181. In addition, and in the alternative, Caddell Yates JV impliedly certi?ed that it was complying in good faith with its Subcontracting Plan and FAR 52.219-8, a material obligation of the contract. Caddell Yates JV knew that it was bound to this material contractual obligation. However, as noted above, Caddell Yates was not complying in good faith with its Subcontracting Plan and FAR 52.219-8 and, thus, was in material breach of its contract with the Government. 182. Had Caddell Yates JV not made the aforementioned certifications, Caddell Yates JV would not have been paid. FAR Had the Government known the truth that Caddell Yates JV was not complying in good faith with its Subcontracting Plan and FAR 52.219?8 the Government would have terminated the contract for default, imposed liquidated damages, and/ or reduced or suspended payments. 52 Case Document 190 Filed 07/17/17 Page 56 of 84 c. Caddell Yates JV Made False Statements in Subcontracting Plan Reports 183. Caddell Yates JV made multiple false statements in the Individual Subcontracting Reports (lSRs) that it submitted to the Government during the performance of the Wallace Creek Phase 1 project. 184. Caddell Yates March 26, 2010 ISR for the Wallace Creek Phase 1 project reported Caddell Yates progress toward meeting its Subcontracting Plan goals from the inception of the contract through September 30, 2009. The ISR lists Diana McGraw as the contact person and Cleet McHenry as the of?cial responsible for administering the Subcontracting Plan. 185. In the March 26, 2010, ISR, Caddell Yates JV represented that it had awarded 77.5% of the total subcontract awards to small business concerns, generally, and 32.1% to WOSBs. These representations were false because those percentages included the contract awarded to Breslow Construction, which did not qualify as a small business, due to its af?liation with Pompano Masonry, for purposes of meeting Caddell Yates Subcontracting Plan goals. Therefore, in actuality, Caddell Yates JV was not meeting its Subcontracting Plan goals, and Caddell Yates JV was not using good faith efforts to do so because it was knowingly using a small business that was af?liated with a large business to falsely represent compliance with its subcontracting goals. Had the Government known the truth, the Government would have terminated the contract for default, imposed liquidated damages, and/or reduced or suspended payments. A true copy of Caddell Yates March 26, 2010 ISR is attached hereto as Exhibit 35. 53 Case Document 190 Filed 07/17/17 Page 57 of 84 186. Caddell Yates JV continued to fraudulently claim the Breslow Construction subcontract toward its Subcontracting Plan goals in each of its next eight 187. In its April 30, 2010 ISR (reporting progress from the inception of the contract through March 31, 2010), Caddell Yates JV falsely represented that it had awarded 78.6% of the total subcontract awards to small business concerns, generally, and 29.7% to WOSBS. 188. In its October 29, 2010 ISR (reporting progress from the inception of the contract through September 30, 2010), Caddell Yates JV falsely represented that it had awarded 78.2% of the total subcontract awards to small business concerns, generally, and 28.7% to WOSBS. 189. In its April 29, 2011 ISR (reporting progress from the inception of the contract through March 31, 2011), Caddell Yates JV falsely represented that it had awarded 77.1% of the total subcontract awards to small business concerns, generally, and 29.1% to WOSBS. 190. In its October 30, 2011 ISR (reporting progress from the inception of the contract through March 31, 2011), Caddell Yates JV falsely represented that it had awarded 78.8% of the total subcontract awards to small business concerns, generally, and 28.3% to WOSBS. 191. In its ISR submitted in April 2012 (reporting progress from the inception of the contract through March 31, 2012), Caddell Yates JV falsely represented that it had awarded 78.6% of the total subcontract awards to small business concerns, generally, and 27.7% to WOSBs. 192. In its ISR submitted in October 2012 (reporting progress from the inception of the contract through September 30, 2012), Caddell Yates JV falsely represented that it had awarded 77.8% of the total subcontract awards to small business concerns, generally, and 24.9% to WOSBs. 193. In its ISR submitted in April 2013 (reporting progress from the inception of the contract 16 Like the March 26, 2010 ISR, all of these ISRs list Diana McGraw as the contact person for Caddell Yates JV and Cleet McHenry as the Subcontracting Plan Administrator. 54 Case Document 190 Filed 07/17/17 Page 58 of 84 through March 31, 2013), Caddell Yates JV again falsely represented that it had awarded 77.8% of the total subcontract awards to small business concerns, generally, and 24.9% to WOSBs. 194. In its ISR submitted in October 2013 (reporting progress from the inception of the contract through September 30, 2013), Caddell Yates JV falsely represented that it had awarded 77.9% of the total subcontract awards to small business concerns, generally, and 25.3% to WOSBs. True copies of Caddell Yates ISRs submitted from April 2010 to October 2013 are attached hereto as Exhibit 36. 195. The statements made in the aforementioned ISRs, in which Caddell Yates JV claimed the Breslow Construction subcontract toward ful?llment of its Subcontracting Plan goals were false because Breslow Construction did not qualify as a small business. Additionally, those statements were also false because the dollars and percentages were not actual subcontracting achievements to the purported small business, but rather were merely a pass-through to a large business, Pompano Masonry. 196. Caddell Yates JV submitted its next ISR in April 2014, after having learned that Julian Marie Breslow and Valdini Associates, PA. had been criminally charged for their conduct with regard to Breslow Construction, and after having been made aware of this lawsuit by the Government. The April 2014 ISR reported Caddell Yates Subcontracting Plan progress from the inception of the contract through March 31, 2014. 197. In the April 2014 ISR, for the ?rst time, and despite its prior knowledge that Breslow Construction was af?liated with Pompano Masonry, Caddell Yates JV removed Breslow Construction from its Subcontracting Plan progress, representing that it had awarded 68.1% (short of its goal of 77%) to small business concerns generally and 16.3% to WOSBs. In the 55 Case Document 190 Filed 07/17/17 Page 59 of 84 ?Remarks? section of the ISR, Caddell Yates JV stated merely: ?Breslow Construction has been reclassi?ed as a large business based upon information obtained from public ?lings since the last reporting period.? The ?public ?lings? referenced in the statement are the Julian Marie Breslow and Valdini Associates criminal ?lings. Caddell Yates statement asserts that, only since the last reporting period, did it learn that Breslow Construction did not qualify as a small business through those public ?lings. A true copy of Caddell Yates April 2014 ISR is attached hereto as Exhibit 37. 198. Caddell Yates foregoing assertions in the April 2014 ISR were false. Caddell Yates JV had known for years (since June 2009) that Breslow Construction did not qualify as a small business for purposes of compliance with its Subcontracting Plan. Caddell Yates JV, in fact, had initiated the plan that led to the formation of Breslow Construction and then it substituted Breslow Construction for Pompano Masonry a large business on the masonry subcontract, including having backdated the purported start date to a date prior to when Breslow Construction even existed. 199. The statement by Caddell Yates JV in the ?Remarks? section of its April 2014 ISR was merely a belated, self-serving attempt by Caddell Construction JV to cover up its fraud and material breach of its contract with the Government, after having learned of this lawsuit and of the criminal charges against Julian Marie Breslow and Valdini Associates. 200. Rather than admitting to the true reasons why it had fallen short of its goals as compared to the previous ISR (which would have underscored the fact that Caddell Yates JV was defrauding the Government and plainly was not complying in good faith with its Subcontracting Plan requirements), Caddell Yates JV continued to deceive the Government by putting forth another false statement of facts to mislead the Government further. By this 56 Case Document 190 Filed 07/17/17 Page 60 of 84 point, Caddell Yates JV had engaged in multiple violations on numerous occasions of the False Claims Act. Despite its obligation to report those violations, Caddell Yates JV continued to try and cover up its fraudulent conduct. Had the Government known the truth, it would have terminated the contract with Caddell Yates JV, imposed liquidated damages, and/or suspended or reduced payments. 201. Caddell Yates JV made similar false statements of compliance in the Summary Subcontracting Reports (SSRs) that it submitted during this time period as well. D. Defendants? Fraudulent Scheme to Create Sham Small Businesses to Falsely Represent Compliance with Subcontracting Plan Goals on the Wallace Creek Phase I Project 202. As set forth above, once the Government awarded Caddell Yates JV the Wallace Creek Phase I contract on or about September 15, 2008, Caddell Yates August 11, 2008 Small Business Subcontracting Plan was incorporated into and made a material part of the Wallace Creek Phase 1 Contract between Caddell Yates JV and the Government. Within the Small Business Subcontracting Plan, Caddell Yates JV represented that it would subcontract 63% of the entire contract amount and that, of this, it would subcontract 77% to small businesses (which included several subcategories of small and/or disadvantaged businesses). 203. In the latter part of 2008 (after the contract award) and into the early part of 2009, Caddell Yates JV was in the process of soliciting and evaluating bids for the various trade subcontracts. 204. As of approximately February 24, 2009, Caddell Yates JV had already selected several large businesses it intended to use for the concrete, masonry, site, electrical, and mechanical subcontracts. When Joseph Yates, of Yates Construction (on behalf of the Caddell Yates JV) gave instructions about sending out certain Invitation to Bid letters, he informed Yates 57 Case Document 190 Filed 07/17/17 Page 61 of 84 personnel not to seek bidders for those trades, as those subcontractors (which were large businesses) already had been chosen. A true copy of Joseph Yates?s February 24, 2009 email is attached hereto as Exhibit 38. 205. For much of the Small Business Subcontracting Plan requirements, rather than to actually utilize small businesses in the performance of various subcontracts, Caddell Yates JV instead chose to ?place? several of its large business subcontracts with small business ?pass throughs? in return for a small fee. 206. On information and belief, as of early April 2009, Caddell Yates JV had included within its project budget for Wallace Creek Phase I the sum of $750,000, which was to be used to fund performance of its Small Business Subcontracting Plan requirements, including the payment of ?pass through? charges. 207. For example, on April 6, 2009, Dick Fitzgibbons, Yates? Vice President of Estimating sent an email to several persons at Yates stating in part that ?some of these [subcontracts] will have to go our under First Construction, not Caddell/Yates. It may be dif?cult to pull this later and send it out under a minority?s letterhead. Also, Ellis will go out under the erector?s name, Ogden Steel, as they are a service owned company. I will send you the info on Ogden.? Thus, at this point, Caddell Yates JV was already implementing its plan to route large business subcontracts through ?pass through? entities. A true copy of Dick Fitzgibbons?s April 6, 2009 email is attached hereto as Exhibit 39. 208. On April 17, 2009, Clint Bledsoe (Yates), sent an email to various members of the Caddell Yates JV team, mostly being Yates personnel, an email with subject line Subcontractor Recap.? This email identi?ed several large business subcontracts as candidates for placement with small business ?pass through? entities. Dick Fitzgibbons 58 Case Document 190 Filed 07/17/17 Page 62 of 84 responded to the email by stating ?Clint, hold up on Bailey for now. I have found out that they are not a WOSB, and may not be certi?ed as a DSB. I should know if we are going to use them at all by Monday.? A true copy of the April 17, 2009 email chain is attached hereto as Exhibit 40. 209. As of late April 2009, Caddell Yates JV was projecting that it would be substantially short of its Small Business Subcontracting Plan requirements. On April 27, 2009, Dick Fitzgibbons sent an email to Mark Smith, Cleet McHenry, Clint Bledsoe, Richard Gurner, and Wes Turner (who were all Yates employees involved with small business compliance on the Wallace Creek Phase 1 project), stating in part: ?Guys, here is my blueprint for reaching the 77% small business goal.? Fitzgibbons then identi?ed seven large business subcontracts that already had been awarded, totaling in excess of $75 million, and wrote up his plan for running all or parts of those large business subcontracts through small business. A true copy of Dick Fitzgibbons?s April 27, 2009 email is attached hereto as Exhibit 41. 210. Also on April 27 2009, Clint Bledsoe circulated a draft subcontract for First Construction among members of the Caddell Yates JV team, stating: ?Please review and comment on the attached draft subcontract for First Construction. They are the small business company that we will run cabinetry, joint sealants, light gage framing, and doors, and hardware material only.? First Construction is a very small general construction business based in Edwards, Mississippi, which MBE status and which has been affiliated with Yates Construction in a mentor/mentee relationship. Here, First Construction was being contracted as a ?pass through? entity rental of their status) for some $5.3 million in Wallace Creek Phase I subcontracts which were in fact to be performed by large businesses. In response to the email, Sid Adams (Caddell) wrote: ?Should we be talking about using subs 59 Case Document 190 Filed 07/17/17 Page 63 of 84 to meet SBA in body of SOW [statement of work] in SC A true copy of the April 27-28, 2009 email chain is attached hereto as Exhibit 42. 211. In fact, when the ?pass through? subcontracts between Caddell Yates JV and First Construction were later ?nalized, and which are dated May 28, 2009, they were broken into four separate subcontracts (for each one of the ?pass throughs?) and the language that offended Sid Adams was removed. 212. By May 28, 2009, Caddell Yates JV had selected Hawk, Inc., of Montgomery, Alabama, as the foodservice equipment subcontractor. Hawk is a large business. On May 28, 2009, Clint Bledsoe sent an email to Rick Stratton of Hawk, forwarding to him a draft of the subcontract. Several members of the Caddell Yates JV team were cc?d on the email both Yates personnel and Caddell personnel. Bledsoe stated, in part, ?We will still need to run this contract through a small business organization.? A true copy of Clint Bledsoe?s May 28, 2009 email is attached hereto as Exhibit 43. 213. The Hawk subcontract for foodservice equipment and installation was ultimately ?passed through? Power Mulch, lnc., a Smith?eld, North Carolina based landscaping and mulch company, in return for a fee equal to 1% of the value of the Hawk contract. Power Mulch had nothing to do with any aspect of the Hawk subcontract other than to invoice for, and collect, a fee of 1% for the rental of its status. 214. In early June 2009, Clint Bledsoe negotiated with Eddie Foy (one of the owners of Power Mulch) to act as a ?pass through? for the bridge and foodservice equipment contracts, in return for a percentage fee of Bledsoe sent and email to Foy dated June 5, 2009, pressing for a response and asking Foy to send Bledsoe a copy of the Power Mulch company logo, so that it could be embedded into the subcontracts that Caddell Yates JV needed to get 60 Case Document 190 Filed 07/17/17 Page 64 of 84 signed on the ?passed through? contracts with the large businesses, S.T. Wooten, and Hawk. A true copy of the June 5, 2009 email chain is attached hereto as Exhibit 44. 215. On June 5, 2009, Eddie Foy of Power Mulch responded to Bledsoe, accepting the offer to act as a ?pass through? for the rental of Power Mulch?s status. A true copy of Edwin Foy?s June 5, 2009 email is attached hereto as Exhibit 45. 216. By June 11, 2009, Caddell Yates JV had somewhat lowered the shortfall under its Small Business Subcontracting Plan requirements. On June 11, 2009, Fitzgibbons wrote an email to his team, then stating that they were ?in the 46% to 47% range? of being able to meet the plan?s 77% small business threshold. On that date, Cleet McHenry (Yates) responded by saying that the entire .J . Kirlin subcontract (for mechanical) could be ?passed through? to Bailey Contracting (a small grading and infrastructure business) for a fee of A true copy of the June 11, 2009 email chain is attached hereto as Exhibit 46. Caddell Yates JV made this decision to ?ip the .J . Kirlin contract to Bailey Contracting some 3 1/2 months after the date of the original contract with Kirlin (February 24, 2009). 217. On July 16, 2009, Clint Bledsoe sent to Dick Fitzgibbons an updated small business spreadsheet. It was anticipated, as of that time, that all of Pompano Masonry?s contract would be run through Breslow Construction. A true copy of the transmittal email is attached hereto as Exhibit 47. The spreadsheet shows that the following subcontracts were to be ?passed through? in their entirety to large businesses.17 The large businesses, in each case, performed the entire scope of work: 17 The amounts shown for each subcontract are believed to the accurate amount for which the contracts were originally written. Most of these increased by the end of the project due to change orders. 61 Case Document 190 Filed 07/17/17 Page 65 of 84 ?Pass Through? Large Business Scope Amount Entity Actually Performing Contract First Construction C.H. Edwards Supplier $1,841,629 ABG Waterproo?ng Joint Sealants 691,000 Stark Steel Metal Roof Trusses $1,664,690 Business Solution Precision Walls Metal Studs/ $2,673,344 Drywall McComb Glass Glass/Glazing $2,405,197 Baker Roo?ng S.S. Metal Roo?ng $3,394,920 Power Mulch Hawk Food Service $1,421,379 S.T. Wooten Bridge 858,764 B.R. McMillan Specialties 929,641 Millwork $1,509,406 Bailey Contracting .J . Kirlin Mechanical $27,090,350 Painting Southeastern Interior Flooring Systems $2,664,522 Systems 218. On information and belief, and based in part upon Dick Fitzgibbons? April 6, 2009 email, the contract for structural steel was with Ellis Steel in the approximate amount of $3,028,900. On information and belief, this contract was ?passed through? Ogden Steel (or Ogden Construction), which was a 219. One of the small businesses that Caddell Yates JV used as a ?pass through? entity standing in between Caddell Yates JV and its chosen large business subcontractors was Business Solutions, a minority, woman-owned staf?ng company in Knoxville, Tennessee. 62 Case Document 190 Filed 07/17/17 Page 66 of 84 220. Business Solutions acted as the ?pass through? subcontractor on three contracts. (1) Baker Roo?ng; (2) McComb Glass; and (3) Precision Walls, each of which was a large business that would give no bene?t to Caddell Yates JV for compliance with the Small Business Subcontracting Plan if they were direct subcontractors with Caddell Yates JV. 221. For its ?services? as the ?pass through? subcontractor (and so that Caddell Yates JV could claim compliance under the SB, SDB, and WOSB categories), was paid a fee of 2% of the subcontract amounts with Baker Roo?ng, McComb Glass, and Precision Walls. 222. Business Solutions did nothing of any substance and added no value to the contracting process, other than to have ?rented out? its SB, SDB, and WOSB status to Caddell Yates JV. 223. Business Solutions? purported subcontract with Baker Roo?ng (May 18, 2009) was purportedly signed and entered into even before the Caddell Yates Business Solutions subcontract (June 2, 2009). True copies of the May 18, 2009 and June 2, 2009 contracts are attached hereto as Exhibits 48 and 49. 224. So little did Business Solutions actually do in the performance of its ?pass through?/ status rental role, that it did not even deliver the ostensible subcontracts between itself and either Baker Roo?ng or Precision Walls. The transmittal letters for each of those subcontracts (from Business Solutions to Baker Roo?ng and to Precision Walls) were in fact sent by Tom Newton, who was Yates? Subcontract Administrator, were printed on letterhead as if they came from Business Solutions. True copies of the transmittal letters are attached hereto as Exhibits 50 and 51. 225. As with all payments made on the ?pass through? subcontracts (with the exception of payments made to Breslow Construction, since Pompano and Breslow were acknowledged 63 Case Document 190 Filed 07/17/17 Page 67 of 84 by Caddell Yates JV to be ?one in the same?)18, all payments on the Business Solutions? ?pass through? contracts were joint checked to Business Solutions and either Baker Roo?ng, McComb Glass, or Precision Walls as the case may be. A true copy of the check request breakdown for the Business Solutions/McComb Glass payment for 7/ 16/2010? 8/15/2010 is attached hereto as Exhibit 52. This check shows that for such payments, Business Solutions received a 2% fee for the ?pass through? rental of its status. For each such payment request, there was a single jointly payable check to the ?pass through? entity and the large business entity for the amount due the large business entity. This check was ?rst sent to the ?pass through? entity such as Business Solutions, which endorsed the check and returned it to Caddell Yates JV, which would then forward along the check to the large business that actually performed the work. A second check (for Business Solutions in the amount of would then be sent to the ?pass through? entity for its services in renting out its SB or other status. 226. Both Baker Roo?ng and Precision Walls wound up in federal Miller Act litigation with Caddell Yates JV over unpaid invoices owed. Business Solutions was named a nominal defendant in each of these cases. However, even though Business Solutions was supposedly acting as the subcontractor on said subcontracts to Caddell Yates JV, Business Solutions did not have any payment or performance bonds, and the litigation was conducted entirely between Caddell Yates JV and Baker Roo?ng and Precision Walls, and as a mere ?pass through? entity, Business Solutions did not even participate in the litigation. Replete throughout expert reports ?led by both Baker Roo?ng and Precision Walls 18 See Lisa Stokes (Yates) email to Amy Smith (Yates) dated October 19, 2009, which Stokes reports her conversation with Clint Bledsoe (Yates) in which Bledsoe said that ?Breslow and Pompano are one company in the same? A true copy of this email is attached hereto as Exhibit 53 . 64 Case Document 190 Filed 07/17/17 Page 68 of 84 are statements evidencing that the Business Solutions subcontracts were nothing more than shams: ?[It is] Baker?s contention that CY and entered into their Subcontract with the intentions by CY and that would NOT perform its de?ned duties and responsibilities in the Subcontract, but instead would function only as a straw man to satisfy requirements to meet its minority subcontracting goals.? A true copy of the Baker Roofing Preliminary Impact Analysis is attached hereto as Exhibit 54. ?Moreover, Caddell Yates established as a ?gurehead position only, regularly and intentionally directing the work of PWI in Violation of agreement with A true copy of the Precision Walls Preliminary Impact Analysis is attached hereto as Exhibit 55. 227. Acting in the role of ?pass through? subcontractor, on several subcontracts with large businesses (foodservice equipment and installation, bridge, specialties, and woodwork), Power Mulch did not really know what it was doing or what to do, since the actual performance of the scope of work was by the large business holding the subcontract, and all real management of the contract was by Caddell Yates JV. On August 3, 2009, Clint Bledsoe wrote an email to Eddie Foy instructing that Caddell Yates JV still needed to get an insurance certi?cate, as well as the signed bond from S.T. Wooten (for the bridge contract). Foy responded by stating that he did not know what he was supposed to do with the bond form, and looked to Bledsoe (who was really running and managing the contract), for direction. A true copy of the August 3-5, 2009 email chain is attached hereto as Exhibit 56. 228. As further evidence that the Power Mulch ?pass through? arrangement was just a sham, in August 2009, Joey Kroll (S.T. Wooten) exchanged emails with Clint Bledsoe (Yates) 65 Case Document 190 Filed 07/17/17 Page 69 of 84 about pay applications. No one from Power Mulch was even copied on the emails. However, on August 13, 2009, Clint Bledsoe instructed Tom Newton (Yates Subcontract Administrator) to email S.T. Wooten with the pay applications forms ?on Power Mulch?s letter head.? A true copy of the email chain is attached hereto as Exhibit 57. 229. For all ?pass through? contracts, including those passed through Bailey, Breslow, First Construction, Ogden Steel, Power Mulch, and whenever a change order was submitted it was evaluated, negotiated, and accepted or rejected by Caddell Yates JV not by any of the ?pass through? entities who supposedly held these first-tier subcontracts. The ?pass through? entities had no authority at all over the subcontractors or the contracts which they supposedly were performing. For example, on April 6, 2010, Ryan (of B.R. McMillan) send a change order proposal to Clint Bledsoe for approval. He did not send a copy of this to Eddie Foy of Power Mulch (to whom B.R. McMillan was supposedly in contract with). After Bledsoe approved of the change order proposal, Bledsoe instructed Foy to put the proposal on his (Power Mulch?s) letterhead and to ?include your 1% fee.? A true copy of the email chain is attached hereto as Exhibit 58. 230. For all ?pass through? contracts, including those passed through Bailey, Breslow, First Construction, Ogden Steel, Power Mulch, and whenever a change order was submitted and processed, the ?pass throug entity was instructed to add its ?pass throug fee [typically 1% to before the change order request was sent up the chain for approval and payment. As an example, on September 30, 2009, Clint Bledsoe instructed Eddie oy to add 1% to the change order proposal from Hawk. A true copy of the email chain is attached hereto as Exhibit 59. 66 Case Document 190 Filed 07/17/17 Page 70 of 84 231. For all ?pass through? contracts, including those passed through Bailey, Breslow, First Construction, Ogden Steel, Power Mulch, and all pay applications had to ?rst be submitted to and approved by Caddell Yates JV. Only then, after they were so approved, were they placed onto the letterhead or transmittal documents of the ?pass through? entities and sent to Caddell Yates JV to be paid by joint check, with another check in the amount of 1% to 2% (of the performing large business?s claimed amount) paid to the ?pass through.? As an example, on October 12, 2010, Dan Hawk (of Hawk, Inc.) wrote to Clint Bledsoe complaining that Bledsoe was supposed to be approving Hawk?s pay applications within two or three days of submittal, and the after such approval Hawk was to forward hard copies to Power Mulch (for further delivery on Power Mulch letterhead to Caddell Yates JV). In the email, Hawk is complaining that Bledsoe had not so approved the September pay application in thirty days, and was telling Bledsoe that Hawk needed more communication from Bledsoe, as well as payment checks. A true copy of the October 12, 2010 email chain is attached hereto as Exhibit 60. 232. Caddell Yates JV itself has acknowledged that it used ?pass throughs? for much of its Small Business Subcontracting Plan compliance. In August 2010, its assessed a deductive change order on most of its then-subcontractors as re?ected in an August 27, 2010 email from Clint Bledsoe to Cindy Shepherd (of Yates), with a cc to Cleet McHenry. The email states in part as follows: ?Scope: The following deductive change order is to cover Able Body cost associated with ongoing clean up and safety related tasks project wide. The deductive change order covers cost from March 2010 to July 2010.? On the section of the email that sets forth amounts to be deducted from the various contracts, for subcontracts using First Construction, and Power Mulch, Bledsoe?s entry notes that for each ?this is 67 Case Document 190 Filed 07/17/17 Page 71 of 84 a pass through. Do not charge [MPi/First/Power Mulch]. In fact, however, in addition to those three ?pass through? entities, the subcontracts with Bailey, Ogden Steel, and were also ?pass throughs.? A true copy of Clint Bledsoe?s August 27, 2010 email is attached hereto as Exhibit 61. 233. Based on Caddell Yates Application for Payment #38, dated October 25, 2012, the ?Percentage of performance complete? at that time was 99.997%, and the total value of contract (task order through last change) was $194,5 85 ,480.97. 234. Truthful, good faith compliance with the Small Business Subcontracting Plan was a material part of the contract between the United States and Caddell Yates JV for the Wallace Creek Phase 1 project. All of the foregoing ?pass through? subcontracts, under which Caddell Yates JV subcontracted at the ?rst tier level with small businesses which then further subcontracted the actual performance of the full scope of work to large businesses, and were paid a percentage fee ranging from between 1% to 2% were concealed from the United States in a manner that was done knowingly, intentionally, willfully, and in bad faith. As a result of Caddell Yates conduct, the laws and policies of the United States under 15 U.S.C. 637 and FAR 52.219-8 were subverted, and the United States has been damaged. 235. Caddell Yates claims for payment under FAR were therefore false, because when claims for payment were submitted, Caddell Yates JV was not performing in accordance with the specifications, terms, and conditions of the contract, and the truth or falsity of these certi?cations was material to payment by the United States. 236. Caddell Yates JV also made false certifications and submitted false records to the United States in its Individual Subcontracting Reports (ISRs) and Summary Subcontracting Reports (SSRs), because those records measurably and materially underreport the actual dollars 68 Case Document 190 Filed 07/17/17 Page 72 of 84 expended with small business concerns due to Caddell Yates intentional, bad faith ?sidestepping? of compliance with the accepted Small Business Subcontracting Plan requirements. VII. ACTIONABLE CONDUCT BY DEF ENDANTS UNDER THE FALSE CLAIMS 237. This is an action to recover damages and civil penalties on behalf of the United States and Relator Howard arising from the false and/or fraudulent statements, claims, and acts by Defendants made in violation of the False Claims Act, 31 U.S.C. 3729?3732. 238. Based on these relevant FCA provisions, Relator Howard, on behalf of the United States Government, seeks through this action to recover damages and civil penalties arising from Defendants? submission and/or causation of the submission of false claims to the federal government. Relator Howard believes that the United States has suffered signi?cant damages as a result of the false representations made by Caddell Yates JV in connection with the Wallace Creek Phase I Project, and the false claims for payment submitted thereon. A. The False Claims Act 239. The FCA provides that any person who: (A) knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval; (B) knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim; (C) conspires to defraud the Government by committing a violation of the (G) knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and 69 Case Document 190 Filed 07/17/17 Page 73 of 84 improperly avoids or decreases an obligation to pay or transmit money or property to the Government, is liable to the Government for a civil penalty of not less than $5,500 and not more than $11,000 for each such claim, plus three times the amount of damages sustained by the Government because of the false or fraudulent claim. 31 U.S.C. 3729(a)(1). 240. The FCA de?nes ?claim? as: (A) mean[ing] any request or demand, Whether under a contract or otherwise, for money or property and whether or not the United States has title to the money or property, that-- is presented to an of?cer, employee, or agent of the United States; or (ii) is made to a contractor, grantee, or other recipient, if the money or property is to be spent or used on the Government's behalf or to advance a Government program or interest, and if the United States Govemment-- (1) provides or has provided any portion of the money or property requested or demanded; or (II) will reimburse such contractor, grantee, or other recipient for any portion of the money or property which is requested or demanded . . . . 241. The FCA allows any persons having knowledge of a false or fraudulent claim against the Government to bring an action in Federal District Court for themselves and for the United States Government and to share in any recovery as authorized by 31 U.S.C. 3730. B. Defendants Submitted False and/or Fraudulent Claims for Payment to the Federal Government and/or Caused Entities to Submit False and/or Fraudulent Claims for Payment 242. Defendants Caddell Construction and Yates Construction, acting together as Caddell Yates JV, and Defendant Julian Marie Breslow, knowingly presented, or caused to be presented, false or fraudulent claims for payment or approval to the Government. 70 Case Document 190 Filed 07/17/17 Page 74 of 84 243. These false or fraudulent claims for payment include, but are not limited to, progress payment requests submitted on the Wallace Creek Phase I project from June 2009 to the conclusion of the project, for which Caddell Yates JV made express and/or implied false certi?cations that it was complying in good faith with its Subcontracting Plan and FAR 52.2 1 9-8. 244. Defendants? conduct and the false statements made or caused to be made, as described herein, were capable of in?uencing the payment decision of the Government. Had Caddell Yates JV not made the aforementioned false certi?cations, it would not have been paid. 245. As a result of Defendants? fraudulent conduct, the Government has suffered signi?cant damages. C. Defendants Made, Used, or Caused to be Made or Used False Records and/0r Statements to Receive Payment 246. Defendants Caddell Construction and Yates Construction, acting together as Caddell Yates JV, and Defendant Julian Marie Breslow, knowingly made, used, or caused to be made or used, false records or statements material to false or fraudulent claims paid or approved by the Government. 247. These material false statements or records include, but are not limited to, materially false express and/or implied certi?cations in support of progress payment requests on the Wallace Creek Phase I Project, submitted from June 2009 to the conclusion of the project. 248. These material false statements or records additionally include, but are not limited to, materially false statements in Caddell Yates V?s Individual Subcontracting Plan Reports (ISRs) on Wallace Creek Phase I, submitted from March 26, 2010, until April 2014. 249. Defendants? conduct and the false statements made or caused to be made, as described herein, were capable of in?uencing the payment decision of the Government. Had Caddell 71 Case Document 190 Filed 07/17/17 Page 75 of 84 Yates JV not made the aforementioned false certi?cations along with its requests for progress payments, it would not have been paid. 250. As a result of Defendants fraudulent conduct, the Government has suffered signi?cant damages. D. Defendants Conspired to Commit Violations of the False Claims Act 251. By virtue of planning, and then implementing, their schemes to use an af?liated, sham small business to ful?ll Subcontracting Plan goals, Defendants Caddell Construction and Yates Construction, acting together as Caddell Yates JV, and Defendant Julian Marie Breslow conspired and confederated among themselves and with others to commit violations of the False Claims Act, 31 U.S.C. 3729, including having conspired and confederated to knowingly present false or fraudulent claims for payment or approval; to knowingly make, use, or cause to be made or used, false records or statements material to false or fraudulent claims; and to knowingly make, use, or cause to be made or used, false records or statements material to an obligation to pay or transmit money or property to the Government, or knowingly conceal or knowingly and improperly avoid or decrease an obligation to pay or transmit money or property to the Government. 252. Defendants took substantial steps in furtherance of that conspiracy by, among other things, utilizing a non-quali?ed, af?liated business to claim compliance with Subcontracting Plan goals and creating false records which concealed the nature of their actions regarding their material contractual subcontracting plan obligations. 253. The United States has suffered substantial damages as a result of the conspiracy described herein. 72 Case Document 190 Filed 07/17/17 Page 76 of 84 E. Defendants Caddell Construction and Yates Construction Concealed and/or Failed to Disclose Their Obligation to Repay the Federal Government in Violation of the Reverse False Claims Provision of the False Claims Act 254. In further consequence of their fraudulent schemes in connection with the utilization of a non-quali?ed, af?liated small business to ful?ll its Subcontracting Plan goals, Defendants Caddell Construction and Yates Construction, acting together as Caddell Yates JV, knowingly made, used, or caused to be made or used, false records or statements material to an obligation to pay or transmit money or property to the Government, or knowingly concealed or knowingly and improperly avoided or decreased an obligation to pay or transmit money or property to the Government. 255. Defendants Caddell Construction and Yates Construction?s false statements or records include, but are not limited to, false statements and representations in Caddell Yates Individual Subcontracting Reports on the Wallace Creek Phase I. 256. In making those materially false statements, as well as material omissions, Defendants Caddell Construction and Yates Construction, acting together as Caddell Yates JV, concealed or improperly avoided their obligation to repay to the United States Government the amounts they had received as a result of their submission of false claims and/or to avoid their obligation to pay liquidated damages, and it was reasonably foreseeable that their statements would enable them to avoid these obligations. 257. By virtue of the false records and/ or statements that Defendants Caddell Construction and Yates Construction made, used, or caused to be made or used, or material omissions by Defendants Caddell Construction and Yates Construction, the United States has suffered substantial monetary damages. 73 Case Document 190 Filed 07/17/17 Page 77 of 84 FIRST CLAIM FOR RELIEF (FALSE CLAIMS 31 3729(a)(1)(A)) 258. The allegations of all paragraphs in this Complaint are incorporated by reference. 259. Defendants Caddell Construction and Yates Construction, acting together as Caddell Yates JV, and by and through their agents, servants, of?cers and employees, knowingly presented, or caused to be presented, to an of?cer or employee of the United States Government, false or fraudulent claims for payment or approval in violation of 31 U.S.C. 3729(a)(1)(A). 260. Defendant Julian Marie Breslow knowingly presented, or caused to be presented, to an of?cer or employee of the United States Government, false or fraudulent claims for payment or approval in violation of 31 U.S.C. 3729(a)(1)(A). 261. The United States Government, unaware of the falsity of the claims for payment presented, or caused to be presented, by Defendants, paid claims that it would not have paid if the truth had been known. 262. As a result of Defendants? conduct, the United States Government has been damaged in an amount to be determined at trial. 263. Additionally, the United States is entitled to penalties of up to $11,000 for each and every false or fraudulent claim made or caused to be made by Defendants. SECOND CLAIM FOR RELIEF (FALSE STATEMENTS 31 3729(a)(1)(B)) 264. The allegations of all paragraphs in this Complaint are incorporated by reference. 265. Defendants Caddell Construction and Yates Construction, acting together as Caddell Yates JV, and by and through their agents, servants, of?cers and employees, knowingly made, used, or caused to be made or used, false records or statements, and omissions, 74 Case Document 190 Filed 07/17/17 Page 78 of 84 material to false or fraudulent claims paid or approved by the Government in violation of 31 U.S.C. 3729(a)(l)(B). 266. Defendant Julian Marie Breslow knowingly made, used, or caused to be made or used, false records or statements, and omissions, material to false or fraudulent claims paid or approved by the Government in violation of 31 U.S.C. 3729(a)(l)(B). 267. The United States Government, unaware of the falsity of the records and/0r statements made, or caused to be made, by Defendants, paid claims that it would not have paid if the truth had been known. 268. As a result of Defendants? conduct, the United States Government has been damaged in an amount to be determined at trial. 269. Additionally, the United States is entitled to penalties of up to $11,000 for each and every false or fraudulent claim paid or approved arising from Defendants? fraudulent conduct as described herein. THIRD CLAIM FOR RELIEF (CIVIL CONSPIRACY TO COMMIT VIOLATIONS OF THE FALSE CLAIMS ACT 31 U.S.C. 3729(a)(l)(C)) 270. The allegations of all paragraphs in this Complaint are incorporated by reference. 271. Defendants Caddell Construction and Yates Construction, acting together as Caddell Yates JV, and Defendant Julian Marie Breslow conspired and confederated amongst themselves and with others to commit violations of the False Claims Act, 31 U.S.C. 3729, including having conspired and confederated to have knowingly presented false or fraudulent claims for payment or approval; having knowingly made, used, or caused to be made or used false records or statements material to false or fraudulent claims; and having knowingly made, used, or caused to be made or used, false records or statements material to an 75 Case Document 190 Filed 07/17/17 Page 79 of 84 obligation to pay or transmit money or property to the Government, or knowingly concealed or knowingly and improperly avoided or decreased an obligation to pay or transmit money or property to the Government. 272. As a result of Defendants? conduct, the United States Government has been damaged in an amount to be determined at trial. 273. Additionally, the United States is entitled to penalties of up to $11,000 for each and every false or fraudulent claim paid or approved arising from Defendants? fraudulent conduct as described herein. FOURTH CLAIM FOR RELIEF (REVERSE FALSE CLAIMS 31 U.S.C. 3729(a)(1)(G)) 274. The allegations of all paragraphs in this Complaint are incorporated by reference. 275. Defendants Caddell Construction and Yates Construction, acting together as Caddell Yates JV, knowingly made, used, or caused to be made or used, false records or statements material to an obligation to pay or transmit money or property to the Government, or knowingly concealed or knowingly and improperly avoided or decreased an obligation to pay or transmit money or property to the Government. 276. Through Defendants Caddell Construction and Yates Construction?s actions of improperly retaining funds to which they were not entitled, the United States has been deprived of the use of these monies and is entitled to recover damages in an amount to be determined at trial. 277. Additionally, the United States is entitled to penalties of up to $11,000 for each and every violation of 31 U.S.C. 3729(a)(1)(G) Defendants Caddell Construction and Yates Construction committed. 76 Case Document 190 Filed 07/17/17 Page 80 of 84 FIFTH CLAIM FOR RELIEF (FALSE CLAIMS ARISING OUT OF VIOLATIONS OF THE ANTI-KICKBACK ACT, 41 U.S.C. 53) 278. The allegations of all paragraphs in this Complaint are incorporated by reference. 279. Defendants Caddell Construction and Yates Construction, acting together as Caddell Yates JV, as prime contractors to the United States Government, illegally and unlawfully offered and then provided kickbacks to Pompano Masonry and/or Breslow Construction in connection with the Wallace Creek Phase 1 project. 280. In its prime contracts with the Government on the aforementioned projects, Defendants Caddell Construction and Yates Construction, acting together as Caddell Yates JV, made false statements that Caddell Yates JV had in place, and was following, effective and reasonable procedures designed to prevent and detect possible violations of the Anti- Kickback Act. Those false statements were material to Caddell Yates claims for payment made during the performance of those contracts. 281. The Anti-Kickback Act expressly states that is illegal for a person to include any kickback in a claim for payment to the Government. Defendants Caddell Construction and Yates Construction, in violation of the Anti-Kickback Act, included, directly or indirectly, the amount of kickbacks in the contract price charged to the Government on the Wallace Creek Phase 1 project. As a result, those claims for payment which included the cost of the kickbacks were false. Had the Government known the truth, those claims would not have been paid. 282. As a result of Defendants Caddell Construction?s and Yates Construction?s conduct, the United States Government has been damaged in an amount to be determined at trial. 77 Case Document 190 Filed 07/17/17 Page 81 of 84 PRAYER FOR RELIEF Relator Howard, on behalf of himself and the United States Government, prays as follows: 1. That for violations of the Federal False Claims Act, 31 U.S.C. 3729, M, this Court enter Judgment against the Defendants, jointly and severally, in an amount equal to three times the amount of damages the United States Government has sustained because of Defendants? actions, plus a civil penalty of $11,000 for each action in violation of 31 U.S.C. 3729, and the costs of this action, with interest, including the costs to the United States Government for its expenses related to this action; That Relator Howard be awarded all costs incurred, including reasonable attorneys? fees; That Relator Howard be awarded an amount that the Court decides is reasonable for collecting the civil penalty and damages in the amount of 30% of the proceeds of the action or the settlement, or the maximum allowed under applicable law; That Relator Howard be awarded all costs of this action, together with all expert witness fees, attorneys? fees, and court costs, as fully as is allowed by law; That a trial by jury be held on all issues; and That the United States Government, and the Relator Howard, receive all relief, both in law and in equity, to which they may reasonably appear entitled. [Signatures follow on next page] 78 Case Document 190 Filed 07/17/17 Page 82 of 84 Respectfully Submitted, OF COUNSEL: Joel Androphy Texas State Bar No. 01254700 Sarah M. Frazier Texas Bar No. 24027320 Rachel L. Grier Texas Bar No. 24055592 Berg Androphy 3704 Travis Street Houston, Texas 77002?9550 Tel.7 1 3-529?5 622 Fax 713-529-3785 Charles H. Rabon, Jr. Charles H. Rabon, Jr. NC. State Bar No. 16800 crabon@usfraudattornevs.eom Daniel J. Finegan NC. State Bar No. 36754 Gregory D. Whitaker NC. State Bar No. 51065 gwhitaker@usfraudattornevs.com Rabon Law Firm, PLLC 225 E. Worthington Avenue, Suite 100 Charlotte, NC 28203 Tel. 704-247-3247 Fax 704-208-4645 James A. Roberts NC. State Bar No. 10495 Lewis Roberts, PLLC i 3700 Glenwood Avenue, Suite 410 Raleigh, NC 27612 Tel. 919-981-0191 Fax 919-981-0199 Matt Abbott Alabama State Bar. No. ABB007 Abbott Law Firm, LLC 2100 Morris Avenue Birmingham, AL 35203 Tel. 205-338-7800 Fax 205-224-5576 Attorneys for Plaz'm?i? 79 Case Document 190 Filed 07/17/17 Page 83 of 84 CERTIFICATE OF SERVICE This is to certify that on this date I served a copy of the Relator?s Second Amended Complaint, which was electronically ?led with the Clerk of Court using the system. The system will send noti?cation of the electronic ?ling to the following individuals: Kearns Davis kdavis@brookspierce.com D. J. O'Brien, dobrien@brookspierce.com Andrew A. Steinberg andrew.steinberg@usdoi.gov Nathan Andrew Huff nathan.huff@phelps.com Frank W. Trapp frank.trapp@phelps.com A hard copy was also mailed Via USPS. to the following Pro Se Defendant: Julian Marie Breslow 91 Compass Lane Fort Lauderdale, Florida 33308 This the 17th day of July, 2017. Charles H. Rabon, Jr. Charles H. Rabon, Jr. 80 Case Document 190 Filed 07/17/17 Page 84 of 84