Luke Hillier, the majority owner and former Chief Executive Officer of Virginia-based defense contractor ADS, Inc., has agreed to pay the United States $20 million to settle allegations that he violated the False Claims Act by fraudulently obtaining federal set-aside contracts reserved for small businesses that his company was ineligible to receive.

In order to qualify as a small business, companies must satisfy defined eligibility criteria, including requirements concerning size, ownership, and operational control. The government alleged that Hillier caused ADS to falsely represent that it qualified as a small business concern when it failed to do so, including due to its alleged affiliations with a number of other entities. The United States alleged that, as a result of Hillier’s representations, his company was awarded numerous small business set-aside contracts for which it was ineligible.

The government previously resolved related claims against ADS for $16 million, and Charles Salle, the former general counsel of ADS, has agreed to pay $225,000 to resolve claims arising from his role in the alleged scheme. The government has also obtained recoveries from other related entities that were involved in the alleged fraudulent scheme. The combined settlements, totaling more than $36 million, rank as the largest False Claims Act recovery based on allegations of small business contracting fraud.

“The settlements in this matter demonstrate the excellent results stemming from the joint efforts of federal agencies, including the Small Business Administration, working with the Department of Justice in responding to allegations of fraud perpetrated by participants in SBA’s procurement programs,” said SBA General Counsel Christopher M. Pilkerton.

“When individuals knowingly make misrepresentations to gain access to federal contracts set aside for small businesses, they will be held accountable,” said Inspector General Hannibal “Mike” Ware. “These settlements send a strong message that allegations of wrongdoing will find their way into the open and will be investigated. I want to thank the Department of Justice and our law enforcement partners for their support and dedication in this case.”   back...