Fort Drum contractors plead guilty to wire fraud conspiracy and pay over $750,000 to resolve liability under misrepresentation law | USAO-NDNY

SYRACUSE, NEW YORK – Sean O’Sullivan, 59, of Sackets Harbor, New York, and David Rose, 58, of Newport News, Virginia, pleaded guilty to conspiracy to commit wire fraud for their role in a fraudulent scheme to obtain government construction contracts reserved for businesses owned and operated by disabled veterans. O’Sullivan, Rose and their companies also agreed to pay a total of $758,526.68 to the United States to resolve their civil liability for submitting false claims to the federal government.

The announcement was made by US attorney Carla B. Freedman; Patrick J. Hegarty, Special Agent in Charge, Office of the Inspector General of Defense, Defense Criminal Investigative Service; Larry S. Moreland, Special Agent in Charge, U.S. Army Criminal Investigations Division, Mid-Atlantic Fraud Field Office; Joseph Dattoria, Special Agent for General Services Administration, Office of the Inspector General (GSA-OIG); Amaleka McCall-Brathwaite, Special Agent in Charge, US Small Business Administration, Office of Inspector General, Eastern Region (SBA-OIG); and Joseph Harris, Special Agent in Charge, Department of Transportation Office of Inspector General, Northeast Region (DOT-OIG).

Federal government agencies offer “set aside” construction contracts to small businesses owned by disabled veterans (“SDVOSB”), which must meet certain criteria, including that a military veteran with a disability rating incurred at the military service suite must own the majority of the business and personally manage and control its day-to-day business operations.

Rose and O’Sullivan jointly owned Sierra Delta Contracting, LLC, a construction company. Although Rose is a disabled military veteran, O’Sullivan is not. O’Sullivan certified to federal agencies that Sierra Delta was an SDVOSB, misrepresenting that Rose personally managed and controlled the day-to-day business operations of Sierra Delta. This certification was bogus because O’Sullivan, not Rose, filled those roles. Rose lived in Virginia, where he had a full-time job, unrelated to Sierra Delta, and O’Sullivan ran the business himself in Jefferson County, New York, with little input from Rose.

Sierra Delta bid on and received several Army construction contracts at Fort Drum, New York, and a U.S. Department of Transportation construction contract. All contracts were 100% reserved for SDVOSB. These contracts were obtained fraudulently because Sierra Delta was not an SDVOSB.

O’Sullivan arranged for Sierra Delta to hire SOS Inc. – O’Sullivan’s own construction company – as the main subcontractor for the set-aside contracts, allowing O’Sullivan to retain the majority of the profits generated by the contracts. O’Sullivan admitted to receiving $345,271.34 in profits from the scheme. Rose admitted to receiving $33,992 from her participation in the scheme.

Government agencies challenged Sierra Delta’s SDVOSB status and questioned whether Rose ran the business on a day-to-day basis. In response, Rose falsely claimed that he “controls[led] the day-to-day and long-term operations of Sierra Delta Contracting LLC”, that he maintained Sierra Delta’s “main office” in Virginia, that he worked on Sierra Delta business 25 hours a week, and that O’Sullivan devoted much less time in Sierra Delta. Rose knew these statements were false.

O’Sullivan, Sierra Delta Contracting LLC and SOS Inc. will pay $690,542.68, and Rose will pay $67,984 to the federal government as part of the resolution of criminal and civil allegations.

O’Sullivan is scheduled to be sentenced May 11, 2022 and Rose is scheduled to be sentenced July 20, 2022. The charges against O’Sullivan and Rose carry a maximum sentence of 20 years in prison, a fine of up to to $250,000 and a period of supervised release of up to 3 years. A defendant’s sentence is imposed by a judge based on the particular law the defendant is accused of breaking, US sentencing guidelines, and other factors.

In a related case, O’Sullivan also pleaded guilty to conspiring to commit an offense against the United States by offering and giving gratuities to Fort Drum contracting officer Cindy McAleese. In pleading guilty, O’Sullivan agreed that he promised and provided things of value to McAleese, including sports tickets, meals, sexual encounters, time and attention, for and because of the official actions taken by McAleese on O’Sullivan’s behalf, such as providing the O’Sullivan company with government contracts and approving payment for those contracts. O’Sullivan also admitted that he and McAleese took steps to keep their relationship a secret from other Fort Drum officials. McAleese has been indicted for her alleged role in the conspiracy, and her trial is scheduled for July 11, 2022. The charges against McAleese are only charges, and she is presumed innocent until proven guilty.

The investigation and resolution was the result of a coordinated effort between the U.S. Attorney’s Office for the Northern District of New York, the Department of Defense Office of the Inspector General of the Defense Criminal Investigative Service ; U.S. Army Criminal Investigation Division; General Services Administration, Office of the Inspector General; United States Small Business Administration, Office of Inspector General; and Department of Transportation Inspector General’s Office, Northeast Region. Criminal cases are prosecuted by Assistant United States Attorney Michael Perry. The civil case was handled by Assistant United States Attorney Christopher R. Moran.

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