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Hayner Hoyt Corporation to Pay $5 Million to Resolve False Claims Act Liability

The Hayner Hoyt Corporation to Pay $5 Million to Resolve False Claims Act Liability

Last month Hayner Hoyt Corporation agreed to pay $5 million to resolve charges that its chairman and CEO Gary Thurston, its president, Jeremy Thurston, employees Ralph Bennett and Steve Benedict and Hayner Hoyt affiliates, LeMoyne Interiors and Doyner Inc., exploited contracting opportunities reserved for service-disabled veterans.  The government uses contracting to promote all small businesses but in particular those businesses connected to or owned by service-connected veterans who are disabled.  In fact, there is a targeted procurement program for the U.S. Department of Veterans Affairs (VA) which requires the VA to set goals for contracting with service-disabled veterans who own, control, make the decisions for and mange their own businesses.

The settlement resolves allegations that Gary and Jeremy Thurston took advantage of the service-disabled, veteran-owned small business program to obtain government contracts for their now defunct company, 229 Constructors, LLC.  They are also alleged to have fraudulently secured subcontracts for Hayner Hoyt and its affiliates.  The Thurstons – neither of whom is a veteran – exerted influence over 229 Constructors during the bidding and performance of government contracts.  They also allegedly staffed the company with Hayner Hoyt employees and their spouses.  Their allocation and command of resources meant for service-disabled, veteran-owned businesses gave them a competitive advantage over legitimate veteran owned businesses.

Moreover, Hayner Hoyt officials allegedly made false certifications and statements representing that 229 Constructors met all the requirements necessary to be a service-disabled, veteran-owned business when in fact it did not.  By engaging in this activity Hoyt and its affiliates undercut the original intent of Congress’s efforts to aid service-disabled, veteran owned small businesses.  The investigation revealed that Bennett – who is a service-disabled veteran who allegedly ran 229 Constructors, served as its president and oversaw $14.4 million in government contracts – was not involved in making decisions for the company.  He instead performed minor duties at Hayner Hoyt.  To aid in the deception, Jeremy Thurston set up an email account that forwarded all of Bennett’s mail to him.  Further, Gary Thurston wrote others that he and his brother would likely terminate 229 Constructors after the government began questioning its affiliation with Hayner Hoyt.

Several months later, Bennett and Benedict – both of whom were listed as “co-owners” of 229 Constructors and with Benedict being listed as one of five “key” officials on Hayner Hoyt’s website – transferred $52,000 to Gary Thurston’s personal bank account to allegedly show appreciation for the assistance he had provided.  During the settlement agreement, the defendants admitted that their conduct violated federal regulations, that 229 Constructors provided $1.3 million in small business contracts to Hayner Hoyt, LeMoyne Interiors and Doyner and that those companies generated nearly $300,000 in gross profits as a result their deception.

“Those who do business with the federal government must do so honestly,” said U.S. Attorney Richard S. Hartunian for the Northern District of New York  “As today’s settlement demonstrates, this office will vigorously pursue those individuals and entities who game programs designed to help our nation’s veterans succeed in starting small businesses.”  “This settlement demonstrates the Department of Veterans Affairs, Office of Inspector General’s continued commitment to aggressively pursue individuals and companies that misrepresent themselves as service-disabled veteran-owned small businesses and deny legitimate disabled veterans the opportunity to obtain VA set-aside contracts,” said Special Agent in Charge Jeff Hughes for the Office of Inspector General for the Department of Veteran Affairs (VA-OIG).

The government’s investigation was prompted by a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act.  This act allows private citizens to sue on behalf of the government in cases involving fraud against the government and entitles them to a portion of any recovery.  If you have knowledge of fraud committed against the government you should report it and contact a qui tam law firm.  Qui tam law firms will be able to assist you by explaining to you and protecting your rights in such cases.