A&D General Contracting: The Secret Joint-Venture Agreement Behind the Criminal Verdict

A&D General Contracting and its owner agreed to pay $3,259,679 to resolve civil False Claims Act allegations over a secret joint-venture agreement that diverted veteran set-aside work. The Justice Department’s account of the criminal trial describes the contradiction: an agreement promising that a veteran-owned business would manage the venture, and a secret agreement giving A&D the construction jobs and almost all the payments. If you know whose people actually ran a set-aside project, this is a case about the difference you may have seen.

A&D was a contractor based in Santee, California. Its joint-venture partner was Action Telecom, a veteran’s company.

What the Secret Agreement Changed

The secret agreement reversed the management and financial arrangement used to make the joint venture appear eligible for service-disabled veteran-owned small-business contracts. According to the Justice Department’s account of the criminal trial, the initial agreement assigned Action Telecom responsibility for managing the venture, employing a project manager for each set-aside contract and receiving most of the profits.

The trial proved that A&D’s owner and Action Telecom’s owner also signed a secret side agreement. That agreement assigned the construction jobs to A&D and stated that the venture existed so A&D could use Action Telecom’s disabled-veteran status to bid. The payment provision was equally direct:

Every payment. The arrangement reached the money coming into the venture, not merely whatever profit remained after a job’s costs.

We see the absurdity in that pairing: the veteran-owned business supplied the qualification, while another contractor reserved the work and money for itself. The parties put the contradiction in writing.

Veteran Status Was Only Part of the Qualification

SDVOSB contract fraud can turn on who controls and performs the business’s work. A&D’s case concerned a venture that used a veteran-owned participant’s status while assigning the operating role elsewhere.

In construction, control reaches the company managing the job and the company providing the people who run it.

The 2019 article Examining SDVOSB Certification, published in The Military Engineer, described efforts to align veteran-business ownership and control requirements, including the treatment of joint ventures. Its discussion separated verification of a veteran’s status from the business’s ownership and control. A&D shows why that distinction matters commercially: the qualifying participant’s promised management role was contradicted by a second agreement between the same owners.

The broader question of limitations on subcontracting follows the work and payments beyond the eligible name. A project manager or contract administrator who knew the working arrangement could recognize what the qualifying paperwork concealed.

What the Criminal Trial Established

The criminal trial established that A&D and its owner created a fraudulent joint venture to obtain contracts reserved for service-disabled veteran-owned small businesses. A federal jury convicted both, according to the Justice Department.

The Justice Department identified the Department of Veterans Affairs Office of Inspector General as the investigating agency.

The harm fell on legitimate service-disabled veteran-owned businesses whose contracts the scheme diverted. The qualification was supposed to put work within their reach. Here, it became something another contractor could use to obtain the work for itself.

The Civil False Claims Act Settlement

A&D and its owner fraudulently obtained more than $11 million in veteran set-aside contracts, according to the criminal verdict. Their civil settlement: $3,259,679 to resolve False Claims Act allegations arising from the same conduct.

The civil case addressed the same underlying contradiction between the venture’s claimed eligibility and its secret operating arrangement. That is the connection between a false procurement certification and the money paid under the resulting contracts.

The Pattern in Other Set-Aside Cases

Other set-aside cases show the same separation between the business presented to the government and the people actually directing the work. Their evidence adds different views of that arrangement: ownership certifications, bid authorship, email accounts and transfers of money.

Veteran Construction Associates admitted liability under the False Claims Act in a settlement concerning false veteran ownership and control in VA construction contracting. The company completed construction work and submitted invoices. That makes the comparison with A&D useful: completed work and a false account of who qualifies to receive the contract can sit in the same case. One question concerns the building work. The other concerns the business that was entitled to win it.

TriMark’s settlement admissions show how control can appear in everyday communications. The company identified bids, supplied prices and ghostwrote emails for qualifying small businesses. Its employees used a small business’s email accounts, while TriMark performed substantially all the work and the small businesses billed. The covered customers included VA facilities. The email address made the communication look like the eligible company’s work, while its authorship showed who was directing it.

In the government’s allegations against Strock Contracting, Veteran Enterprises Company obtained set-aside work, including VA contracts, while non-veterans controlled operations. The government alleged that proceeds moved through sham loans and leases. A&D’s side agreement spelled out a payment split. Strock’s alleged arrangement shows why the loans and leases between participating businesses can also matter.

What Are the Indicators of Government Procurement Fraud?

In the A&D case, the central indicator was a direct conflict between the qualifying joint-venture agreement and the secret agreement governing work and payments. The signs to recognize are work, management and payments going to a different business from the one promised in the qualifying paperwork.

An estimator may know who developed the price. A project manager may know whose employees actually directed the work. Someone handling payments may know which business retained the money and what instructions explained the split. Those different views can connect the bid, the operating arrangement and the financial benefit.

We examine the contract and payment records alongside the communications that explain them. Bid drafts, email authorship, management records and onward payments help show who controlled and performed. Your knowledge of how the job ran can give those records their meaning.

What an Honest Veteran-Owned Contractor Loses

A diverted set-aside takes away the opportunity to perform the contract and build experience for the next one. The National Contract Management Association’s May 2025 article, The Big Power of Small Business, explains that winning federal work builds past performance and knowledge of an agency’s needs. That experience can strengthen future bids and make a business more attractive for teaming and subcontracting.

That is why we see more at stake here than the name printed on an award. The work, customer relationship and experience are part of the opportunity. A venture that reserves those benefits for the business behind the qualifying name defeats the purpose the preference was meant to serve.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know Which Agreement Ran the Job

If the venture promised one company would manage the project while another controlled the work and payments, tell our whistleblower experts about the arrangement you saw. We build your case around the contracts, decisions and money, bring in government procurement fraud whistleblower lawyers who understand veteran set-asides, and stay beside you through the case. You can start with the part of the business you know.