Deerpath International: The Alleged Veteran Front for NASA Equipment Work

The owner of Deerpath Corp. agreed to pay $800,000 to resolve allegations over NASA equipment work through a nominal veteran business. The government alleged that she organized and controlled Deerpath International to obtain work reserved for a service-disabled veteran-owned small business and funnel it to her own company. For someone inside a contractor, the question is familiar: whose company appeared on the award, and who actually ran the work?

The Justice Department’s announcement concerned equipment refurbishment at NASA’s Plumbrook facility in Sandusky, Ohio. A whistleblower’s False Claims Act case started the government’s investigation.

Why the Plumbrook Set-Aside Mattered

NASA reserved the refurbishment contract for a small business owned and controlled by one or more service-disabled veterans. The government alleged that the person who organized and controlled Deerpath International was not a service-disabled veteran.

A small-business set-aside reserves a contracting opportunity for the qualifying business. Ownership and control are part of that qualification.

We see a veteran set-aside turned inside out. The alleged arrangement put a person who did not qualify in control of the opportunity reserved for those who did. Veterans on the paperwork. Someone else running the business.

Deerpath International and Deerpath Corp. Had Different Alleged Roles

Deerpath International was the alleged front. Deerpath Corp., based in St. Joseph, Michigan, was the company to which the owner allegedly funneled the work.

The Justice Department’s announcement named Deerpath Corp., Scope Services Inc. and American Nuclear Resources Inc. among her companies that allegedly knowingly caused false claims connected to the NASA refurbishment contract.

That account connects the person controlling the nominally eligible business to the operating company benefiting from the work. For an employee who knows which business gives instructions, or a subcontractor who knows which company actually directs performance, that connection can be more revealing than the name on the contract.

What Control Looks Like in Procurement Records

Control shows up in decisions about the bid, price, performance and payment. In a case about an alleged front, we connect the business’s ownership and control representations with who actually made those decisions. The useful comparison follows the same contract from the solicitation through the work and the money.

At the bidding stage, that can mean the proposal, pricing communications and correspondence showing who prepared the offer and negotiated it. During performance, it means the primary work, the subcontracting arrangements and the company directing the job. Where equipment is involved, ordering, possession and transportation records can show which business handled the goods. Payment records then show where the contract proceeds went.

The decisions behind an invoice can reveal a different business directing performance. For a refurbishment contract, we want to understand how the equipment work reached the company doing it, who controlled that relationship and how the payment trail fits. Those are practical questions about the alleged Deerpath arrangement, the sort that someone in purchasing, operations or accounting may be able to answer from ordinary work.

Veteran Status and Company Control Are Separate Questions

The 2019 article Examining SDVOSB Certification, published in The Military Engineer, described separate systems of Small Business Administration self-representation and Department of Veterans Affairs verification. It distinguished verification of an owner’s military service or disability from requirements governing ownership and control of the company.

The NASA allegation reached both questions: the owner was not a service-disabled veteran, and she allegedly controlled the business that claimed the reserved work.

Academy Medical Shows How Control Can Reach the Bank Account

Academy Medical illustrates the same separation between the eligible business and the business directing the transaction. In that separate VA procurement case, the Justice Department alleged that a veteran business submitted bids and invoices while an Academy employee prepared the bid, arranged the goods and used bank-signature authority to transfer contract receipts to Academy.

Academy and its owners admitted in their settlement agreement that their conduct violated federal regulations designed to encourage awards to service-disabled veteran-owned small businesses. The government’s account also described an express warning against using the veteran business as a pass-through.

The comparison makes control concrete. Bid preparation, arranging the goods and authority over the bank account each show a different part of the transaction. Academy’s VA purchases illustrate what that evidence can reveal. The Deerpath matter concerned NASA equipment refurbishment and the alleged routing of the work to the owner’s company.

The Whistleblower Case and the NASA Contractor Settlement

The NASA contractor settlement followed a False Claims Act qui tam case in the Northern District of Ohio. The Justice Department announced the owner’s agreement to pay on September 21, 2011, and said the whistleblower would receive a share of the settlement.

NASA’s Office of Inspector General helped investigate the case.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. For someone who knows how an eligible company’s name was used to obtain work for another business, that connection between inside knowledge and a recovery is the reason to speak with our experts.

Who Inside a Contractor Sees the Real Control?

People preparing bids, directing equipment work or handling contract receipts may see who really controls the contractor. We examine the contract, representations, work records and payments together, with your account of how the operation ran.

A person preparing bids may know whose prices went into the proposal and who approved them. Someone in operations may know which business arranged the equipment work and directed performance. An accounting employee may know who controlled the receipts and where they went. A subcontractor or competitor may recognize the gap between the eligible contractor’s claimed role and the business handling the job.

Those are different views of the same procurement. We work with the person who holds one of them to connect it to the ownership claim, the company’s decisions and the government payment. Your familiarity with the actual work can explain why the paperwork tells an incomplete story.

You Know Who Ran the Work

If you know who controlled a nominal veteran contractor’s bids, equipment work or contract receipts, talk with our whistleblower experts about what you saw. We build the government procurement fraud case with you and bring in government procurement whistleblower lawyers who understand veteran set-asides and hidden control. From the first call through the case, we stay on your side and put your knowledge of the business to work for your strongest government procurement whistleblower case.