Contractor Gets Jail After Defrauding Government Out of $346 Million in Contracts Meant for Vets and Minorities

·3 min read

A construction company owner who is neither a veteran nor a minority has been sentenced to 28 months in prison for defrauding the government out of $346 million in contracts meant for service-disabled veterans and minorities.

Matthew C. McPherson, 45, of Olathe, Kansas, was also ordered to pay the government back $5.5 million, which was his share of profits from the scheme, the Justice Department said in a news release.

"This contractor not only defrauded the government, but cheated to get contracts that should have gone to firms led by disabled veterans and minority owners," U.S. Attorney Teresa Moore said in the release Wednesday, the day McPherson was sentenced in federal court. "His greed and deception allowed him to enrich himself at the expense of disabled veterans and minority owners."

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McPherson had pleaded guilty in June 2019 to one count of conspiracy to commit wire fraud and major program fraud after admitting he participated in a plot from September 2009 to March 2018 to get federal contracts meant for small businesses owned and controlled by veterans, service-disabled veterans and certified minorities, according to the Justice Department.

McPherson's sentencing "sends a clear message that contractors unjustly enriching themselves at the expense of our nation's veterans will not be tolerated," Gavin McClaren, acting special agent in charge with the Department of Veterans Affairs inspector general's central field office, said in a statement.

McPherson and his co-conspirators were accused of setting up two companies using straw owners to fraudulently win the contracts.

The first was Zieson Construction Company in July 2009. Stephon Ziegler, 61, of Weatherby Lake, Missouri, a Black service-disabled veteran, was listed as the "nominal owner" of the business, but McPherson and his co-conspirators actually ran the company and received most of its profits, according to the Justice Department.

Zieson was awarded 199 federal contracts worth about $335 million meant for small businesses, minority-owned small businesses and veteran-owned small businesses, according to the news release. McPherson and his co-conspirators each got about $4.2 million through Zieson by using false and fraudulent invoices, the Justice Department said.

When Zieson grew too big for small business contracts in 2014, McPherson and his co-conspirators set up another company using the name of a Native American employee at Zieson, Rustin Simon, 45, of Smithville, Missouri.

Much like Zieson, the second company, called Simcon Corp., was actually controlled by McPherson and his co-conspirators, according to the Justice Department. Simcon also used the same office space and employees as Zieson, and Zieson falsely claimed to subcontract work to Simcon so Simcon would have a track record that made it able to better compete for federal contracts, the department said.

Simcon won a $4.4 million contract in July 2016 from the Air Force and a $6.9 million contract in September 2016 from the Army. McPherson and his co-conspirators each got about $319,866 from Simcon using false and fraudulent invoices, according to the Justice Department.

One of McPherson's co-conspirators, Patrick Michael Dingle, 50, of Parkville, Missouri, pleaded guilty to one count of conspiracy to commit wire and major program fraud and is awaiting sentencing. A third conspirator, Matthew L. Torgeson, of Topeka, Kansas, had been indicted as well, but died in November 2019.

Ziegler has pleaded guilty to making a false statement to the VA and is scheduled to be sentenced Jan. 20. Simon has pleaded guilty to two counts of making material false statements to the Small Business Administration and is awaiting sentencing.

-- Rebecca Kheel can be reached at rebecca.kheel@military.com. Follow her on Twitter @reporterkheel.

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