Feds Charge Alleged Sham Small Businesses Owners

by Davis Wright Tremaine LLP
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On April 3, 2018, a federal grand jury indicted two Wisconsin residents and a construction business of fraud and other charges accusing them of wrongfully obtaining $200 million in contracts set aside for small businesses by misrepresenting the companies’ ownership status.

Brian Ganos and Mark Spindler are accused of falsely certifying businesses owned and controlled by Ganos as being owned by disadvantaged individuals or service-disabled veterans. Ganos’ business Sonag Co. Inc. was also included in the indictment. Sonag Co. Inc. is listed as a minority-owned business on the System for Award Management (“SAM”). The charges also included allegations of conspiracy to commit mail and wire fraud. Ganos was also charged with concealment and spending of money laundering transactions. A third man, Nicholas Rivecca, accepted a plea deal on April 4, 2018, related to charges that he conspired to defraud the federal government. Rivecca is a co-owner of Sonag Ready Mix LLC, one of the companies involved in the scheme.

Ganos and Spindler are accused of submitting false applications and recertifications on behalf of three companies, Nuvo Construction Co. Inc., C3T Inc. and Pagasa Construction Co.  On SAM, Nuvo Construction Co. Inc. is listed as a minority owned business and C3T Inc. is listed as a service disabled veteran owned business. According to the allegations, Ganos controlled the companies’ operations in all aspects while straw owners were set up to perpetuate the fraud. Spindler co-owned an accounting firm that provided services for Ganos’ businesses and the straw-ownership companies. The Government claims Ganos and Spindler maintained the ruse for 12 years.

Ganos and Spindler could be sentenced to 20 years in prison and a $250,000 fine for the wire and mail fraud charges and Ganos could face an additional 20 years for the money laundering and concealment charges, in addition to 10 years for spending the money laundering proceeds. Rivecca could be sentenced to up to five years in prison for conspiring to defraud the Government.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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