Wednesday, September 13, 2017
Closing arguments are set to begin at 9 a.m. today for two Little Rock men accused of falsely portraying their construction business as owned and directed by a service-disabled veteran to make them eligible for million-dollar government contracts.
Defense attorneys acknowledge that Alan Hope and Mikel Kullander joined forces in 2007 with Jim Wells, a service-disabled veteran who worked for Hope, for the purpose of competing for large federal contracts set aside for such businesses.
But they say the three men carefully followed federal guidelines in establishing their business and its board of directors, and weren't trying to defraud anyone.
Federal prosecutors, on the other hand, say Wells wasn't actually involved in the operations of the newly formed DAV Construction business and that the men made false proclamations on paper greatly exaggerating Wells' role and duties so the business could qualify for the set-aside contracts. Wells has not been charged with a crime.
Over about seven or eight years, DAV received such contracts totaling more than $15 million to work on construction projects for the U.S. Department of Veterans Affairs and the Food and Drug Administration, until federal regulators cut them off, saying they no longer qualified.
A federal jury now must decide whether the actions of Hope and Kullander constituted fraud or perhaps misguided good-faith efforts to comply with regulations. If jurors believe they acted in good faith, they must be acquitted.
Hope and Kullander each face a single charge of wire-fraud conspiracy, three counts each of major fraud each involving more than $1 million, and 24 counts of wire fraud.
On Tuesday, the fifth day of the trial in the Little Rock courtroom of U.S. District Judge Leon Holmes, the defense began and ended its case after four days of testimony by prosecution witnesses, including Wells.
Hope, 57, testified that he "never" had an intent to harm or defraud the government, and that he, Kullander and Wells never, "even for a millisecond," formulated a plan to that end.
Hope continues to own Powers of Arkansas, a commercial heating and air business he and his wife bought in 2005, eight years after he left the company as vice president. He said Wells worked for Powers as a computer-assisted design and drafting specialist for 19 years until he announced in 2007 that he was being forced to quit because the VA had declared him 100 percent disabled.
Hope, who has an industrial engineering degree, said he was aware at the time of Wells' announcement that the VA had recently started giving first consideration for its contracts to service-disabled veteran-run businesses, in adherence with a 2006 law.
He said he also knew firsthand, as a contractor for the administration for several years, that the agency wasn't satisfied with the work of two companies it was required to use under the new law.
He said he formed the idea to establish a veteran-operated business with Wells, telling jurors, "I saw this as a vehicle to help my customer."
Hope said he asked Wells if he could own a company, even if he wasn't allowed to work, and after checking into it, Wells found that he could and said he wanted to give it a try.
Hope said he soon asked his best friend, Kullander, who ran his family's construction business, to join them, because Kullander had construction skills and general contracting experience.
Hope said he had administrative and accounting skills, and Wells had the practical skills needed for working on thermostat controls made by Siemens, a multinational company for which Powers had been the sole Arkansas distributor and contractor since 1990.
"We never thought about scamming anybody," Hope testified Tuesday. "That's not the way I, Mikel or Jim do business."
He said the men soon learned that under federal regulations, Wells would have to be at least a 51 percent owner of the business in order for it to be classified as a service-disabled veteran-run business, so they set up their company accordingly.
"We self-certified that we met the requirements they listed," he testified.
He said those requirements included that the veteran had to "control the day to day management" of the company, which they thought was accomplished by giving him 51 percent ownership.
"This is what control means to us," Hope testified. "We never expected Jim to do the work."
He said that when Wells learned in 2008 or 2009 that the contracts were causing him to make too much money to continue receiving disability checks, the men checked with accountants and changed the business from an "S" corporation to a "C" corporation and made some other changes, such as making Kullander president instead of Wells -- all of which they relayed to a government agent who made a site visit in 2011.
But by admitting to the agent that Wells "no longer held the highest position," they were later denied a renewal of their status as a service-disabled veteran-run business, Hope said.
He said additional changes the men made after receiving the denial notice were intended to comply with the rules but seemed to only make the government more suspicious that the men were lying about Wells' specific duties.
Hope said he wasn't aware of regulations that the veteran had to be present at construction sites or interact regularly with customers -- situations that were later used against the men. He also testified that "while Jim may not have physically been able to go places, his mind was always fine."
Metro on 09/13/2017
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