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David E. Gorski had a good business plan: get government contracts for a construction company owned and operated by disabled veterans.
It worked like a charm, quickly bringing in more than $110 million under a government program. There's was only one problem: disabled veterans didn't actually own and control the company.
For defrauding the government, Gorski received 30 months in prison and a $6.7 million forfeiture order. In United States of America v. Gorski, he said he relied on his lawyers and accountants. The U.S. First Circuit Court of Appeals said that was no excuse.
A Massachusetts jury found Gorski guilty of defrauding the government in violation of 18 U.S.C. Section 371, by knowingly procuring government contracts on the false premise that his company was owned and controlled by disabled veterans. The jury also convicted him of wire fraud.
To qualify for the "service-disabled veteran-owned small business," or SDVOSB program, Gorski said that at least 51 percent of the company was owned by veterans who had become disabled in military service. He also attested that they controlled the company.
But prosecutors proved that was not true. Employees at the company said Gorski was in charge, and records showed he received "several magnitudes" more than any service-disabled veteran owners.
Gorski said he consulted with lawyers and accountants to restructure the company to be compliant, but prosecutors undercut the defense by showing that some documents prepared by outside counsel were backdated to comply with regulatory changes.
"Patina of Legitimacy"
On appeal, Gorski argued there was insufficient evidence to prove that he intended to defraud the government. The First Circuit didn't buy it.
"The mere act of seeking the help of attorneys and accountants in restructuring the company does not necessarily establish an intent to comply with the SDVOSB regulations," the appeals court said.
The appeals panel said a jury could have reasonably found that Gorski was merely seeking to give "a post hoc patina of legitimacy" to the fraudulent scheme.