Broadway Electric, Cornerstone and Two Executives to Pay $21.3 Million Over Veteran Set-Aside Contract Fraud

The Justice Department announced June 9 that Broadway Electric Inc., Cornerstone Contracting Inc., chief executive John Oehler and president Christian Blake agreed to pay $21.3 million to resolve False Claims Act allegations that they improperly obtained federal contracts reserved for service-disabled veteran-owned small businesses (SDVOSBs) and other eligible small firms. From approximately April 2017 through May 2025, prosecutors allege, the defendants used purported SDVOSBs and other small businesses as pass-through entities: Broadway and Cornerstone identified opportunities, prepared and priced bids in the small firms' names, secured bonding, selected subcontractors, and controlled execution and payroll, while the nominal awardees received fixed payments of roughly one to three percent of contract value, untied to work performed. Neither Oehler nor Blake is a service-disabled veteran. 'We will hold accountable those who fraudulently obtain, or assist others in fraudulently obtaining, these set-aside contracts,' said Assistant Attorney General Brett A. Shumate of DOJ's Civil Division.

The settlement resolves a qui tam suit brought by two whistleblowers — a U.S. Air Force veteran and an SDVOSB executive — who will share $3,674,250; the case is captioned United States ex rel. Welch, et al. v. American First Contracting Inc., et al., No. 3:23-cv-0525 (N.D.N.Y.).

Inspectors general from the VA, SBA, GSA, Defense Department and U.S. Postal Inspection Service joined the investigation.