John Blanchard, Family Members & Staff Indicted for Defrauding Feds, Underpaying Veterans

A press release from the U.S. Attorney’s Office:

OWNER AND FOUR EMPLOYEES OF CRYSTAL LAKE BUSINESSES CHARGED WITH DEFRAUDING UNITED STATES, U.S. MILITARY VETERANS, AND SERVICE DISABLED VETERAN OWNED SMALL BUSINESSES

On a warm January, 2012, day, John Blanchard explained the Veteran-run auto repair shop to U.S. Senator Dick Durbin.

ROCKFORD — the owner of certain Crystal Lake, Ill. businesses, three of his current employees, and one former employee, were all indicted today by a federal grand jury in Rockford, Ill. The indictment charges the five defendants with defrauding the United States, U.S. military veterans, and certain other disadvantaged businesses known as Service Disabled Veteran Owned Small Businesses.

Defendant, John C. Blanchard, 51, of Crystal Lake, Ill., owns and operates several businesses referenced in today’s indictment, including

  • National Association of Systems Administrators, Inc. (“NASA, Inc.”),
  • National Association of Systems Administrators Corporation (“NASA Corp.”),
  • NASA Education Corp. (“NASA Education”), and
  • Liberating Solutions Corporation (“Liberating Solutions”).

NASA, Inc., and NASA Corp. provide computer system maintenance and support for small businesses and engage in some software design.

NASA Education and Liberating Solutions are companies that are purportedly designed to help homeless U.S. military veterans by providing them with work training, community reintegration, and other services. All of these businesses are located in Crystal Lake, Ill.

The remaining four defendants all worked for John Blanchard’s businesses.

  • Joanne Blanchard, 49, of Crystal Lake, John Blanchard’s wife, managed the finances and payroll for her husband’s companies.
  • James Blanchard, 55, of McHenry, Ill., John Blanchard’s brother, was a Project Manager for Liberating Solutions and managed security for his brother’s businesses.
  • Eric R. Behler, 51, of Curlew, Washington, was a Contracting Officer for Liberating Solutions.
  • Amy B. Johnson, 50, of Elkhart, Indiana, oversaw NASA Education.

The indictment alleges that the defendants fraudulently obtained federal contracts that were set-aside for Service Disable Veteran Owned Small Businesses. Federal law allows for certain contracts to be set-aside for Service Disabled Veteran Owned Small Businesses.

John Blanchard handed Senator Dick Durbin an insert that Secretary of State Jesse White inserted in his mailings which solicited donations of cars, the proceeds of which would go to help Veterans.

To qualify as a Service Disabled Veteran Owned Small Business, a company must be at least 51% owned by one or more service-disabled veterans, and the daily operations of the business must be managed by a service-disabled veteran.

According to the indictment, the defendants caused Liberating Solutions to bid for and win federal set-aside contracts by falsely representing that Liberating Solutions was a Service Disabled Veteran Owned Small Business.

The indictment also charges that the defendants defrauded the U.S. military veterans who were enrolled in the NASA Education program by failing to pay them the wages they were entitled to under the Davis Bacon Act, the Service Contract Act, and Illinois law.

The Davis-Bacon Act requires that companies receiving federally funded contracts for work on federal buildings must pay their employees locally prevailing wages and fringe benefits for similar projects in the area. The Service Contract Act requires companies that are awarded federal contracts to provide certain services to the federal government must also pay their employees certain wage rates. Illinois law has similar requirements for contractors who are awarded contracts for state and local government projects.

According to the indictment, the defendants caused Liberating Solutions and NASA Education to win contracts with the federal government and local governments in Illinois by representing that their businesses would pay their employees the wage rates required under the Davis Bacon Act, the Service Contract Act, and Illinois law.

Then, the defendants required the U.S. military veterans who were enrolled in the NASA Education program to perform the physical labor required by these contracts.

Contrary to the representations on the contracts, the defendants did not pay the veterans the wage rates required by the Davis Bacon Act, the Service Contract Act, and Illinois law.

Waiting for a volunteer-served and local business-donated lunch at a Camp Algonquin Stand Down.

The indictment also charges the defendants with defrauding the United States in connection with the receipt of certain grant funds.

The U.S. Department of Labor (“DOL”) provides up to $10,000 in grant funds to organizations that sponsor “Stand Downs.”

Stand Downs are events which provide homeless veterans with information regarding training, employment opportunities, and social services.

John Blanchard, a Navy Veteran, started a trucking company with Veterans as drivers.


The DOL requires organizations that receive these grants to provide the DOL with receipts and invoices for the costs incurred. The grant recipients are also required to return any funds not expended for the event.

According to the indictment, the defendants fraudulently caused NASA Education to keep excess grant funds it received for Stand Down events by submitting fraudulent invoices falsely claiming that Liberating Solutions had incurred certain expenses.

For example, some of these fraudulent invoices claimed that security for NASA Education’s Stand Down events had been provided by a company known as “Bull Dog Security,” when in fact security for those events had been provided by veterans who were not paid for their services.

The indictment returned today contains six counts of wire fraud, one count of mail fraud, and ten counts of providing material false statements and documents in a matter within the jurisdiction of a federal agency. Each count of wire fraud and mail fraud carries a maximum penalty of 20 years in prison.

Each count of providing material false statements or documents carries a maximum penalty of 5 years in prison. All of the counts carry a maximum fine of $250,000, or an alternate fine totaling twice the loss or twice the gain derived from the offense, whichever is greater, and restitution. If convicted, the Court must impose a reasonable sentence under the advisory United States Sentencing Guidelines.

The defendants are scheduled to be arraigned on the indictment next Tuesday, August 28, 2012, at 11:00 a.m., at the federal courthouse in Rockford, Ill. The arraignments will be conducted by U.S. Magistrate Judge P. Michael Mahoney.

The indictment was announced today by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, James Vanderberg, Special Agent in Charge of the Chicago Office of the U.S. Department of Labor, Office of Inspector General, John W. Brooks, Special Agent in Charge of the Central Field Office of the U.S. Department of Veterans Affairs, Office of the Inspector General, Armando Lopez, Special Agent in Charge of the Chicago Field Office of the U.S. Department of Homeland Security, Office of the Inspector General, and Jeffrey L. Arsenault, Special Agent in Charge of the Central Field Office of the Defense Criminal Investigative Service.

The government is represented by Assistant U.S. Attorney Scott A. Verseman.

The public is reminded that an indictment contains only charges and is not evidence of guilt. Each defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

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You can read the indictment here.


Comments

John Blanchard, Family Members & Staff Indicted for Defrauding Feds, Underpaying Veterans — 4 Comments

  1. What we don’t see is any allegation that Blanchard pocketed any money, or any shenanigans like that.

    The indictment lacked any explanation of a motive, eveing assuming the Bull Dog invoices were fraudulent as charged.

    The Nasa stand downs provided a great amount of needed services and clothing to many needy veterans.

    Hopefully the truth will come out with as much vigor as the press release, no matter how the chips lay.

  2. The Feds just can’t believe that people would serve the vets and give of themselves and their own money, time and energy.

    That all the wonderful peeps that have served have a heart to help our veterans !

    They may need to search their own hearts.

    No money trail, no dirty business.

    God is the judge and the truth will prevail !

  3. I did rec’d a car from him.

    I thought he was nice guy trying to give back to the people that he served with.

    I hope that other company will come forward and help us vets out.

    I do know understand the whole story but I hope that truth comes out and Nasa is still for the vets.

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