Legal Issues
Kansas Contractor Sentenced to Prison for Veteran, Minority Ownership Fraud Scheme
Matthew McPherson pleaded guilty to conspiracy to commit wire fraud and major program fraud at the federal courthouse in Kansas City, Mo., on June 3, 2019.
Photo by Steam Pipe Trunk Distribution Venue/Flickr
A Kansas construction executive was sentenced to prison for a “rent-a-vet” and “rent-a-minority” scheme he used to win hundreds of government contracts worth a combined $346 million intended for minority- or veteran-owned small businesses for which he was not qualified.
On Jan. 5, U.S. District Court Judge Roseann Ketchmark sentenced 45-year-old Matthew C. McPherson, of Olathe, Kansas, to two years and four months in federal prison without parole. McPherson also forfeited more than $5.5 million, his share of the proceeds of the scheme, the U.S. Attorney’s Office for the Western District of Missouri announced. The sentencing followed McPherson’s 2019 guilty plea to conspiracy to commit wire fraud and major program fraud.
Zieson Construction Co., was formed in July 2009 with an African-American service-disabled veteran, Stephon Ziegler, as the nominal owner. However, it was actually McPherson, the president of Topeka-based McPherson Contractors, and co-conspirators Patrick Dingle and Matthew Torgeson, who ran Zieson Construction, authorities say.
Under their control from 2009 to 2018, Zieson Construction was awarded about 199 federal contracts set aside for small minority- or veteran-owned businesses that the company’s actual owners weren’t entitled to win, the U.S. Attorney's Office says. The government paid the company about $335 million, and the conspirators used false invoices to take about $4.2 million each from Zieson.
By 2014, authorities say Zieson was growing too big to compete for the small business contracts, so the conspirators used a Native American employee, Rustin Simon, to set up another business, Simcon Corp., in Missouri. They used Simcon to compete for more contracts they weren’t actually qualified for, and the company won a $4.4-million Air Force contract and $6.9-million Army contract in 2016.
“This contractor not only defrauded the government, but cheated to get contracts that should have gone to firms led by disabled veterans and minority owners,” U.S. Attorney Teresa Moore said in a statement. “His greed and deception allowed him to enrich himself at the expense of disabled veterans and minority owners.”
A representative for McPherson Contractors, now doing business as MCP Group, declined to comment on McPherson’s current status with the company. Paperwork filed with the Kansas Secretary of State lists McPherson as the company’s president as of March 2021, the most recent documentation available.
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Dingle pleaded guilty in September 2020 to conspiracy to commit wire and major program fraud, and is awaiting sentencing. In a separate case, he also pleaded guilty to filing a false tax return. Torgeson died in 2019.
Ziegler pleaded guilty in May 2019 to making a false statement to the U.S. Department of Veterans Affairs. He’s scheduled to be sentenced on Jan. 20, 2022. Simon pleaded guilty in June 2019 to two counts of making material false statements to the Small Business Administration. He’s awaiting sentencing.
A 2019 Government Accountability Office (GAO) report found that contractors with opaque ownership structures posed a risk for programs promoting government contracts with small businesses owned by minorities, women, service-disabled veterans or other economically or socially disadvantaged individuals. GAO identified 20 cases of Defense Dept. contractors or contractor employees being convicted, pleading guilty or settling charges related to such fraud in order to falsely qualify for such contracts. In 2021, a follow-up report stated that the Defense Dept. was taking steps to assess risks related to contractor ownership fraud.
