SEPTEMBER 2008

Asbestos abatement manager pleads guilty to fraud

David Muir, of Olney, Maryland pleaded guilty to conspiracy to defraud the U.S. Small Business Administration’s (SBA) 8(a) program, which is designed to assist socially and economically disadvantaged small businesses.

According to the plea agreement, since August 1998, Muir worked for, or was associated with, three Maryland companies that performed asbestos and lead abatement and demolition work on federal and private facilities.

Between 1998 and 2007, all three companies participated in the SBA’s 8(a) program.

For one of the companies, Muir represented himself to different contractors and subcontractors doing business with the company as operations manager, project manager, quality control manager and vice president.

In violation of SBA’s regulations, Muir and his co-conspirators, who are all non-disadvantaged individuals, exerted significant financial and operational control over the three Maryland corporations in a variety of ways, including: personally indemnifying the liabilities of one of the companies, which enabled it to obtain higher bonding and 8(a) contracts of higher value than the company otherwise would have been qualified; for exercising significant control over the contracts bid upon by all three companies; and exercising control over the selection and payment of subcontractors on behalf of two of the companies.

To continue participating in the program each year, the companies' presidents were required to submit updates to the SBA in which they certified that the companies remained eligible.

On June 27, 2005, Muir faxed to the SBA the 2004 financial statements of one of the companies, as part of that company’s annual update. These statements failed to disclose that bonuses were paid to Muir and his co-conspirators, and that their bonuses and other compensation far exceeded the compensation paid to the disadvantaged individual. In fact, between 2002 and 2004, Muir and his coconspirators received approximately $900,000 more in bonuses and salaries than the president of the company. These salaries and bonuses were given without the SBA’s knowledge or approval.

Muir knew that he and the co-conspirators provided critical bonding, financial and operational support to the three companies, and during the course of the conspiracy, the presidents of two of the companies submitted fraudulent annual updates to the SBA in which they falsely certified that their companies continued to meet the SBA regulations related to eligibility, including those which prohibit financial and operational control of the firm by a non-disadvantaged individual.

Muir faces a maximum sentence of five years in prison, followed by three years of supervised release. U.S. District Judge Peter J. Messitte scheduled sentencing for October 30, 2008.