Kansas contractor pleads guilty to $346m fraud through fake veteran, minority status

In a major case of so-called "rent-a-vet" scamming, the owner of a Kansas-based contractor has pleaded guilty to helping steal $346m from the US government by fraudulently winning contracts intended for veterans and ethnic minorities over nine years.

Matthew McPherson, 43, the owner of Topeka-based McPherson Contractors, pleaded guilty Monday to one count of conspiracy to commit wire fraud and major programme fraud – known colloquially as "rent-a-vet" or "rent-a-minority" schemes.

Prosecutors said McPherson and his co-conspirators, Matthew Torgeson and Patrick Michael Dingle, set up Zieson Construction Co in 2009, with an African American disabled veteran Stephon Ziegler as the nominal owner.

"McPherson and his co-conspirators actually controlled and operated Zieson, and received most of the profits from Zieson through the respective business entities," prosecutors said.

Ziegler pleaded guilty on 21 May to making a false statement to the US Department of Veterans Affairs.

Between 2009 and 2018, Zieson won 199 federal contracts, for which the government paid Zieson approximately $335m.

In 2014, when Zieson was growing too big to compete for such contracts, McPherson and his co-conspirators used the minority status of a Zieson employee to set up another fake company, Simcon Corp, in the state of Missouri.

Simcon would go on to win government contracts worth more than $11m, bringing the total to $346m in contracts won fraudulently.

McPherson and his co-conspirators netted $4.1m each from the scam by issuing fraudulent invoices to Zieson from their other business entities.

Last year, McPherson said he was confident that a federal civil lawsuit naming him and two other area businessmen as defendants would be straightened out in a way that cleared him of any wrongdoing.

Image: The conspirators made a false statement to the US Department of Veterans Affairs (Dreamstime)

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