Illinois electrical contractor is first in construction to agree to settle fraud claims in GSA crackdown
In June, Broadway Electric Inc., a Chicago-based company, and its sister company, Cornerstone Contracting Inc., along with Chief Executive Officer 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 and other eligible small businesses.
It was revealed in an August 25 General Services Administration press release that the investigation and ensuing settlement involving Broadway and Cornerstone were part of a multibillion-dollar anti-procurement fraud investigation by the federal government’s landlord agency and all other agencies for which it develops and acts as owner of real estate. So far, Broadway and Cornerstone are the only construction companies revealed to have been ensnared by the probe.
The settlement covers activity from approximately April 2017 through May 2025. Oehler and Blake agreed that they engaged in a scheme to obtain federal set-aside contracts for which Broadway and Cornerstone were ineligible by using purported service-disabled veteran-owned small businesses and other small businesses as pass-through entities.
The agreement states that both men agreed they are not service-disabled veterans and that neither qualified to own or control a service-disabled veteran-owned small business. Although contracts were set aside by law for qualifying small businesses, Broadway and Cornerstone personnel, in fact, primarily controlled and performed the work for which the pass-throughs were granted.
The investigation found Broadway and Cornerstone employees prepared and priced bids submitted under the names of purported small businesses, secured bonding, selected subcontractors, and primarily controlled project execution, staffing, and financial administration. The pass-through small businesses received payments of roughly 1% to 3% of the contract value.
Pass-through entities that do little to no actual work themselves are as old as federal set-aside programs, but true veteran- and minority-owned disadvantaged businesses have been more successful in the last few years at challenging small firms that do little of their own work.
In addition to the $21.3 million penalty imposed on Broadway and Cornerstone, Oehler and Blake agreed to pay fines and restitution for the illegal contracts. Based in Mount Prospect, Ill., Broadway serves as an electrical prime, electrical subcontractor, and directly for owners. Its largest current job is the $1.45 billion connector project at O’Hare International Airport.
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