Contractor and Two Executives Pay $21.3 Million for Faking Veteran-Owned Status

Published 2026 | TIKC NewsWire

The Justice Department announced a $21.3 million settlement with Broadway Electric Inc. and Cornerstone Contracting Inc., along with their top two executives, over a scheme to grab set-aside contracts meant for service-disabled veteran-owned small businesses. Neither the CEO, John Oehler, nor the president, Christian Blake, was a service-disabled veteran, and neither qualified to own or control an SDVOSB. From about April 2017 through May 2025, the government says, they ran the work through veteran-owned front companies while really controlling everything themselves. These are allegations, with no finding of liability. But the lesson for honest set-aside firms is loud: the government is naming the people, not just the companies.

What the government says happened

According to the government, Broadway and Cornerstone used purported SDVOSBs and other small businesses as pass-through entities, tied together with teaming agreements, joint ventures, and mentor-protege structures. Broadway and Cornerstone allegedly found the opportunities, priced the bids, got the bonding, picked the subcontractors, and ran staffing, payroll, and the money. The front companies collected fixed payments of roughly 1 to 3 percent of contract value, not tied to real work. Broadway and Cornerstone staff even used the small businesses’ email addresses and signed communications to agencies on their behalf. On paper it looked like a veteran-owned firm. In reality, the government says, it was a rented label.

The executives were named personally

The part every owner should notice is that the CEO and president are in the settlement by name. Set-aside fraud is not treated as a faceless corporate slip. When individuals design and run the scheme, the government pursues them, which is the hard edge of individual accountability in government work. A set-aside label is a promise about who really owns and controls the business. If that promise is false, the people who signed it own the consequences, not some abstract entity.

A veteran and an insider blew the whistle

This case came from two whistleblowers, including a U.S. Air Force veteran and an executive at an SDVOSB firm, and they are receiving a share of $3,674,250. That is the pattern in nearly every set-aside fraud case. The people who see a front arrangement up close, the real veterans being used as a label, the insiders who are told to look the other way, are exactly the ones who report it. If you understand how a whistleblower case works, you understand why these schemes almost always come apart.

What honest set-aside firms should do

If you hold or pursue a set-aside, this is your reminder to make the label true. The veteran, woman, or disadvantaged owner must really own and control the business, not just sit on the paperwork. Teaming and mentor-protege relationships are legitimate and valuable, but the eligible firm has to run its own work, not collect a thin fee while someone else drives. If you see a pass-through arrangement taking shape around you, that is the moment to fix it or walk away.

What to do now

• Make ownership real. The eligible owner must actually own and control the company, day to day.
• Run your own work. An eligible firm performs and manages its contracts, it does not just lend its certification.
• Keep teaming honest. Use joint ventures and mentor-protege deals for real capability, not to disguise who is in charge.
• Watch the fee structure. A tiny fixed percentage to the eligible firm is a red flag of a front.
• Speak up early. If you are being used as a label, correct it or get out before it becomes your case.

Set-asides exist to give real veteran, woman, and minority owners a fair shot, and that is worth protecting. Keep your ownership true and run your own contracts, and your certification stays an asset instead of becoming the evidence. Brick by brick.

FAQ

What was the settlement?

Broadway Electric, Cornerstone Contracting, and their CEO and president agreed to pay $21.3 million to resolve False Claims Act allegations that they used veteran-owned front companies to win set-aside contracts. The claims are allegations only.

Why were the executives named?

Because the government says individuals designed and ran the scheme. Set-aside fraud is pursued against the people who control it, not just the company.

How did it come to light?

Two whistleblowers, including an Air Force veteran and an SDVOSB executive, brought the claims and are receiving a share of $3,674,250.

How do honest set-aside firms stay safe?

Make sure the eligible owner truly owns and controls the business, perform and manage your own work, keep teaming deals honest, and watch for front arrangements where the eligible firm only collects a small fee.

Sources

U.S. Department of Justice. (2026, June 9). Government contractor and executives to pay $21.3M to resolve fraud scheme involving service-disabled veteran-owned small business set-asides. Office of Public Affairs.

U.S. Small Business Administration. (2026). Service-Disabled Veteran-Owned Small Business program, ownership and control requirements.

This article is general information, not legal advice.