Vending Gender and Race to Defraud

Fraud Involving Businesses Owned by Women & Minorities

By Alison K. Jimenez

Governmental and business entities are giving women/ minority-owned businesses chances to compete with other firms for contracts. But fraudsters can exploit regulations and diversity policies to rake in the cash. Learn how to protect your company and discover ways to deter and detect schemes that defraud taxpayers, corporations, and true W/MBEs.

Nancy thought this was her big break into the lucrative world of government contracting. As president of a small steel producing firm, she was thrilled when she got the call from the president of ABC Construction, who had won the contract to build a convention center. In its winning bid, ABC pledged to subcontract 25 percent of the business to women- and minority-owned businesses. Nancy had previously registered with the city as a woman-owned business and ABC had found her through the city’s registry. Nancy’s initial excitement turned to frustration when ABC told her they would pay her a 2 percent fee and they would do the work themselves. ABC planned on turning the fraudulent bills into the city. Nancy’s golden opportunity soon turned into a nightmare of fraud and lawsuits.

This composite case illustrates what can happen when fraud becomes part of contracting with a women/minority business enterprise.

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