U.S. Attorney's Office
Northern District of New York
May 17, 2024
Sean O’Sullivan Misrepresented Company as a Service-Disabled Veteran-Owned Small Business and Gave Gratuities to a Contracting Officer at Fort Drum
SYRACUSE, NEW YORK – Sean O’Sullivan, age 61, of Sackets Harbor, New York, was sentenced yesterday in federal court in Utica to 2 years of Probation and ordered to pay $345,271.34 in restitution to the United States after previously pleading guilty to conspiracy to commit wire fraud in relation to government contracts and conspiracy to commit an offense against the United States by offering and giving gratuities to a former Fort Drum contracting officer.
The announcement was made by United States Attorney Carla B. Freedman; Brian J. Solecki, Acting Special Agent in Charge, Department of Defense Office of Inspector General Defense Criminal Investigative Service; Joel Kirch, Special Agent in Charge, U.S. Army Criminal Investigation Division, Northeast Field Office; Joseph Dattoria, Special Agent in Charge of the General Services Administration, Office of the Inspector General (GSA-OIG), Northeast Region Investigations Office; Christopher A. Scharf, Special Agent in Charge, Department of Transportation Office of Inspector General, Northeastern Region (DOT-OIG); and Amaleka McCall-Brathwaite, Special Agent-in-Charge, Eastern Regional Office, Small Business Administration, Office of Inspector General.
The wire fraud conspiracy related to government contracts O’Sullivan fraudulently obtained with his former business partner, David Rose, of Newport News, Virginia, which had been “set aside” solely for Service-Disabled Veteran-Owned Small Businesses (“SDVOSBs”). To be designated as an SDVOSB, a construction company must meet certain criteria, including that a military veteran with a disability rating incurred as a result of military service must own the majority of the business and personally manage and control its daily business operations. In pleading guilty previously, O’Sullivan admitted that he conspired with David Rose to defraud the United States by bidding for and obtaining contracts set aside for SDVOSBs, to which they knew they were not entitled. Specifically, O’Sullivan and Rose incorporated and became co-owners of a construction company named Sierra Delta Contracting, LLC. O’Sullivan controlled and managed Sierra Delta and bid on and obtained contracts primarily at Fort Drum in Watertown, New York. Although Rose is a service-disabled military veteran, O’Sullivan is not. However, O’Sullivan certified to federal agencies that Sierra Delta was an SDVOSB by representing, falsely, that Rose personally managed and controlled Sierra Delta’s day-to-day business operations. In reality, O’Sullivan, not Rose, controlled and managed Sierra Delta in Jefferson Country, New York, where it sought and received construction contracts, while Rose continued to live and work at a separate full-time job in Virginia. Rose, who had no construction experience, offered little to no input on the management of Sierra Delta.
Between May 2014 and July 2017, Sierra Delta bid on and received multiple construction contracts from the Army at Fort Drum, New York, and one construction contract from the U.S. Department of Transportation. All of the contracts were 100% set aside for SDVOSBs. Each time Sierra Delta received one of these set aside contracts to which it was not entitled, O’Sullivan hired SOS Inc. – his own construction company – as the primary subcontractor on the fraudulently obtained contracts, enabling O’Sullivan to retain the majority of the resulting profits. Sierra Delta received more than $3.3 million in gross revenue from these fraudulently obtained contracts, and O’Sullivan has admitted that he personally received $345,271.34 in profits from the scheme.
Even as O’Sullivan and Rose were continuing their conspiracy to obtain government contracts by fraud, two different government agencies challenged Sierra Delta’s SDVOSB status and questioned whether Rose actually managed the construction company on a day-to-day basis. In response, Rose falsely claimed that he “control[led] the long term and day to day operations of Sierra Delta Contracting LLC,” that he maintained Sierra Delta’s “main office” in Virginia, that he worked on Sierra Delta business 25 hours a week and that O’Sullivan dedicated substantially less time to Sierra Delta. Rose also falsely claimed that he was “responsible for all decisions regarding which projects will be bid on by [Sierra Delta]” and that he (Rose) was solely “responsible for all proposals, including pricing.” Rose and O’Sullivan both knew these statements were false.
Rose, O’Sullivan, and their businesses previously agreed to pay a total of $758,526.68 to the United States to resolve their civil liability for the submission of false claims to the federal government seeking payment on the fraudulently obtained contracts. O’Sullivan, Sierra Delta Contracting LLC, and SOS Inc. agreed to pay $690,542.68; and Rose agreed to pay $67,984. Rose also previously pled guilty for his role in the conspiracy and admitted that he received $33,992 in profits. Following his felony conviction for this offense, Rose was fined $2,000. As part of O’Sullivan’s sentence, United States District Judge David N. Hurd ordered O’Sullivan to pay $345,271.34 in restitution to the United States, which O’Sullivan has already paid through the related civil settlement.
O’Sullivan’s sentence yesterday also related to his prior guilty plea for conspiring to commit an offense against the United States by offering and giving gratuities to Cindy McAleese (nee Garnsey), a former civilian contracting officer at Fort Drum, from November 2009 through February 2018. With respect to that offense, O’Sullivan admitted that he promised and provided things of value to McAleese, including sports tickets, meals, sexual encounters, and time and attention, for and because of official action taken by McAleese on O’Sullivan’s behalf, such as providing O’Sullivan’s company with government contracts, approving payment on those contracts, and reviewing the work performed by Sierra Delta. O’Sullivan also admitted that he and McAleese took steps to keep their relationship a secret from other officials at Fort Drum and from O’Sullivan’s colleagues. McAleese has pled guilty for her role in the gratuities conspiracy but has not been sentenced, and she is no longer employed by the U.S. Army.
The investigation and resolution of these cases were the result of a coordinated effort among the U.S. Attorney’s Office for the Northern District of New York, the Department of Defense Office of Inspector General Defense Criminal Investigative Service; U.S. Army Criminal Investigation Division; General Services Administration, Office of the Inspector General; U.S. Small Business Administration, Office of Inspector General; and Department of Transportation Office of Inspector General, Northeast Region. The criminal cases are being prosecuted by Assistant United States Attorney Michael Perry. The civil case was handled by Assistant United States Attorney Christopher R. Moran.
Source: U.S. Attorney's Office press release
