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A high GOP lawmaker is asking on the Department of Protection to conclude no-expose contracts by strategy of a minute-change program for socially and economically disadvantaged firms, noting a scandal whereby Native Hawaiian protection contractor Christopher Dawson used to be accused of cheating it for private create.

This week Sen. Joni Ernst, chair of the Senate Little Industry Committee, sent a letter to Protection Secretary Pete Hegseth calling contracts awarded by strategy of the Little Industry Administration’s 8(a) program a “fraud magnet.”

She namely cited Dawson, whose offices in downtown Honolulu had been raided by federal brokers in 2023 as piece of an embezzlement probe. Ernst used to be significantly shy that Dawson’s firms continued to get protection contracts while below investigation, including a $3.4 million award from the Navy to 1 of his firms, Dawson MCG, ethical days after federal brokers entered his offices to confiscate worker cellphones and computers. Civil Beat and ProPublica printed an in-depth article on Wednesday regarding the allegations against Dawson and the SBA’s actions, and Civil Beat earlier reported on the Department of Justice’s investigation into him.

“I am panicked by a firm below active federal investigation persevering with to get high-buck, no-expose contracts from the Pentagon, despite federal actions indicating well-known issues regarding the firm’s ‘factual character,’ which is a required eligibility criterion for 8(a) contributors,” wrote Ernst, who represents Iowa.

Ernst cited Civil Beat’s reporting regarding the DOJ accusing Dawson and other executives of abusing the 8(a) program by utilizing shell firms, say firm transfers and “hollow invoices” to line their very gain pockets, including by shopping luxury properties in Hawaii and Florida. SBA records received by Civil Beat and ProPublica converse he used to be also spending lavishly on non-public jets and Porsches and pumping hundreds of hundreds into his popular ardour, polo.

Prosecutors talked about in court paperwork that, between 2015 and 2021, the total quantity of cash diverted into one of Dawson’s shell firms used to be $17 million, practically double what used to be sent to Dawson’s nonprofit Hawaiian Native Corp. for the coolest thing about Native Hawaiians.

The SBA talked about it may per chance well truly most likely per chance also circuitously screech on the Dawson case, citing the continuing investigation, however talked about it “welcomes the partnership of all companies in the effort to conclude fraud and abuse inner the 8(a) Program.” The agency is conducting an audit of the program and talked about it “appears to be forward to identifying unhealthy actors, holding them in price, and restoring a contracting program built on advantage as a substitute of arbitrary DEI agendas.”

The 8(a) program used to be born out of the civil rights technology and used to be designed to relieve change owners from traditionally disadvantaged groups, including racial and ethnic minorities, fetch federal contracts with restricted or no opponents.

Dawson had built an empire off of the special privileges granted to him by strategy of the program, and by plan of the Hawaiian Native Corp. he owned a build of firms which gain received better than $2 billion in contracts. His firms gain accomplished a wide form of labor for the authorities, from sweeping the Arizona desolate tract for unexploded munitions to prepping grave sites for navy burials on Oahu.

These contracts, on the opposite hand, got right here with a gain. He used to be speculated to make enlighten of his earnings to uplift Native Hawaiians. Federal prosecutors now counsel in court records that he broke that promise.

Dawson used to be fired by his gain firm, and he died by suicide in December 2024, however prosecutors are pursuing an asset forfeiture case against four properties they are saying he bought with stolen funds. The DOJ is also persevering with its criminal investigation into other that that it’s seemingly you’ll contain of suspects, based fully on court records.

Ernst called on Hegseth to “peek for potential fraud” the Dawson MCG contract and other 8(a) awards to the firm. She talked about she wished the Pentagon’s review to also consist of 8(a) contracts awarded to the Hawaiian Native Corp.’s other subsidiaries, which operate below the name DAWSON.

The Hawaiian Native Corp. and DAWSON officers spoke back to Ernst’s letter with their very gain letter to Hegseth whereby they talked about the federal investigation did no longer aim the Hawaiian Native Corp. or its firms however quite used to be targeted on decided broken-down employees. They talked about the senator is “simply wrong” and that the Hawaiian Native Corp. and its firms gain “fully cooperated with both the DOJ and SBA to contend with points identified by both agency in their investigations.”

“It is serious to converse that HNC and its portfolio of operating firms gain a solid efficiency file as a federal authorities contractor, and there has no longer been any suggestion otherwise by any law enforcement or regulatory agency,” the letter states.

Dawson wasn’t Ernst’s finest misfortune. In the letter she entreated Hegseth to create a extra thorough review of all 8(a) no-expose and situation-apart contracts awarded by his agency relationship lend a hand to fiscal one year 2020 to substantiate any violations of law or SBA principles.

Ernst sent similar letters to 21 other federal companies, every including an example of an 8(a) contract that the senator chanced on problematic.

In her letter to Transportation Secretary Sean Duffy, she called out Echelon Services LLC, a firm owned by the Hawaii Pacific Foundation, which admire the Hawaiian Native Corp., is a Native Hawaiian organization that below SBA principles is required to make enlighten of firm earnings to toughen Native Hawaiians.

Ernst accused the root of getting two diversified firms performing the same influence of labor for the authorities while collaborating in the 8(a) program, something she talked about is a potential violation of SBA principles.

Jeanine DeFries, president and CEO of the Hawaii Pacific Foundation, refuted Ernst’s allegations, asserting that SBA principles allow those firms to create the same work as lengthy as they’re piece of a joint endeavor. 

“We are in a position to also verify,” DeFries talked about, “that we had been no longer contacted by the senator’s or the committee’s offices forward of receiving the letter.”

Ernst’s letters are piece of a broader Republican-led push to total the extra or much less diversity, equity and inclusion efforts on the heart of the 8(a) program.

In June, Kelly Loeffler, President Donald Trump’s pick to manual the SBA, announced a plump-scale audit of the program after the owners of two 8(a) firms pleaded responsible to federal charges of taking piece in a $550 million bribery diagram gripping a U.S. Company for International Development contracting officer.

Then in October she launched an investigation into the Susanville Indian Rancheria and one of its firms, ATI Government Solutions, after James O’Keefe, a factual-waft political activist, printed undercover pictures purporting to converse firm employees admitting they broken-down the 8(a) program to fetch contracts and go them alongside to other firms.

When announcing the investigation on X, Loeffler attacked the program she’s now charged with operating. “Take care of every other authorities program rooted in DEI,” she talked about, “the 8(a) Program is rife with grift and fraud.” Two days later Loeffler again took to X to enlighten she had suspended ATI Government Solutions and three of its executives from contracting with the federal authorities.

ATI did no longer retort to calls and messages looking out out for screech.

The Treasury Department adopted up in November by itself issues regarding the firm by initiating an audit of $9 billion in preference-based fully contracts, an inquiry that the agency talked about would peek potential misuse of the 8(a) program. And ethical final week, Loeffler ordered all 8(a) contributors to put up detailed monetary statements to the agency or trouble shedding their contracting advantages.

Ernst and others gain tried to lay blame on the Biden administration, with the senator asserting in her letters that the broken-down president’s aim of increasing federal contracting alternatives for minority change owners situation the stage for potential fraud and abuse.

On the same time, she acknowledged that 8(a) program flaws, which consist of “sloppy oversight and long-established enforcement measures,” gain “raised distress bells for a long time.”

But Linda McMahon, Trump’s SBA administrator at some level of his first time-frame, praised Dawson and his firms at some level of a 2019 senate oversight listening to, asserting “they teach so many firms in and toughen so many firms.” McMahon, who is now the secretary of education, did no longer retort to a ask for screech.