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Contractor Admits $6M Veteran Fraud

Thursday, July 16, 2015

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TRENTON, NJ--The owner of several New Jersey construction companies is headed to prison after pleading guilty to raking in millions of dollars from a federal program designed to help disabled veterans.

Donna Doremus, 47, the owner of Tyro General Construction, Storm General Construction and DMD Drafting, had been charged with bribing a public official, conspiracy to defraud the United States, and making and submitting false federal tax returns.

VA East Orange

Doremus' construction companies were awarded more than  $6 million in contracts to perform work at the Department of Veterans Affairs Medical Center in East Orange, NJ.

Doremus will spend 37 months in prison, under plea agreements announced Monday (July 13).

Doremus said she paid $671,000 in bribes to a former Department of Veterans Affairs supervisory engineer at the VA’s campus in East Orange in order to obtain $6 million in construction contracts, including those reserved for service-disabled, veteran-owned small businesses, according to an announcement by U.S. Attorney Paul J. Fishman.

Bribes and Lies

Prosecutors say Doremus paid the bribes to Jarod Machinga, 45, over a period of five years, beginning in 2007.

As a supervisory engineer, Machinga had the authority and influence to direct certain VA construction contracts to particular companies. He directed more than $6 million in contracts to Doremus’ companies for work at the VA Medical Center in East Orange, prosecutors said.

Moreover, Doremus and Machinga falsely represented to the VA that Tyro General Construction was a service-disabled, veteran-owned small business in order to obtain a contract worth $3 million with the VA.

The company was not qualified to participate in the program, which sets aside federal contracts for small businesses owned by service-disabled veterans.

Official White House Photo / Pete Souza

The U.S. Department of Veterans Affairs’ Service-Disabled Veteran-Owned Small Business Program, established in 1999, is part of a federal effort to increase the number of contracts awarded to small businesses owned by service-disabled veterans.

Authorities also said that for the tax years 2009 and 2010, Doremus falsely reported that certain bribe payments she made to Machinga, as well as some personal expenditures, were her companies’ business expenses.

As a result, she failed to pay $250,374 in federal income taxes that she owed to the Internal Revenue Service, Fishman said.

Sentencing Details

In addition to the prison term, Doremus was ordered to serve one year of supervised release.

As part of her plea, she also agreed to a forfeiture money judgment of $671,975.

Restitution in the case will be determined in August.

In June, Machinga was sentenced to serve 46 months in prison. He pleaded guilty in 2013 to one count of honest services wire fraud, one count of wire fraud and one count of engaging in a monetary transaction in criminally derived property, according to the U.S. Attorney's office.


Tagged categories: Bidding; Building operations; Business matters; Contract awards; Criminal acts; Fraud; Good Technical Practice; Government; Government contracts; North America

Comment from Tom Schwerdt, (7/16/2015, 9:27 AM)

Well, here's one source of the construction mismanagement and insane cost overruns at the VA.

Comment from jim dolan, (7/16/2015, 2:03 PM)

Can you find anything the Gov. does well?

Comment from Tom Schwerdt, (7/17/2015, 8:34 AM)

By far the best military in the world, even though it costs as much as the next 12+ militaries combined. NASA does the best job exploring other planets, despite Congress treating NASA like a jobs program for their districts.

Comment from Paul Braun, (7/17/2015, 8:46 AM)

rural electrification, the federal highway system, public education, clean air and water, the FDA, DOE, NHTSA, CDC, MSHA, OSHA, NOAA, (we do reeeealll good at acronyms), the judicial system. Which seven of these would you prefer to do without?

Comment from John Fauth, (7/27/2015, 8:27 AM)

Paul, don't you think an "all or nothing" premise is painfully flawed?

Comment from Paul Braun, (7/28/2015, 8:36 AM)

Sure thing, John. That's why I have such little patience for the lazy and deceptive proposition that government IS the problem, that it is incapable of doing anything right, and that we would all be better if it was "shrunk to the size where it could be drowned in a bathtub".

Comment from John Fauth, (7/28/2015, 8:41 AM)

But Paul, you're advocating the "all" proposition as if we have to accept the gross mismanagement and inefficiency as a necessary component of any good government (or an agency) may do. At least, that's my perception.

Comment from Andrew Piedl, (7/28/2015, 10:02 AM)

What have the Romans ever done for us?

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