Deceptive Hiring - Feds Duped Out of $100 Million

As early as 2005 through 2007, Blackwater was erroneously awarded 39 separate contracts slotted for small business owners.  According to the SBA Blackwater may have misrepresented its worker population and actually did not meet the small business owner requirements outlined in SBA guidelines.

The façade came to light when House Committee on Oversight and Government Reform Chairman Rep. Henry Waxman became suspicious of the security firm and asked SBA to investigate the firm. On July 28 2008, Waxman went public with Blackwater's deceptive hiring irregularities and the agency that knew about it but did not take corrective action. Waxman stated "it appears the company misled contracting officials who in turn chose to ignore all of the warning signs. It is deplorable that no one ever looked out for the interests of the federal taxpayer." Although Blackwater is not accused of breaking any federal laws this case is far from closed as this article states.

In my opinion misappropriation of federal contract dollars earmarked for small business owners are small potatoes compared to a much larger employer hiring practices that teeters at a pandemic level. The mere fact personnel hired by Blackwater were brought on as independent contractors and not employees presents a whole slew of other headaches for the security firm and they have not heard the last from the Feds. With the recent passage of state and federal legislation designed to crack down on employers who intentionally misclassify workers the security firm will need to staff up with an army of lawyers.

The IRS and the states in which Blackwater is doing business in will dig in and undoubtedly be able to prove the workers are indeed misclassified. Their audit findings will yield hefty fines, steep penalties resulting in corporate punishment. Waxman's statement in addition to the Blackwater retort to the allegations will be used as evidence to prove willful and intentional worker misclassification. Perhaps the illegal "got" may not be worth it in the end.