Wednesday, December 12, 2018

Federal jury finds Neosho businessman not guilty on Joplin Tornado fraud charges

A federal jury found Neosho businessman Raul R. Gonzales not guilty of tornado fraud charges Friday in U. S. District Court in Springfield.

A grand jury indicted Gonzales in June 2016, claiming he was behind a $3 million disaster fraud scheme in which his company, Intelligent Investments, Inc., received a government contract designated for a service disabled veteran-owned small business that hired local workers to clean up debris following the May 22, 2011 tornado.

The Kansas City Star report on Gonzales' acquittal includes the following:

In court, Gonzales — represented by William Fleischaker of Joplin and Dennis Hartley of Colorado Springs — acknowledged that after the government cut the time of debris removal from six months down to just over four weeks, he was forced to rely more heavily on subcontractors to get the work done.

But his legal team presented evidence that Gonzales and Intelligent Investments had spent more than $318,000 on personnel costs. That personnel logged close to 12,000 man-hours removing debris in July and August 2011. Gonzales testified he believed his employees performed at least 40 percent of the contract.

The team also showed that the federal government, despite its accusation, had never audited Gonzales’ work to calculate who had done the work and what expenses had been incurred. The government ceased paying Gonzales after accusations of fraud arose.

“The government has paid for about half the contract,” meaning about $3 million, Fleischaker said. “They still owe him over $3.5 million. … I mean they ruined him. He is a strong guy. He is a Marine Corps veteran. I am expecting that he will get back. … It’s been close to three years. Obviously it is tough on anybody.”

The news release issued in 2016 by the U. S. Attorney for the Western District of Missouri described the charges against Gonzales:
Under the terms of a contract managed by the U.S. Army Corps of Engineers to remove tornado debris from public rights-of-way and residential property in the wake of the 2011 tornado, the prime contractor was required to be a service disabled veteran-owned small business. The contract also specified that at least 50 percent of the work must be done by employees residing in Jasper and Newton counties.

Gonzales owned and operated Intelligent Investments, Inc., in Joplin, which was registered with the Department of Veterans Affairs as a service disabled veteran-owned small business. Intelligent Investments was awarded a contract in June 2011 and received payments of approximately $3 million.

According to the federal indictment, a company outside the state of Missouri – identified in the indictment as Company A – recruited Intelligent Investments to bid on and obtain the contract as the primary contractor, because Company A did not qualify. The indictment alleges that Gonzales and Company A agreed that he would perform little, if any, work on the contract. Instead, Company A would perform virtually all the work on the contract using its own resources and subcontractors, which were not local. Gonzales and Company A allegedly agreed to split the net profits received from claims under the contract, with Company A to receive substantially more than half of the net profits.

The indictment charges Gonzales with one count of conspiracy to defraud the United States, three counts of making a false claim, three counts of disaster fraud and three counts of making and using a false document.

The accompanying video is from KSN/KODE.

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