Suit calls VA’s pull of plug a violation
It questions basis for contract halts
Powers of Arkansas, a North Little Rock commercial heating and air company that has provided services under contract with federal agencies in Arkansas for over 30 years, on Thursday sued the U.S. Department of Veterans Affairs for suspending ongoing contracts based on dismissed criminal allegations.
Powers and its owner, Ross Alan Hope, said the department is violating their due-process rights by suspending them from government contracting programs on the basis of fraud allegations that deadlocked a federal jury in September and were later permanently dismissed at the request of federal prosecutors.
Hope and the company, the largest commercial heating and air company in the state, “have spent countless hours and resources in defending the criminal charges … and now face the prospect of defending the same allegations in a forum that has been available to the [government] from the outset,” wrote attorney Charles A. “Chuck” Banks of Little Rock on the plaintiffs’ behalf.
The lawsuit was assigned to U.S. District Judge Leon Holmes, who in November granted prosecutors’ request to dismiss major-fraud charges against Hope and Mikel Kullander in lieu of retrying them after a jury deadlocked on whether they had intentionally hoodwinked the government to obtain million-dollar contracts.
The men had faced 28 charges apiece in what
Banks said should have been a civil dispute from the beginning and never warranted criminal charges.
Kullander owns a Little Rock construction company, and in 2007 joined Hope and James Wells, a service-disabled veteran, in forming a new company, DAV Construction, to compete for construction contracts set aside under a new government program for businesses run by disabled veterans.
Hope and Kullander contended at trial that by naming Wells as the controlling partner of the company, they were simply trying to abide by government regulations. They said they had consulted with government agency officials who knew that Wells was a minimal participant and seemed to approve the arrangement. Wells wasn’t charged.
After six days of trial and 1½ days of deliberation, jurors reported being unable to reach a verdict on any of the charges.
Hope and Kullander had been indicted in 2016 under the leadership of Chris Thyer, who was then the U.S. attorney for the Eastern District of Arkansas. But in November, after Cody Hiland took over as the U.S. attorney under a new
presidential administration, the office asked to drop the case “with prejudice,” meaning the charges couldn’t later be refiled.
The office also asked Holmes to lift a hold on Hope’s bank account. The lawsuit filed Thursday says the seized funds were returned Jan. 21.
Kullander isn’t a plaintiff in the lawsuit, which names as defendants the U.S. Department of Veterans Affairs; Jan Frye, the suspending and debarring official for the department; and Timothy Baker, an investigator for the U.S. Food and Drug Administration, which also had contracts with DAV Construction.
No one could be reached for comment Thursday at the Veterans Affairs regional office in North Little Rock.
In addition to providing services to the department for more than 30 years, Hope and the company are “uniquely qualified and have demonstrated time and time again a superior expertise in providing their services to the beneficiaries of contracts with the VA and other federal agencies,” the lawsuit says.
It notes that federal regulations require agencies to establish procedures to promptly report, investigate and refer matters appropriate for “debarment” consideration. It says the
defendants began an investigation in 2012, then “ignored their own rules and the process available to them and instead wasted countless resources, including a raid in which 83 federal agents appeared at Hope’s home and office,” before the December 2016 indictment was handed up.
Not only do the defendants’ actions constitute violations of due-process rights, the suit says, but “they are also emblematic of a larger and increasing problem — the virtually unrestrained power of federal investigators to decimate livelihoods as they conduct investigations, without any readily available, or effective means of oversight or protection for those ensnared — no judge to resolve disputes, no mandatory rules of procedure with sanctions, and no feasible means of appeal if an investigator oversteps.”
Hope is seeking an injunction preventing the government from enforcing the contract suspension and a restraining order preventing him and his business from being excluded from bidding on federal contracts.
The suit calls the suspension “a debilitating blow” to Hope’s “bottom line and reputation,” and alleges that it was done to punish him for fighting the criminal charges.