Former lawmaker pleads guilty to contracting fraud

A former state lawmaker from Virginia Beach admitted Tuesday that for nearly a decade, he fraudulently won defense contracts set aside for disadvantaged and minorityowned businesses.

Ron Villanueva, 48, a Republican who lost his seat in the General Assembly in 2017, pleaded guilty to conspiracy to defraud the United States. He faces up to five years in prison when sentenced July 2.

According to court documents, in about 2005, Villanueva met a man named Khalil Naim, who was running a struggling government contracting business with his wife. Villanueva and Naim took over the business and ran it for five years while pretending that Naim’s wife was in charge so they could keep getting preferential contracts for military and tactical gear. She was not even living in Virginia Beach, where the company was located.

Villanueva helped draft a misleading letter to the Small Business Administration that mischaracterized the degree to which the company relied on other suppliers, according to court documents.

The program that Villanueva and Naim exploited was meant to help small businesses get on their feet; after 2010, the company would no longer qualify. So, Villanueva admitted, he persuaded his brother-in-law, Sam Caragan, to move to Virginia Beach and be the front for a new company. Villanueva used his official House of Delegates letterhead to write to the SBA in support of the new company — not disclosing that he was actually running it with Naim.

Together, the two companies — SEK and Karda — won more than $80 million in government contracts; Villanueva made about a million dollars from them.

Caragan and Naim pleaded guilty last year to their roles in the conspiracy.

A larger Virginia Beach contractor affiliated with SEK and Karda paid $16 million to settle fraud claims in 2017. The two companies together agreed to pay the government $220,000.