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WHEELING -- Michael J. Marshall and Brandt Stover, a local contractor, each entered a guilty plea Thursday afternoon in U.S. District Court to one count of "attempt and conspiracy to commit wire fraud."
The Steubenville residents were among four people who were named in an 11-count federal indictment in June 2015 charging them with manipulating business development programs facilitated by the United States Small Business Administration to derive unlawful profits of approximately $24 million.
Also indicted by a federal grand jury in 2015 were Stephen M. Powell of Steubenville, who died in December 2015, and his sister, Nichole P. Northcraft of New Cumberland.
The Northcraft case is pending.
According to a press release issued Thursday afternoon by the U.S. Attorney's Office of the Northern District of West Virginia, Marshall and Stover admitted to being involved in a scheme to defraud the government in which they violated regulations to enter into and remain in programs for disadvantaged individuals and disabled veterans. They were awarded contracts through the programs worth more than $140 million from February 2003 through October 2014.
The Small Business Administration operates programs to assist socially or economically disadvantaged business operators, and the. Department of Veterans Affairs assists disabled veterans in competing for government contracts. The businesses must be unconditionally owned and controlled by the qualifying individuals in order to comply with federal law, the press release stated.
Assistant U.S. Attorneys Robert H. McWilliams Jr. and Andrew Cogar prosecuted the cases. The Small Business Administration Office of Inspector General, the Defense Criminal Investigative Service, the Department of Veterans Affairs Office of Inspector General, the Department of Labor Office of Inspector General and the Federal Bureau of Investigation investigated.
Stacy Bishop, public affairs specialist, said Marshall and Stover each face a prison sentence of no more than 20 years and a fine of no more than $250,000.
No sentencing date has been set, and Bishop said a pre-sentence investigation has been ordered.
U.S. Magistrate Judge James E. Seibert presided during Thursday's hearings.
The four defendants each were charged in the 2015 indictment with:
¯ One count of conspiracy to defraud the United States, for which they each face up to five years in prison and a fine of up to $250,000.
¯ One count of attempt and conspiracy to commit wire fraud, with each facing up to 20 years in prison and a fine of up to $250,000.
¯ Three counts of wire fraud, with each facing up to 20 years in prison and a fine of up to $250,000 on each count.
Stover also was charged with two counts of conspiracy to defraud the government with respect to claims; four counts of willfully causing the submission of false, fictitious and fraudulent claims; and one count of tampering with a witness.
The indictment said Marshall was the accountant, attorney and inside office manager for several participants described in the indictment and Stover was the general manager.
"This indictment alleges that the defendants conspired to exploit the Small Business Administration's regulations to defraud the Department of Defense and other federal agencies," said Craig W. Rupert, special agent in charge of the Northeast Field Office of the Defense Criminal Investigative Service in a June 2015 press release from the U.S. Attorney's Office.
"Through these schemes, the defendants allegedly took taxpayer dollars from the contracts intended to support the U.S. military. These acts erode public confidence and deny opportunities for honest contractors. The American taxpayer expects the Defense Department Office of the Inspector General and DCIS to champion fiscal accountability and acquisition integrity. DCIS, along with our law enforcement partners, continues to shield America's investment in national defense and to vigorously investigate procurement fraud allegations," added Rupert.
"Our office will continue to pursue justice against those who commit fraud to gain access to SBA's preferential contracting programs," said Peggy E. Gustafson, Small Business Administration inspector general. "The defendants' actions deprived legitimate disadvantaged companies of federal contracting opportunities. I want to thank the U.S. Attorney's office for its dedication and leadership throughout the investigation."
According to the 28-page 2015 indictment, Marshall, Stover, Powell and Northcraft "conspired with each other and with other persons known and unknown to defraud the United States and its agencies including the Department of Defense, the Small Business Administration and the Department of Veterans Affairs for the purpose and object of unlawfully obtaining money from federal agency contracts awarded to the participants.
The federal prosecutors also claim Marshall, Stover and Powell set up two real estate companies to purchase property with money obtained from the participants named in the indictment.
The 2015 indictment indicated the federal government would seek forfeiture of $24 million and assets including:
¯ All funds contained in five Huntington National Bank accounts in the name of Eastern Construction & Excavating.
¯ All funds contained in a WesBanco Bank Inc. account in the name of Eastern Construction & Excavating.
¯ All funds contained in Huntington National Bank in the name of Lexington Real Estate LLC.
¯ All funds contained in two PNC bank accounts in the name of N-Powell.
¯ All funds contained in a PNC Bank account in the name of S-Powell Construction Co. Inc.
¯ All funds and financial instruments, including but not limited to, stocks, bonds, commodities and securities contained in a Hillard Lyons brokerage or investment account held in the name of a person with redacted initials.
¯ All funds contained in two Huntington National Bank accounts held in the name of Michael J. Marshal and a person with redacted initials.
¯ All funds contained in a Strip Steel Community Federal Credit Union account held in the name of Michael J. Marshall and a person with redacted initials.
¯ All funds in a Strip Steel Community Federal Credit Union account held in the name of Brandt Stover.
¯ All funds in a Strip Steel Federal Community Credit Union account held in the names of persons with redacted initials or Brandt Stover.
Government officials said in the indictment they would seek the forfeiture of 17 pieces of equipment.
Marshall is the former Steubenville finance director. None of the charges were related to his former job.