June 12, 2026
Contractor To Pay $21.3 Million In Federal Fraud Case
Case highlights control requirements governing federal contracting partnerships
CHICAGO — Broadway Electric Inc., Cornerstone Contracting Inc. and two of their top executives have agreed to pay $21.3 million to resolve False Claims Act allegations that they used service-disabled veteran-owned small businesses as pass-through entities to capture federal contracts they were not eligible to hold, the U.S. Department of Justice announced Tuesday.
The settlement covers conduct from April 2017 through May 2025. According to the settlement agreement, Broadway and Cornerstone identified contracting opportunities, prepared and priced bids submitted in the names of purported small businesses, secured bonding, selected subcontractors and primarily controlled project execution, staffing and financial administration, including payroll.
The small businesses listed on the contracts received fixed payments of roughly one to three percent of contract value, unrelated to the work performed. The remaining revenue flowed to Broadway, Cornerstone and contractors they selected.
Notably, the defendants admitted to the conduct. Most False Claims Act settlements end with companies paying while conceding nothing; this one includes a formal acceptance of responsibility. CEO John Oehler and President Christian Blake, neither of whom is a service-disabled veteran, were directly involved in establishing and directing the arrangements, according to the agreement. At least one veteran owner raised compliance concerns along the way. The structure stayed put.
A Familiar Name on Big Public Work
Broadway Electric is no small shop. Founded in 1984 on Chicago's north side and headquartered in Elk Grove Village since 2004, the IBEW Local 134 contractor became 100 percent employee-owned in 2018 and works as an electrical prime, electrical sub and, increasingly, directly for owners.
Its current project list runs through some of the region's most visible infrastructure, with a heavy footprint at O'Hare International Airport.
Why It Matters Beyond Chicago
For lighting and electrical firms pursuing federal work, the case lands on familiar terrain. Teaming agreements, joint ventures and mentor-protégé arrangements are common routes into set-aside contracts, and the rules turn on a question that is easy to blur in practice: who actually controls the work. Two whistleblowers, an Air Force veteran and an SDVOSB executive, will share roughly $3.7 million of the recovery.
The administration's new Task Force to Eliminate Fraud signals that procurement enforcement is accelerating rather than cooling. Firms holding set-aside partnerships on federal lighting, energy and infrastructure projects may want to confirm who holds signature authority, who runs payroll and whose email domain the bids go out under. In this case, the government concluded those answers were worth $21.3 million.
