A recent investigation by the Los Angeles Times reveals that, since 2000, the federal government and state officials have awarded more than $300 million in federal contracts to business operators that allegedly made dubious claims to Native American status to win minority set-aside bids.
Officials in St. Louis, Missouri, have responded by decertifying at least five businesses that had claimed minority status, reported the Riverfront Times. Attorneys for the Missouri firms have disputed the action and announced intent to challenge the move with a lawsuit in federal court.
“Efforts by state and local governments to give women and minority owned businesses a fair shot at winning government contracts have proved crucial in helping many of these companies to grow and thrive,” stated Missouri state Rep. Alan Green (D-Florissant). “Unfortunately, there are unscrupulous operators who will fraudulently claim minority status to win contracts. That’s why it is vital for officials to closely monitor these programs so that the goal of improving true minority participation is achieved while avoiding rewarding bad actors.”
The LA Times report revealed that multiple minority contract applicants, dispersed across 18 states, claimed to hail from federally unrecognized Cherokee groups — namely the Clinton, Missouri-based Northern Cherokee Nation; the Western Cherokee Nation of Arkansas and Missouri; and the Northern Cherokee Nation of the Old Louisiana Territory, based in Columbia, Missouri. Members of the Northern Cherokee Nation, for instance, have received an estimated $31.5 million in government contracts earmarked for minorities. The federal government recognizes three Cherokee Tribes: the Cherokee Nation, the Eastern Band of Cherokee Indians and the United Keetoowah Band of Cherokee Indians.
The issue at stake is governmental lack of verification of claims to Tribal membership.
Texas-based AFCO Technologies Inc. took home one of the largest federal contracts set aside for Native Americans or other minorities, $90 million, by claiming membership in an unrecognized Cherokee group. According to the Times, available census and birth records identify the owner’s ancestors as white.
The LA Times’ investigation shines a light on the lack of governmental vetting. Little evidence is required to substantiate an applicant’s minority status or background, and as a result, abuse of the system has become a widespread cultural phenomenon, the LA Times has underscored.
The investigation has prompted federal and state lawmakers and regulators to reconsider minority-certification rules and how misappropriating funds takes opportunity away from Tribal members and other minorities who qualify and could benefit from these contracts. Interestingly, members of non-federally recognized Cherokee groups are prohibited from selling products with the label “Native American Made,” but they’re still able to obtain millions in federal contracts, Times reporter Adam Elmahrek emphasized in a TV interview on Spectrum News 1.
Among the more high-profile cases of alleged fraud is a company owned by relatives of U.S. House Minority Leader Kevin McCarthy, R-Calif. The McCarthys received at least $7 million in minority set-aside federal contracts and allegedly obtained minority certifications based on self-professed affiliation with one of the Cherokee groups. Interestingly, the McCarthys did not reapply for minority certification after the Times commenced its investigative report, Elmahrek said.