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IRS contractor’s HUBZone, SDVOSB status in the spotlight

An information technology contractor working with the Internal Revenue Service faced congressional questioning July 26, in a hearing that highlighted ways at least one contractor gamed the system through a variety of techniques, although actual criminal violations are still unclear.


Just last year Braulio Castillo, president and chief executive of Strong Castle Inc., had a service-disabled veteran-owned small businesses contract and was certified by the Small Business Administration as a HUBZone contractor. Both distinctions made Strong Castle eligible for contracts it would have otherwise not been considered for.

The Veteran Affairs Department, whose office of small and disadvantaged business utilization verifies disability status, had verified Castillo as having a 30 percent veteran disability rating, and he self-certified his SDVOSB status with the IRS.

A still-ongoing investigation into Strong Castle’s operations by the House Oversight and Government Reform Committee, however, has led the SBA to de-certify the company as a HUBZone business and the IRS to freeze contracts with the company.

Testimony before the committee revealed that Strong Castle obtained HUBZone status by opening a small office in the Chinatown neighborhood of Washington, D.C. and hiring Catholic University students. Five of his 10 employees attended Catholic, and lived near the school, which is in a HUB-qualifying neighborhood.

“SBA advised us on all aspects of our HUBZone qualification, including the establishment of a principle office in a HUBZone, and the hiring of college-student employees,” said Castillo in his testimony.

“Because we believed the HUBZone status would be significant benefit to the company, we consulted with SBA on every detail of our application and plans,” he added in his opening remarks.

Castillo later acknowledged that he submitted false documents to the SBA.

The IRS chose to cancel contracts with Strong Castle after the committee’s investigation revealed suspicious text messaged between Castillo and IRS Deputy Director for Information Technology Acquisitions Greg Roseman. After learning of the investigation, the Treasury Inspector General for Tax Administration launched a similar investigation into Strong Castle.

While TIGTA had uncovered emails and text messages between the two that “contained inappropriate language and lacked professional decorum,” it wasn’t until the committee provided more text messages on June 25 that the IRS decided it would no longer be working with Strong Castle, Beth Tucker, deputy commissioner for operations support at IRS told the committee.

The “inappropriate communications with juvenile and offensive homosexual slurs, and mocking references to another IRS employee,” have led to Roseman’s reassignment, said Tucker. Roseman invoked his Fifth Amendment right not to testify at the hearing.

Castillo’s disability claims also drew attention at the hearing. According to testimony and SDVOSB-related records, Castillo’s injury was sustained in 1984 while playing football at a military prep school. Despite this injury, Castillo went on to be a college quarterback for four years and still enjoys an occasional golf game, he said. Castillo sought disability status 27 years following the injury.

During the hearing, he had difficulty stating  whether the injury was from football or from slipping on a rock while orienteering. At one point he also struggled explain whether it was a sprained ankle or a broken foot.

While in prep school, Castillo technically was “active duty”, said Brad Flohr, senior adviser for compensation service at the Veterans’ Benefits Administration, and is so entitled to a disability rating decision. Castillo’s rating was based on documentation by a doctor in Ft. Monmouth, N.J.

During the hearing, Rep. Tammy Duckworth (D- Ill.), a veteran who lost both legs and partial use of her arm in combat, took issue with Castillo’s 30 percent disability rating.

Duckworth: Do you view that the 30 percent rating that you have for the scars and the pain in your foot is accurate to the sacrifices that you’ve made for this nation–that the VA decision is accurate in your case?

Castillo: Yes, ma’am, I do.

Duckworth: You know, my right arm was essentially blown off and reattached. I spent a year in limb salvage with over a dozen surgeries over that time period. And in fact, we thought we would lose my arm and I’m still in danger of possibly losing my arm. I can’t feel it. I can’t feel my three fingers. My disability rating for that arm is 20 percent.

Duckworth went on to read the letter Castillo sent to the VA in order to gain disability status where he said, he “bears crosses” due to his service “And I would do it again to protect this great country.”

“I’m so glad that you would be willing to play football in prep school again to protect this great country. Shame on you, Mr. Castillo. Shame on you. You may not have broken any laws, we’re not sure yet. You did misrepresent to the SBA. But you certainly broke the trust of this great nation. You broke the trust of veterans,” said Duckworth.

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