As South Carolina Dem Gov Candidates Debate, James Smith Owes Answers Over His Alleged Misuse of Veteran Benefits

As South Carolina Democrat gubernatorial candidates debate tonight, James Smith owes answers following a report that he may have improperly used his disabled veteran status to turn his company into a pass-through for government contracts to non-veteran businesses. A recent government audit found that “[Smith] uses his [disabled veteran] status to secure VA set-aside contracts and pass the performance of such contracts to various non-Veteran entities” while stating that “such conduct is prohibited.”

The Daily Caller reported that abuse of set-aside veterans contracts or “rent-a-vet” schemes, are “a multi-million dollar problem in the federal government and sometimes results in criminal prosecutions.” With an audit showing Smith potentially engaged in prohibited activity, this raises serious questions for his campaign, and even if he should run for governor if involved in potentially illegal schemes with taxpayer dollars.

Smith should release the past 10 years of his full tax returns, and release financial information from his company, The Congaree Group, for full transparency. After Smith only showed his tax returns for 2014-2016 to the media, declining to make them publicly available, it’s time for Smith to come clean with voters and release his tax returns for the past 10 years.

The Daily Caller reports:

“A Democrat running for governor on his military and small business bona fides may have used his disabled veteran status to obtain government contracts and then hand off the work to non-veteran owned entities, a government audit found.

James Smith, a candidate for South Carolina governor in the state’s June 12 primary election, is a representative in the state legislature, serves in the National Guard, and runs a law firm in Columbia. He also finds time to operate the Congaree Group, a small company that has received millions of dollars in federal contracts. The company operates out of the same office as his law firm.

The firm boasted the capability to do everything from distributing pharmaceuticals to parking hundreds of cars per day as part of valet services at massive hospitals — all with Smith telling Department of Veterans Affairs (VA) officials he was its only employee, a 2013 document from the VA’s Center for Veterans Enterprise (CVE) shows, which TheDCNF obtained.

‘He doesn’t just work 40 hours a week,’ Smith’s campaign spokeswoman, Alyssa Miller, told The Daily Caller News Foundation.

‘It appears that [Smith] uses his [disabled veteran] status to secure VA set-aside contracts and pass the performance of such contracts to various non-Veteran entities,’ the audit said, according to the VA’s findings. ‘Such conduct is prohibited.’

Smith worked 35 hours for the Conagree Group and also found time to represent his constituents and practice law, the South Carolina candidate told the VA.

The VA revoked the company’s ability to obtain contracts reserved for veterans, but the agency reversed that decision after Smith appealed, spokeswoman Miller said…

Miller would not say on what basis the VA reversed the audit’s initial finding that Smith’s company was improperly connecting major non-veteran companies with contracts reserved for veterans in exchange for a financial cut.

Yet the evidence gathered in that audit, including from Smith’s own website, shows he used Congaree as a pass-through company to help non-veteran businesses.

The Congaree Group’s website boasted the company said it had ‘strategic alliances”’that helped other businesses meet “government mandates” for government work set aside for disabled veterans, the audit noted.

When it came to pharmaceuticals, the audit showed language from Smith’s website at the time:

You can order these products from Congaree Pharma … but the product is drop shipped from BDI Pharma’s warehouse directly to you. The Congaree Group, Congaree Pharma, has the ability through our Service Disabled Veteran Owned Small Business (SDVOSB) designation to broker the government contracts that will ensure your company’s future stronghold in the marketplace.
The audit said:

[A] credible basis exists to question the concern’s dependence on non-Veteran entities. It appears that [Smith] offers to broker access to his SDVOSB status for the benefit of non-Veteran entities … [Smith] does not have the specialty skills required to perform on several of the contracts he has secured. … “The Congaree Group currently holds contracts for pharmaceutical sales, medical equipment sales, and valet parking services, worth a total of over $1,000,000,’ the audit continued. ‘It is reasonable to conclude that the Congaree Group functions as a middleman to enable various non-Veteran entities like BDI Pharma to secure the actual contract. Therefore, it appears that undue dependence exists due to the Congaree Group’s business relationships with non-Veteran entities in contravention of 28 CFR 74.4(i)(4).

‘The Congaree Group has undue influence/dependence with non-veteran entities … As a result, the Congaree Group is ineligible for the SDVOSB program,’ the audit concluded…

Abuse of set-aside veterans contracts — known as rent-a-vet — is a multi-million dollar problem in the federal government and sometimes results in criminal prosecutions. A ‘joint venture’ between a veteran-owned company and a non-veteran company, for example, allegedly misrepresented that the veteran company was keeping most of the profits to defraud the government of more than $11 million in contracts, according to a 2017 Department of Justice indictment…

‘Smith, the top Democratic fundraiser in the race, did not release his tax returns with other candidates at the request of The Post and Courier last month but allowed reporters to review them Thursday,’ The Post and Courier reported on May 3. It was not clear the company’s profits were included in what reporters reviewed.”