Company remains eligible for federal contracts despite settlement over shell-company allegations 

A major federal contractor from Florida that paid to settle accusations of using shell companies to snag deals reserved for service-disabled veterans still holds billions of dollars in U.S. government work and remains eligible for more.

Loyal Source Government Services reached the settlement with the Justice Department in April, nearly seven years after a whistleblower filed a lawsuit in federal court.

The complaint alleged that Loyal Source secretly controlled companies that won contracts that were open only to small businesses owned by former military members who became disabled as a result of their service.

The case raises questions about how aggressively the federal government polices contractors accused of abusing programs intended to steer taxpayer dollars to disabled veteran-owned small businesses, and why companies that settle such cases can remain eligible for lucrative federal deals.

Based in Orlando, Loyal Source provides medical staffing and health care services for several federal agencies. It currently has $2.1 billion in contracts with the Department of Veterans Affairs, the Defense Department and the Homeland Security Department, according to federal records.

And as of July 20, Loyal Source was not listed in the online General Services Administration database of companies barred from receiving government contracts.

Loyal Source officials and the owner of the three companies named in the complaint did not respond to requests for comment.

VA spokesman Quinn Slaven said the agency has no active contracts with Officium Global, one of the three purported shell companies.

“Any remaining contracts with Loyal Source are unrelated to and independent from the allegations in the settlement,” Slaven said.

The definition of a small business varies by industry but is mostly based on the average of annual receipts or the average number of employees, according to the Small Business Administration website.

The complaint alleged that Loyal Source was too large to qualify under SBA regulations. The company had over 5,000 employees worldwide in 2023 and nearly 4,000 a year later, according to statements it issued.

In 2024, Loyal Source made Inc. magazine’s list of America’s fastest-growing private companies for the seventh time. The list has previously included such notables as Facebook and Microsoft.

The firm agreed to pay $1.8 million to settle the allegations but admitted no wrongdoing, the Justice Department said last month. Officium Global also agreed to pay $1.8 million to settle the allegations without admitting wrongdoing.

Federal agencies have the authority to suspend or bar contractors accused of fraud or other misconduct, potentially preventing them from receiving future government work.

William Daniels, spokesman for the U.S. attorney’s office for the Middle District of Florida, declined to answer questions about Loyal Source and the settlement beyond providing basic details.

According to the complaint, Loyal Source carried out the scheme through three companies — Officium Global, Ghost RX and Ghost-Loyal Source JV — which were owned on paper by Justin Myers, a service-disabled veteran whose brother Michael was formerly Loyal Source’s business development manager.

The complaint alleged that the shell companies were under Loyal Source’s ownership and control, so they no longer qualified as being owned by a service-disabled veteran.

Loyal Source employees, not Myers, effectively operated the companies by writing contract proposals, providing workers, managing projects and controlling the businesses’ finances, the lawsuit contended.

The companies funneled revenue back to Loyal Source, according to the lawsuit, which was filed in 2019 by Jeremy Lavin. He had been hired by Myers to reconstruct the billing and financial records of the three businesses.

The complaint cited emails, financial records, bank accounts and Lavin’s firsthand observations as evidence that Loyal Source controlled the companies.

The complaint also said the Air Force Office of Special Investigations raided Loyal Source in 2017, after which the company attempted to distance itself from the businesses while continuing to control them through former employees and longtime associates.

Loyal Source has faced scrutiny over its government work in recent years.

In 2018, the Labor Department ordered the company to pay nearly $575,000 in back wages to more than 4,000 employees after finding that it had made unlawful paycheck deductions.

A Senate Judiciary Committee report last year accused the company of providing inadequate medical care at an Immigration and Customs Enforcement detention facility in El Paso, Texas, that contributed to the death of an 8-year-old girl.

U.S. Rep. Veronica Escobar, a Democrat whose district includes El Paso, said in a statement that Loyal Source “should be nowhere near federal contracts.”

“They have proven time and time again they are poor stewards of taxpayer dollars,” Escobar said.

As of mid-June, Loyal Source was still providing medical services for detained immigrants in El Paso, Escobar said. She added that she’s looking for ways to hold the company accountable.