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Entrepreneur feels victimized by federal agency, big competitors

PR firm folds after contract is pulled; 9-year court battle lost on jurisdictional issue

By Kevin J. Shay
September 29, 2006

At one time, Joseph Cooper's advertising and public relations company pulled down $3 million in annual sales and had 22 employees.

Then, things went south for the Rockville resident. The U.S. Immigration and Naturalization Service which in 2003 split up into the Immigration and Customs Enforcement, and Citizenship and Immigration Services pulled a substantial contract and gave the work to larger businesses, according to federal court documents.

That was fraudulent, Cooper said, because the contract was under a U.S. Small Business Administration program reserved for small companies. The new awardees were not small, he said, although they claimed to be, according to court documents.

After losing an almost decade-long legal battle this year, Cooper said he is in dire straits. He hasn't found regular employment, with his age 59 being a major hurdle. He lost his home and is living in a Rockville apartment through the generosity of friends and relatives.

He's left wondering what went wrong.

"This isn't the way it's supposed to be," Cooper said. "My parents taught me to work hard and you will gain what you need in life ... I worked hard, and to see it come to this it's rough. It's really rough."

Cooper's plight highlights what some small-business advocates say is a pervasive problem: Large companies using loopholes to win billions of dollars in contracts that should go to small companies such as Cooper's.

SBA officials say they are making changes to fix the situation, and Congress is also trying to address it.

Cooper gets no satisfaction

Cooper had a strong case, said Anthony W. Robinson, president of the Minority Business Enterprise Legal Defense and Education Fund in Largo, who helped with the proceedings.

Many companies, especially minority-owned ones, have to deal with similar situations in which large businesses use smaller companies to get small-business contracts or misrepresent themselves to get the contracts, Robinson said. He was surprised that Cooper's lawsuit was dismissed on a "technical issue."

In a Washington, D.C., federal court in March, District Judge Ricardo M. Urbina threw out the suit and awarded the defendants attorneys' fees due to a "lack of subject-matter jurisdiction," because Cooper's claims were "based on publicly disclosed information" of which he was not the original source.

Under a claim under the False Claims Act, Cooper would have had to show he was "the original source of either the information concerning the alleged misrepresentations or the information indicating that the defendants are all large businesses," Urbina wrote.

The judge cited media reports that documented that the defendant companies were not small. But he wrote that the court did not have jurisdiction to hear the case because "information revealing the true state of facts already exists in the public domain in another form."

Cooper and his attorney, Cyrus E. Phillips IV of Washington, are still scratching their heads over the ruling.

Phillips, who said he believed in the case's merits so strongly that he took it on a contingency basis, has represented other small-business owners in similar instances who saw their cases settled in their favor.

"It was an unexpected ruling," he said.

Contract first won in 1995

Cooper, a Brooklyn, N.Y., native, said he started J. Cooper and Associates in 1987 in the District after holding advertising and other positions with the U.S. Postal Service, Commerce Department and Labor Department. He steadily built his business and joined the SBA's 8(a) program that's designed to help small minority-owned companies.

In 1995, Cooper won a contract from the immigration service that he said would have been worth $8 million over five years to conduct an advertising campaign to recruit Border Patrol agents and other employees. An immigration contracting employee said the contract allowed the agency to use multiple vendors, and officials did so because they "were not happy" with the performance of Cooper's company, according to a 1997 U.S. Justice Department report.

However, Cooper said a senior contracting officer with the immigration agency later gave a sworn deposition in which he said Cooper's company did nothing wrong.

"They had to follow proper procedures to terminate the contract with us, and they didn't do that," Cooper said. "We had taken all the steps to qualify as an 8(a) firm and had signed government documents stating we were a small business ... The companies they gave the same contract to were not small businesses."

The immigration employee told the Justice Department investigator that procedures allowed "verbal verification" over the phone of a company's small-business status for certain contracts. At the time, the cap was $5 million in annual revenues. The new vendors, which included Bernard Hodes Group and J. Walter Thompson Co., verbally verified their status.

In 1985, Hodes agreed to merge with a business with "$20 million in billings," while Thompson had "worldwide billings of nearly $1.5 billion in 1978," according to media reports cited by the judge. Both companies are now part of multibillion-dollar global corporations, according to their Internet sites.

The immigration employee "believed each company was truthful in claiming their status as such and had no reason to doubt their certifications," according to the Justice Department report.

In his ruling, Urbina wrote that "the evidence in this case shows that the [immigration service] was aware that the defendants were not small and?or disadvantaged businesses and offered them advertising and public relations contacts anyway."

Immigration service purchase orders filed in the case showed that immigration officials classified the Thompson and Cass companies as "disadvantaged." The businesses' statements to the immigration employee that they were small or disadvantaged and the designation of the defendants as "disadvantaged" on the immigration agency's orders were "admittedly curious," Urbina wrote.

Kenneth Lee Blalack II, an attorney representing the defendant businesses, could not be reached for comment. Officials with the companies also could not be reached for comment.

In 1997, Cooper filed a lawsuit in the U.S. Court of Federal Claims against the immigration service. The court dismissed the action "without prejudice to allow the plaintiff to exhaust administrative remedies," Urbina wrote.

By 2000, Cooper's business folded, as he said he was not able to recover from losing the big contract and spent much time waging what he called a "David vs. Goliath" battle. He filed another complaint that the court threw out, this time with prejudice.

Cooper appealed to a federal appeals court, which affirmed the lower court's decision. In 2003, he filed the federal lawsuit against Hodes, Thompson and Cass Communications Inc. that was dismissed by Urbina.

Legal fees added up

Phillips said he lacked a basis to appeal. Costs were also a factor. Phillips and a law firm that formerly represented Cooper without being paid upfront spent more than $1 million on the case since 1997, Cooper said.

So Cooper wrote to people such as Rep. Christopher Van Hollen Jr. (D-Dist. 8) of Kensington. In a recent letter to Van Hollen, Luz A. Hopewell, associate administrator for business development for the SBA, wrote that the immigration service was only required to place orders of at least $250,000 with Cooper's company under the 1995 contract and had paid the business more than $280,000.

A member of Van Hollen's staff said she was looking into whether he can do anything more about Cooper's situation.

According to testimony given in connection with Mr. Cooper's lawsuit, [the immigration service] soon became dissatisfied with the quality of [Cooper's company's] work and began placing orders under the contract with other concerns," Hopewell said.

The SBA tried to mediate the matter without success, Hopewell added.

A member of Van Hollen's staff said his office was referring the case to the House Committee on Government Reform for further review.

Cooper said he should have received more help from the SBA, which he thought was trying to "pass the buck" to the immigration service, which was also pointing the finger elsewhere. His case was hamstrung because he "had to exhaust all administrative remedies" in the claims court, which did not have jurisdiction to hear the fraud allegation that he said was at the heart of his case.

Cooper noted that Urbina confirmed his allegations that the immigration service knew the other companies were not small, but that seemed little consolation with his options running out.

"I don't think I received a fair deal," Cooper said. "I have been made to feel like I'm someone to avoid. I followed the laws, and I have worked within the system to try and resolve this matter.

"But it didn't work. And I'm stuck."



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