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VA watchdog questions how Westar got Butler contract

| Saturday, Sept. 21, 2013, 12:04 a.m.
Land at the VA Butler Healthcare Friday, Sept. 20, 2013.
Land at the VA Butler Healthcare Friday, Sept. 20, 2013.

The financial watchdog for the Department of Veterans Affairs is questioning why an Ohio company that had no employees and claimed to complete $400 million in projects but never did so received a VA contract to build a $75 million outpatient center in Butler County, according to a VA memo obtained by the Tribune-Review.

The vendor, Westar Development Co., claimed in its bid proposal to be veteran-owned, even though it wasn't, and stated that “professional success starts with personal integrity” at a time when a former Westar executive was under investigation by the FBI, the memo said.

The memo raises questions as to how a company that “owned no project, building, facilities nor had any tenants” walked away with a VA contract that would have earned it about $120 million over 20 years.

“Our review of the records also raised concerns as to whether (the VA) properly determined that Westar was a responsible vendor,” read the June 13 memo released Friday by the VA to the Trib.

“This is just absolutely breathtaking and jaw-dropping,” said Rep. Mike Kelly, R-Butler. “This is a phantom company. How did these guys get past? Nobody checked to see if this was true, that this company even exists?”

Cleveland attorney John Climaco, who is representing Westar, challenged the inspector general's findings. He said Westar never claimed that it had veteran-owned status. A VA assessor incorrectly credited the company as being veteran-owned.

“But the extra credits did not cause Westar to win. The math shows that Westar would have easily won the bid without the veteran-owned credits that were improperly added by the VA assessor,” Climaco wrote.

He also said the inspector general never accused Westar of any “impropriety related to the (Butler) project.”

“Westar will continue to communicate with the VA in an effort to correct these clear misunderstandings so that the project can be timely completed at the designated location,” Climaco said.

The VA did not respond to questions Friday as to whether it's investigating how the agency awarded the bid and whether Westar was properly vetted.

When asked for comment, spokesman Mark Ballesteros emailed a statement first released on Aug. 19, which said the VA terminated the Westar lease because it made “false and misleading representations.” The VA stopped work on June 21.

The VA has said it plans on moving ahead with the project, but has not said how it plans to do so.

Westar beat out five other companies in May 2012 to win the contract, which would earn it an average of $7.6 million annually in rent over 20 years.

The outpatient center had been scheduled to open in 2015.

Nearly a month before the April groundbreaking in Butler Township, the inspector general “received allegations that Westar was actually conducting business for entities created and managed by Michael Forlani that were suspended by VA in December 2011,” the memo stated.

In April, a federal judge in Ohio sentenced Forlani, 55, to 97 months in federal prison as a result of his pleading guilty to nine conspiracy charges that included racketeering, bribery and fraud. Federal prosecutors said Forlani bribed public officials to get contracts.

Several weeks before the groundbreaking, the inspector general began to look at Westar's proposal, submitted by then-Senior Vice President Robert J. Berryhill. The inspector general soon determined that “based on the information obtained, we concluded that Berryhill and Westar made false and misleading statements in the technical proposal that VA relied on when evaluating the proposal and awarding the lease to Westar,” the report stated.

The VA's memo is “based almost completely on statements and conduct of one individual, Robert Berryhill, whom Westar terminated long ago and who is not involved in the project,” Climaco said.

Westar fired Berryhill several days before April's groundbreaking after federal authorities charged him with setting up a fake company while working as senior vice president at Carnegie Management and Development Corp. in Cleveland. Prosecutors maintain Berryhill used the fake company to siphon money from firms involved in construction of FBI offices in Knoxville, Tenn., and Indianapolis from Aug. 27, 2008, and Sept. 15, 2009.

Berryhill is serving a sentence of 30 to 75 months in a Morgantown, W.Va., federal prison as a result of pleading guilty to related charges.

Berryhill distorted his experience and that of other company representatives to boost Westar's qualifications, the inspector general said. Westar claimed it owned buildings and was involved in projects to which it had no ties, the inspector general's memo read.

“These statements do not merely imply or suggest that Westar has vast experience in this type of project; rather, Westar makes statements that boldly point to its significant experience and proven history of success,” the memo read.

Bill Vidonic is a staff writer for Trib Total Media. He can be reached at 412-380-5621 or bvidonic@tribweb.com.

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