TAMPA — Success can have some lousy side effects.
Two Orlando men whose company provided foreign language and culture instruction won a $50 million contract with U.S. Special Operations Command by virtue of operating a small business.
The contract had a predictable result: Their company grew.
As the contract expired and SOCom put out to bid a second, $100 million contract in 2007, the company, B.I.B. Consulting, no longer qualified as a small business and wasn't eligible to get the work.
The men, prosecutors say, came up with a solution: deception.
Testimony in the federal trial of the two men, Daniel Guillan and Eduardo Blanchet, who owned and operated B.I.B, opened Tuesday with prosecutors telling jurors the pair defrauded the government to keep the money flowing.
They set up a new business with a straw man heading it, prosecutors said, to get the lucrative SOCom contract and then tried to conceal their control and involvement.
"Their company was not eligible for the contract," prosecutor Josephine Thomas said. "So they lied to the government to get it."
But defense attorneys said Guillan and Blanchet were always transparent with SOCom, whose headquarters is at MacDill Air Force Base in Tampa. The pair never lied about their involvement with the new company, MiLanguages, they said, and SOCom knew B.I.B. would act as a subcontractor on the new contract.
In fact, they said, SOCom encouraged small businesses to take on larger, more experienced companies as subcontractors.
"SOCom knew the relationship between MiLanguages and B.I.B.," attorney Robert Leventhal, who represents Guillan, told jurors. "This was not a money grab by MiLanguages."
Blanchet, owner and director of B.I.B., and Guillan, its vice president, are each charged with conspiracy and wire fraud.
MiLanguages provided instruction to special operations forces such as Green Berets and Navy SEALs on a wide variety of languages and cultures and, according to a website, once employed up to 400 teachers.
Prosecutors also accuse the men of making false representations and submitting false information to the Small Business Administration to qualify MiLanguages as a small business.
In 2007, the men instructed an attorney to "send a letter to the SBA size program manager relaying that MiLanguages and B.I.B. had no common officers, shareholders or employees … and that a 'clear line of fracture' existed" between the two companies, an indictment said.
In fact, prosecutors say, Guillan and Blanchet were the only two signatories on a MiLanguages bank account and made all its business decisions.
Defense attorneys, however, said the men relied on and followed legal advice throughout their work and had no intent to defraud.
The trial is expected to last up to two weeks.
Reach William R. Levesque at [email protected] or (813) 226-3432.