U.S. Department of Justice

United States Attorney

Wednesday, November 7, 2012

Three Are Convicted of Fraud Involving Recovery Funds

Extensive investigations by Inspectors General and U.S. Attorneys resulted in guilty pleas from three Missouri business owners who falsely claimed to be service-disabled veterans in order to win special federal contracts of more than $5 million in Recovery Act funding.

One defendant brazenly pretended to be a service-disabled veteran decorated for combat wounds suffered in the Vietnam War. The other two falsely claimed to be service-disabled vets and also bribed a federal official with $20,000 of goods and services that included “entertainment at a local gentlemen’s club,” according to prosecutors.

All three defendants defrauded the federal government’s Service-Disabled Veteran-Owned Small Business Program (SDVOSB Program), which awards government contracts to companies owned by service-disabled veterans. All contracts were awarded through the Department of Veterans Affairs (VA).

Federal officials state that, when applying for contracts under the SDVOSB Program, Warren K. Parker of Blue Springs, Missouri submitted a resume that fraudulently claimed he was a war hero who had been awarded three Silver Stars and three Purple Hearts, among other citations, for his service in Vietnam.  His construction firm was able to win $6.7 million – $4.9 million in Recovery funds – in SDVOSB Program contracts.

Investigators later found that Parker had served in the Missouri National Guard during the Vietnam War but had never left the state.  Parker pleaded guilty to fraud and was ordered to pay $6.8 million in restitution. He is scheduled for sentencing on October 9 and could receive up to 30 years imprisonment.

The two other defendants, Joseph Madlinger and Michael Woodling, partners in a St. Louis contracting firm, set up a shell-company they falsely said was owned and operated by service-disabled veterans. Additionally, Madlinger and Woodling bribed Russell Todd, an official at the St. Louis VA Medical Center, who helped steer SDVOSB Program contracts to the shell company.  Todd accepted “approximately $20,000 in luxury baseball tickets, meals and entertainment at a local gentlemen's club,” the U.S. Attorney for the Eastern District of Missouri said.

The shell-company was able to secure $3.4 million in SDVOSB Program contracts, including a Recovery funded contract for $654,000 for work on the VA Medical Center.

Woodling was sentenced to three years of probation, issued a $60,000 fine, and ordered to pay restitution of $1.5 million. Madlinger was sentenced to 24 months in prison and received a $50,000 fine; his restitution is still to be determined. Todd was sentenced to 15 months in prison.

The cases were investigated by the Offices of Inspector General for the Department of Veterans Affairs, the General Services Administration, and the Small Business Administration. Assistant United States Attorneys for the State of Kansas as well as the Eastern District of Missouri also participated.

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