On August 16, 2019, the SBA Office of Hearings and Appeals (OHA) denied Lachin Architect’s appeal from the U.S. Dept. of Veterans' Affairs' Center for Verification and Evaluation's (CVE) removal of their name from the CVE VIP database. The CVEfirst verified Lachin in January 2013 and reverified it in March 2015. In January 2018, the service-disabled Veteran, Michael Lachin, sold 20 percent of his shares to his nephew David Lachin. However, the company failed to notify the CVE of the ownership change until May 9, 2019, following a CVE examiner visit on May 7, 2019. The CVE sent a Notice of Proposed Cancellation (NOPC) setting as a basis for cancellation that the “CVE has no record of David M. Lachin Jr’s ownership of [Appellant] as the verification eligibility of the concern is based on the 100% ownership and control of Michael George Lachin.” The letter further cited as a basis for canceling Lachin’s inclusion in the database several items including a lack of David Lachin’s resume, knowledge of the extent to which David Lachin participates in the management of the company, and an updated VA form 0877 accurately reflecting the ownership interests of the company.
Lachin replied to the NOPC by submitting an updated VA form 0877 reflecting Michael Lachin’s ownership of 80% and David Lachin’s ownership at 20%. The company did not submit David Lachin’s resume or letter of explanation describing Michael Lachin’s involvement in the management of Lachin Architects. On July 5, 2019, CVE issued a Notice of Verified Status Cancellation (NOVSC) formally canceling Lachin’s verification and subsequently removed it from the VIP database. Lachin appealed the decision.
Lachin filed its appeal pro se, meaning there was no attorney representing them and they represented themselves. In their appeal, Lachin attempted to describe Michael Lachin’s role in the company stating that he maintained “full control of all business management and executive decisions through his full-time presence in the office and daily oversight of all activities.” The company’s appeal also stated that Michael Lachin, the company’s president and a service-disabled Veteran, spent several hours with the CVE’s examiner briefing the examiner on Lachin’s personnel and individual roles and responsibilities. According to Lachin, the CVE examiner did not request David Lachin Jr’s resume or ask for a description of his role within the company. Lachin also asserted in its appeal that the CVE document request on May 31, 2019, only asked for an updated VA Form 0877. Lachin submitted two additional resumes with its appeal as well as other documents. Lachin denied getting any additional requests from the CVE besides an updated 0877.
The first ruling the OHA issued was that the CVE properly noticed Lachin. Lachin asserted in its appeal that it first learned of the NOPC on July 29, 2019. The CVE replied by stating that it put the NOPC in a link on Lachin’s VIP dashboard and sent two emails to the company. The OHA sided with CVE stating that the evidence demonstrated that the CVE sent the emails and posted a link on the VIP database. It further stated that the fact that Lachin completed a 0877 on June 3, 2019 was evidence that it had received the NOPC in time to respond.
The OHA further concluded that the CVE’s cancellation of Lachin is not “clearly erroneous.” In making this finding, the OHA relied on the fact that it took Lachin more than one-year to inform the CVE of its change of ownership and then waited three additional weeks before submitting a revised VA Form 0877. The OHA stated that VA regulations are clear that good cause for cancellation exists when a participant “fails to provide an updated VA form 0877 within 30 days of any change in ownership.” Citing 38 CFR §74.21 (d)(7). The OHA also discounted Lachin’s assertion that the CVE did not inform it of its need to upload David Lachin Jr’s resume. According to the order, the NOPC required “David M Lachin Jr’s role in the business operations of [Lachin], including David Lachin’s resume.” The OHA ruled that because of these failings “CVE could reasonably conclude that [Lachin] did not disclose sufficient information for CVE to evaluate David Lachin Jr’s role at [Lachin], and whether his involvement as part owner (and Partner) undermined Michael Lachin’s control over the company.”
Finally, the OHA determined that it was unable to consider new evidence Lachin supplied in its appeal. Citing 13 CFR §134.1110, the OHA found that “evidence beyond the case file is admissible only if good cause is shown,” and Lachin had failed to explain why good cause existed in the present case sufficient to supplement the case file.
Our law firm is dealt extensively with instances in which the CVE has illegally removed a company from the VIP database. If your company finds itself in a similar situation, please call us for help. Contact us today to learn more about how we can help ensure you receive the benefits you are entitled to. Please call (303) 534-1958 or complete a contact form on our website.