Herndon Business Owner Agrees To Pay $1.1M To U.S. Government Following Kickback Scheme

HERNDON, VA — Facing allegations of receiving kickbacks from federal contracts, a Herndon businessman, his Arlington-based company, and another Virginia company agreed in July to pay a combined $1,174,584 settlement, according to a U.S. Justice Department release.

Chinna Nemelidinne of Herndon is the president and only owner for Index Systems, Inc., which the Small Business Administration certified as an 8(a) small business. This distinction means that the company was owned and operated by a citizen considered to be socially or economically disadvantaged.

In 2018, Nemelidinne and Arlington-based Capital Consulting Group, Inc. (CCG) agreed that Index would use its 8(a) small business certification to bid on a contract that CCG wasn't eligible to bid on because it lacked that certification, according to court documents. In exchange, CCG would pay Index an agreed upon fee for each hour of subcontract work it submitted to CCG. Federal authorities claimed CCG had paid Index that fee.

Between 2018-2020, Index had a similar agreement with Sage Consulting Group, Inc. (Sage), regarding three 8(a) set-aside contracts with the U.S. government, according to court documents. Like CCG, Sage did was not certified to bid on those contracts by itself.

Authorities also accused Index of falsely telling a federal agency that Index employees would be doing all the work on a contract, even though the intention was to subcontract much of the work to Sage.

In order to avoid claims under the Anti-Kickback Act and False Claims Act, Nemelidinne and Index agreed to pay a settlement of $1,174,584, according to court documents. CCG also agreed to pay $164,500, to avoid claims under the Anti-Kickback Act.