Ernesto Alonzo Lopez, also known as Ernie Lopez, of El Paso, Texas, was convicted by a federal jury on October 18, 2010, of one count of conspiracy to make false statements and defraud the United States and one count of making false statements, and was sentenced on March 29, 2011, to three years in federal prison, three years of supervised release, and $3,829,834.54 in restitution to the U.S. Department of Defense. The convictions arose from his years as chief operations officer of the National Center for the Employment of the Disabled (NCED), an El Paso nonprofit that held no-bid federal contracts reserved for organizations employing the blind and severely disabled. The U.S. Court of Appeals for the Fifth Circuit affirmed the convictions and the sentence on August 20, 2012. Every fact in this article about Ernesto Lopez comes from the federal record and contemporaneous press coverage, linked below.
What NCED was, and what the law required
NCED held its federal contracts under the Javits-Wagner-O’Day Act (JWOD), the program that channels no-bid government work to nonprofits where blind or otherwise severely disabled workers perform at least 75% of the direct-labor hours. Qualification is certified annually to the Committee for Purchase from the Blind and Severely Disabled. The FBI’s release on the case put the government contracts involved at $800 to $900 million, which made NCED one of the largest players in the program. The arrangement’s premise is the workforce: the contracts, and the revenue that came with them, were designated for the employment of disabled workers.
What Ernesto Lopez did
Lopez served as NCED’s chief operations officer from 2002 until April 2006. According to the evidence summarized in the Fifth Circuit’s opinion and the GSA inspector general’s sentencing release, between November 2002 and March 2006 Lopez and NCED’s chief executive and president, Robert Edward Jones, conspired to misrepresent NCED’s compliance: the organization counted merely disadvantaged employees as disabled, and Lopez signed the annual compliance certifications for 2003, 2004, and 2005. In June 2005, a federal program officer told Lopez and Jones directly that combining disadvantaged and disabled workers was improper and that medical documentation was required. In October 2005, Lopez signed the annual certification anyway, knowing it still rested on the combined numbers; the opinion records testimony that he signed because “that’s what Mr. Jones wanted.” A subsequent federal review found that 9% of NCED’s direct-labor hours, against the required 75%, were performed by adequately documented severely disabled workers, which meant NCED had not been qualified to hold the contracts at all.
Arrest, conviction, and sentence
Lopez was arrested in October 2008 alongside Jones and a third former NCED official, Patrick Woods, in the federal fraud investigation, as KVIA and the Associated Press reported at the time. A jury convicted Lopez on both counts on October 18, 2010. His sentencing was postponed while the district court reconsidered the government’s financial loss; the court ultimately put the loss attributable to the scheme at $86 million, and the 36-month sentence it imposed on March 29, 2011, was a departure below the guideline range, alongside the three years of supervised release and $3,829,834.54 in restitution. Jones was sentenced in February 2011 to 10 years in prison and $68 million in restitution. Lopez appealed both his convictions and his sentence; the Fifth Circuit rejected every ground and affirmed in case No. 11-50326.
Why the case is not a paperwork technicality
The charges were false-statement charges, and a reader could mistake that for an administrative offense. The court record forecloses that reading. The certifications Lopez signed were the sole basis on which NCED qualified for contracts reserved by statute for the employment of the blind and severely disabled; the false numbers meant the program’s money flowed to an organization employing, by documented count, a fraction of the workforce the law required. The jury’s verdict, the $86 million loss finding, the restitution order to the Department of Defense, and the appellate affirmance together state the federal judgment on the conduct: this was a fraud on a program that exists for disabled workers, sustained over more than three years, and signed for annually by Ernesto Lopez after he had been told, in person, that it was improper.
