"We found this one was too ironic to pass up," said Karra Porter, the attorney for Abel Saiz and his company, Saiz Construction, who filed the lawsuit against Okland in 2011.
Okland rejected the Saiz accusations despite agreeing to the settlement.
"Okland has always been good corporate citizens and has assisted many small businesses to grow and develop over the years," wrote John McEntire, Okland's chief financial officer, in a statement released Friday. "Okland disagrees with any allegations that our conduct was fraudulent ... The decision to settle was a business decision based upon the unequal resources of the federal government vs. the resources of Okland."
The dispute arose under a Small Business Administration program aimed at supporting small "disadvantaged" companies by helping them obtain federal contracts.
Large companies such as Okland can bid on certain projects if they form joint ventures in which smaller, minority-owned businesses are to manage the projects and receive at least 51 percent of profits.
But, after forming a relationship in 2002, Okland told Saiz it was not the manager of projects as required, hired its own people and relatives into administrative positions and did other tasks that the smaller company was to perform under the SBA program. Okland also pocketed profits it wasn't entitled to, according to the lawsuit.
When Saiz realized he was being shuttled aside after Okland used him to win contracts, he complained to the company. Okland told him "it would 'bury [him] in court,' " the lawsuit alleges.
Under the settlement agreement announced Friday, Okland is to pay $928,000 to the federal government, $148,480 to Saiz and $86,000 in attorney fees.
"Large businesses must not be allowed to fraudulently obtain access to contracts set aside for small businesses," SBA Inspector General Peggy E. Gustafson said in a statement.