Participants in the Small Business Administration’s Business Development Program for small, disadvantaged firms must abide by limits on income and personal wealth, under rules intended to prevent people from taking undue advantage of contracting preferences.
To qualify as an 8(a) firm, owners must have income of less than $250,000 and a net worth of less than $250,000. To remain eligible, they must have salaries of less than $350,000 and a net worth below $750,000, not counting the value of their homes or businesses.
When he started MicroTechnologies in 2004, Anthony R. Jimenez, a retired Army lieutenant colonel, and his wife lived in a $456,000 home they bought four years earlier.
The firm was accepted into the SBA’s 8(a) Business Development Program in June 2005. Since then, MicroTech has received hundreds of millions of dollars in federal technology contracts, a third of it through deals reserved for small firms owned by service-disabled veterans or disadvantaged entrepreneurs, according to an analysis of government data by Paul Murphy, a senior data analyst at Bloomberg Government.
In 2009, Jimenez and his wife bought a $1.6 million house in Great Falls.
Over the next few years, MicroTech would spend at least a quarter-million dollars for a cutting-edge audiovisual entertainment system for the house, not counting the cost of design and installation, documents and interviews show.
MicroTech said the spending was related to meeting company goals in marketing or new product development. The expenses for the entertainment system were later counted as “a distribution of company assets to Mr. Jimenez,” the company said. SBA rules give companies wide latitude in shouldering expenses for 8(a) entrepreneurs.
“Mr. Jimenez has never taken excessive financial withdrawals from MicroTech,” the company said in a statement. “Any compensation taken by Mr. Jimenez was within the requirements of the applicable SBA provisions.”
In promotional videos for MicroTech, Jimenez spoke of his working-class roots and credited his success to hard work and free enterprise.
“I always realized that it was great to live in a country where you can achieve what you have dreamed of, if you were willing to work hard,” he said in one of the videos. “I am Tony Jimenez, and I am free enterprise.”
As MicroTech ascended, Jimenez traveled to Las Vegas and other cities to watch mixed-martial-arts (MMA) fighters sponsored by the company, documents and interviews show.
Since then, MicroTech has sponsored more than two dozen fighters in Ultimate Fighting Championship events, along with athletes in other sports, according to the company’s promotional materials. That includes heavyweight champion Cain Velasquez.
On one occasion, Jimenez expressed in a company news release his enthusiasm about attending a Velasquez fight in Germany in 2009. “I was very excited to represent MicroTech in Cain’s corner,” he said.
Asked why the company spent money on MMA, MicroTech said that “it has sponsored several mixed martial arts athletes as a way to increase brand recognition generally, as well as within our target audience,” especially the armed forces.
“The military is one of MicroTechnologies, LLC’s most significant clients and mixed martial arts enjoys a great deal of popularity within the military community,” the statement said. “Sponsorship of the mixed martial arts is one of the most cost effective marketing techniques available.”
MicroTech has also sponsored a fight video game called UFC Undisputed, which features some of the fighters sponsored by the firm. In a statement about MicroTech’s marketing aims at the time, Jimenez said, “It’s all part of our progressive strategy to break new ground and stay innovative in the technology realm.”
Jimenez also said that the firm’s UFC connection is used for charity and that he has arranged for fighters to participate in events for soldiers wounded in combat. “The UFC has always been strong supporters of the U.S. Armed Forces and shares our passion about our nation’s heroes in uniform,” he said.
In 2010, Jimenez asked members of his staff to plan and install the entertainment system. At its core were high-end video components from Kaleidescape, a manufacturer of high-tech luxury video and sound systems. The company’s players, servers and disc vaults would enable Jimenez and his family to access thousands of DVD and Blu-ray movies.
MicroTech asked for a substantial discount, according to a former Kaleidescape salesman, Jason Sayer. “They told me this was for the CEO’s house and that it would be used at parties to demo the system for future sales,” Sayer said.
In a statement issued in response to questions from The Washington Post, MicroTech said that the project was initiated after a potential client approached the firm about “building a cutting-edge residential audio-visual system” and that it “began as a business venture to investigate the potential viability of opening a commercial practice.”
MicroTech declined to name the client, saying that the information was proprietary.
MicroTech valued the equipment installed in Jimenez’s home at “approximately $256,894.22.” The company did not answer questions about the additional costs of the labor and travel of MicroTech employees, some of whom came up from North Carolina during the project.
An e-mail on Dec. 28, 2010, suggests that the project was going to be used as a deductible business expense against corporate taxes.
In that e-mail, Jimenez asked his team: “is there anyway we can buy the components for my home system this year (before Jan 1, 2011)? If we buy as many components as we can it will help our tax situation.”
In a statement to The Post, MicroTech said the company eventually decided to get out of the business.
“We quickly determined that the commercial residential audio-video business was not going to be a profitable endeavor for MicroTechnologies, LLC, and subsequently the value of the equipment put into Mr. Jimenez’s home was treated as distribution of company assets to Mr. Jimenez,” the statement said.
With the project coming to a close last year, MicroTech provided something for his garage as well: a red Mercedes-Benz SLS coupe, which retails for at least $190,000.
“The car is not owned by Mr. Jimenez; the car is leased by MicroTech,” the company said.