The Pentagon has been hemorrhaging taxpayer dollars for decades.
Nobody wanted to admit how bad the fraud actually was.
But one homeless California musician exposed the whole scam when she collected $19 million without owning a single sewing machine.
Living In Her Car One Day, Military Contractor The Next
Rhonda Valles was literally homeless.
She lived in her car between band practices with her ex-lover Monica Salci, writing songs and dreaming of making it big.
Then she discovered three magic words that turned her into a multimillionaire overnight: "Woman Owned Business."
Valles registered a company called Romo Productions claiming to make clothes.
The company never produced a stitch.
Between 2009 and 2017, the military paid her nearly $19 million to manufacture physical training uniforms.
She didn't own a factory, didn't employ seamstresses, didn't own equipment.
The company's website said it all—more space dedicated to Small Business Administration 8(a) logos than to the company name itself.
The certification wasn't part of the business.
It was the entire business.
The Factory Owner Who Refused To Play Ball
Brad Thompson ran BT Apparel with 100 employees actually manufacturing clothing.
He'll never forget how Valles approached him.
"She said 'I got this government contract, do you know anyone with a factory who can help me perform it?' She was literally living in her car," Thompson told The Daily Wire.
A woman living in her car just scored a multimillion-dollar military contract to manufacture uniforms she had no ability to produce.
Thompson agreed to produce the clothing while Valles collected checks and forwarded packages from her band's practice space.
Government inspectors showed up at Thompson's factory to verify compliance with the Berry Amendment requiring military gear be made in America.
Thompson heard Valles implying to inspectors that she owned his factory.
"I started to think there was something fraudulent going on," he said.
When Thompson hired a lawyer and obtained the actual contract, he discovered Valles was legally required to own the facilities doing the work.
The military had never bothered to check.
That's when Valles showed her true colors.
She demanded Thompson sell her 10% of his business for one dollar—or lose all the work.
When he refused, Valles yanked every contract.
"Within three weeks it was all gone because I wouldn't play ball," Thompson said.
Then she literally cast a curse on him.
This Wasn't A Bug In The System—It Was The Entire Point
Thompson tried to get military contracts himself after losing Valles's business.
Bureaucrats were deliberately writing contracts to require middlemen like Valles.
"It's like 'procure apparel with an Under Armour logo.' Obviously they should just get them from Under Armour," Thompson said.
The Romo contract required New Balance gear—something only New Balance could legally produce.
To let other factories make it, New Balance had to be paid licensing fees giving them the same profit as if they'd gotten the contract directly.
The military was paying Valles to be a middleman on top of paying New Balance full price.
Pure waste added zero value but let bureaucrats check their diversity quota boxes.
The scheme collapsed in 2018 when Valles sued one of the factories and a California court ordered her to pay their legal fees.
You'd think the federal government would prosecute someone who bilked taxpayers for $19 million while living in her car.
They didn't.
Romo's website still brags about an "A+ Contract Past Performance Rating" and a "certificate of appreciation" from the Marine Corps.
Valles told The Daily Wire she's now focused on "the health of the planet, feminine energy" and building a "coalition for women to run the planet."
"Male energy is heavy and war like and long overdue for a reduction," she said, railing against "evil feudal lords and evil Jews."
Now she markets herself as a consultant helping other companies navigate military contracting—teaching others to run the same scam.
The Scam Was Everywhere And Everyone Knew It
Valles wasn't some criminal mastermind who found a loophole.
She was following the blueprint that's been ripping off taxpayers for decades.
Last month, over 1,000 firms in the 8(a) program were banned after refusing to provide basic financial documents.
Those firms had collected $5 billion in four years—a quarter of all 8(a) contractors.
James O'Keefe caught an ATI Government Solutions executive on camera admitting his "Native American-owned" firm got $100 million, kept $65 million, and paid another company $35 million to do the actual work.
A USAID official and contractors pleaded guilty to steering $500 million through pass-through schemes.
The Government Accountability Office found 14 ineligible firms collected $325 million through fraud.
TriMark paid $48.5 million to settle charges it used small business fronts while doing all the work itself.
Secretary of War Pete Hegseth said nearly $100 million in 8(a) contracts go out every single day with zero competitive bidding.
"In many, many instances, these socially disadvantaged businesses don't even do work. They take a 10%, 20%, sometimes 50% fee off the top, then pass the contract off to a giant consulting firm," Hegseth explained.
Experts estimate these scams cost taxpayers $42 billion every year.
$42 billion stolen annually through a program claiming to help disadvantaged businesses.
Biden Tripled The Fraud Then Ignored It
Joe Biden didn't just allow this corruption.
He supercharged it by tripling 8(a) contracting goals from 5% to 15% of all federal contracts.
When Senator Joni Ernst requested reports required to monitor for fraud, she discovered Biden's SBA failed to track and retain them.
"It is obvious that the Biden Administration's indifference toward meaningful oversight in the 8(a) program allowed swindlers and fraudsters to treat federal contracting programs like personal piggy banks," Ernst wrote.
A judge ruled in 2021 that the core of the program was illegal.
Businesses owned by racial minorities were "presumptively disadvantaged"—meaning they didn't have to prove they'd faced discrimination.
They just had to prove their race or check a box claiming to be woman-owned.
No verification required.
Just collect your millions and subcontract the work to someone who knows what they're doing.
Trump's Taking A Sledgehammer To The Whole Racket
The Trump administration finally said enough.
Hegseth announced in January 2026 a line-by-line review of every 8(a) contract over $20 million at the Department of War.
The Pentagon's 8(a) spending is 10 times higher than any other agency.
Any contract not "critical to warfighting capabilities" gets terminated.
Any 8(a) firm not doing the actual work itself gets cut off.
SBA Administrator Kelly Loeffler banned over 1,000 firms that wouldn't provide basic business records.
"The Trump administration has acted from Day One to dismantle the discriminatory agenda that put white small business owners at a disadvantage, and to crack down on the fraud and corruption that proliferates within DEI programs," Loeffler said.
The Treasury Department launched a separate $9 billion audit.
Senator Ernst demanded a complete halt of 8(a) sole-source awards until proper oversight exists.
"We're doing away with these pass-through schemes," Hegseth vowed.
The lesson from Rhonda Valles is crystal clear.
The 8(a) program was never about helping disadvantaged businesses overcome discrimination.
It was a DEI slush fund where homeless musicians could collect $19 million for doing absolutely nothing—as long as they checked the right demographic boxes.
And the Pentagon handed her a certificate of appreciation for it.
Sources:
- Luke Rosiak, "How The Military Gave A Homeless Lesbian's 'Minority Contracting' Firm $19 Million," The Daily Wire, January 29, 2026.
- Luke Rosiak, "A Quarter Of 'Minority Contracting' Firms Banned After Refusing Anti-Fraud Check," The Daily Wire, January 28, 2026.
- Luke Rosiak, "Feds Crack Down On Minority Contracting Schemes, D.C.'s Worst-Kept Secret," The Daily Wire, November 10, 2025.
- Joe Lonsdale, "The Scandal of Minority Contracting," Joe Lonsdale Blog, April 23, 2025.
- "DOW Announces Review Of All Small Business Set-Aside Contracts Over $20 Million," Holland & Knight, January 29, 2026.
- "Hegseth Orders Pentagon Review of SBA 8(a) Contracting Program," HSToday, January 2026.
- U.S. Government Accountability Office, "8(a) Program: Fourteen Ineligible Firms Received $325 Million in Sole-Source and Set-Aside Contracts," GAO-10-425, 2010.
