Georgia Tech Procurement Assistance Center

Atlanta businessman indicted on 51 counts including bribery, tax evasion, and money laundering

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City of Atlanta contractor Lohrasb “Jeff” Jafari has been charged in a 51 count federal indictment with conspiratorial bribery, bribery, tampering with a witness, tax evasion, money laundering, and structuring.

“Jeff Jafari allegedly paid multiple bribes to two local officials over a period of years and then attempted to obstruct the federal investigation into his misconduct,” said U.S. Attorney Byung J. “BJay” Pak. “He also failed to pay income taxes on millions of dollars he earned from city contracts.  Instead, he used the funds to live a lavish lifestyle.  Whether you bribe, take a bribe, or otherwise misuse the public’s money to enrich yourself – it’s all corruption. We will vigorously pursue any such cases.”

According to U.S. Attorney Pak, the charges, and other information presented in court on March 6, 2019:

  • Beginning at least in 2014 to January 2017, Jafari allegedly paid thousands of dollars in bribe payments to Adam Smith, the then-Chief Procurement Officer of the City of Atlanta.
  • At the time, Jafari was the Executive Vice-President of PRAD Group and did millions of dollars in work with the City of Atlanta, primarily under the City’s Architectural and Engineering contracts.
  • Jafari and Smith met at Atlanta-area restaurants where they discussed City business, among other things, and Jafari would generally pay Smith $1,000 in cash in the restaurant bathroom.
  • Jafari similarly paid bribes to a local official in DeKalb County in April and August of 2014.

According to the U.S. Attorney’s office, in exchange for Jafari’s payments to Smith, Smith provided Jafari with information and counsel regarding the City of Atlanta’s procurement processes, among other information. When PRAD Group or a joint venture in which PRAD Group was a partner became a successful proponent on a City of Atlanta contract or Request for Proposal, Smith approved and submitted the award of those projects. Smith also approved task and/or purchase orders for those projects.

In February 2017, Jafari became aware of the federal investigation into his payments to Smith, at which time he confronted Smith in an effort to intimidate and persuade Smith to provide false information to federal law enforcement about the payments, instructing Smith to deny taking bribe money from Jafari.

Between 2014 through 2016, Jafari also willfully failed to pay income taxes to the IRS. During those years, Jafari withdrew large amounts of cash from corporate bank accounts and used corporate funds for personal expenses, among other things, to avoid the assessment of income tax. In 2014, Jafari owed at least $150,000; in 2015, at least $300,000; and in 2017, at least $700,000 to the IRS. Jafari is additionally charged with numerous counts of money laundering for engaging in financial transactions with funds earned from City of Atlanta work he obtained while he was paying bribes to Adam Smith.

Members of the public are reminded that the indictment only contains charges.  The defendant is presumed innocent of the charges and it will be the government’s burden to prove the defendant’s guilt beyond a reasonable doubt at trial.  This case is being investigated by the FBI and IRS Criminal Investigation.

Source: https://www.justice.gov/usao-ndga/pr/lohrasb-jeff-jafari-indicted-51-counts-including-bribery-tax-evasion-and-money

See federal indictment here: Jeff Jafari-Indictment-03.06.2019

See September 28, 2017 article about guilty plea by City of Atlanta purchasing chief here: https://gtpac.org/2017/09/28/city-purchasing-head-pleads-guilty-to-conspiracy-charge

Partner of military contractor sentenced to prison for bribery scheme related to contracts in support of Iraq war

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A former business partner of a U.S. military contractor was sentenced last week to 18 months in prison for his role in a years-long scheme to bribe U.S. Army contracting officials stationed at a U.S. military base in Kuwait during the Iraq War.

Finbar Charles, a citizen of Saint Lucia most recently residing in Baguio City, Philippines, was sentenced by Chief U.S. District Judge Karon O. Bowdre of the Northern District of Alabama.  Chief Judge Bowdre also ordered Charles to forfeit $228,558 in illicit gains.  Charles pleaded guilty in July 2018 to one count of bribery of a federal official.

According to admissions made in connection with his guilty plea, Charles was a business partner of a former U.S. military contractor, Terry Hall.  As Hall’s business partner, Charles admitted that he facilitated Hall and others in providing millions of dollars in bribes in approximately 2005 to 2007 to various U.S. Army officials in exchange for preferential treatment for Hall’s companies in connection with Department of Defense (DoD) contracts to deliver bottled water and construct security fencing to support U.S. troops stationed in Kuwait and Iraq.

As part of his role in this criminal conspiracy, Charles admitted that he managed bank accounts in Kuwait and the Philippines that he used to receive DoD payments and transfer illegal bribes to various U.S. Army contracting officials, including Majors Eddie Pressley, James Momon, and Chris Murray.  All of those individuals, as well as at least 10 other co-conspirators, have pleaded guilty or been convicted of crimes relating to this scheme.  Charles admitted that he falsified loan and consulting agreements to conceal the true nature of the bribe payments to the Army officers, and that he personally received over $228,000 in illicit gains as a result of his participation.

This case was investigated by the Defense Criminal Investigative Service (DCIS), the U.S. Army Criminal Investigation Command, the FBI, and the Special Inspector General for Iraq Reconstruction.  The Criminal Division’s Office of International Affairs provided substantial assistance in this matter.

Source: https://www.justice.gov/opa/pr/former-business-partner-us-military-contractor-sentenced-prison-bribery-scheme-related

Government contractors found guilty in $11 million veteran set-aside fraud scheme

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A federal jury has convicted Andrew Otero and his company, A&D General Contracting, Inc. (A&D), on charges that they fraudulently obtained $11 million in federal contracts specifically set aside for service-disabled veteran-owned businesses.  The jury’s decision was rendered on Nov. 21, 2018.

The evidence demonstrated that Otero had no military experience.  Yet Otero and veteran Roger Ramsey participated in a conspiracy to defraud the government by forming a joint venture (JV) – and falsely representing that Ramsey’s firm and the JV qualified as service-disabled veteran-owned small businesses (SDVOSB).  Based on the false claim to SDVOSB eligibility, the conspirators fraudulently obtained approximately $11 million in federal government construction contracts or task orders with the Department of Veterans Affairs (VA) and the Army Corps of Engineers (ACE).

As proven at trial, the fraudulent conspiracy involved set-aside contracts that could only be bid upon by legitimate service-disabled veteran-owned small businesses – a designation that did not apply to Otero or A&D.  To appear qualified, Otero and Ramsey initially executed an agreement to create the JV, which stated that Ramsey’s company would be the managing venturer, employ a project manager for each of the set-aside contracts, and receive the majority of the JV’s profits.

However, as proved at trial, six months later, Otero and Ramsey signed a secret side agreement that made clear the JV was ineligible under the SDVOSB program. For example, the side agreement said the parties created the JV so that A&D could simply use the disabled veteran status of Ramsey’s firm to bid on contracts.  The side agreement also stated that A&D – not Ramsey – would run the construction jobs.  They also agreed that A&D would keep 98 percent of every payment.

In addition to the secret side agreement, the evidence demonstrated several ways in which the JV did not operate as a legitimate SDVOSB, but was essentially controlled by Otero and A&D.  For example, although Ramsey (a service-disabled veteran) nominally served as president of his firm and the JV, he actually worked full-time for a telecommunications company.  Otero and A&D, not Ramsey, controlled the day-to-day management, daily operation and long-term decision making of the JV. Among other things, Otero and A&D appointed an A&D employee as the project manager for every contract and task order.

“Our nation strives to repay the debt of gratitude we owe to our veterans by setting aside some government contracts for veterans with service-related disabilities,” said United States Attorney Adam Braverman.  “These unscrupulous contractors abused this program through a cynical and illegal ‘rent-a-vet’ scheme.  They are now being held fully accountable for robbing truly deserving vets of important economic opportunities.”

The defendants are also facing civil charges consisting of alleged violations of the false claims act based on the similar misconduct.  The defendants have been ordered to appear in U.S. District Court for sentencing on February 19, 2019.

Source: https://www.justice.gov/usao-sdca/pr/government-contractors-found-guilty-11-million-veteran-set-aside-fraud-scheme

Division of N.C. company pays $3.5 million to settle False Claims Act allegations

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Indal Technologies, Inc. has agreed to pay $3.5 million to resolve allegations that it knowingly sold defective helicopter landing systems designed for U.S. Navy destroyers.  Indal, of Ontario, Canada, is a division within Curtiss-Wright Corporation of Charlotte, North Carolina.

Since the 1970s, Indal has produced the Recovery, Assist, Secure, and Traverse (RAST) system attached to U.S. Navy’s Arleigh-Burke class destroyers.  RAST systems allow helicopters to land on destroyers.

The RAST system includes a device that locks a hovering helicopter onto a trolley.  Once locked in place, the helicopter moves along a series of steel track plates into a shipboard hangar.  The trolley must remain securely connected to the track plates, because the helicopter may be required to land during rough seas and high winds.  The Navy’s contracts for RAST systems expressly required track plates made of HY100 steel due to the material’s increased strength, combat ruggedness, and protection from corrosion.

The settlement announced last week resolves allegations that Indal, without informing the Navy, knowingly substituted a different, less expensive type of steel in numerous RAST system track plates delivered to the Navy.

This settlement was the result of a coordinated effort among the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the District of New Jersey.  The investigation was conducted by the Naval Criminal Investigative Service and the Defense Contract Audit Agency.

The claims resolved by the settlement are allegations only; there has been no determination of liability.

Source: https://www.justice.gov/opa/pr/indal-technologies-agrees-pay-35-million-settle-false-claims-act-allegations

Fort Stewart contractor that posed as small business forfeits $7.8 million

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A company that rents tents and other outdoor structures for events agreed to pay the government $7.8 million to settle charges that it wrongly won Defense Department set-aside contracts reserved for small businesses.

Arena Americas, which does business from multiple locations as Arena Event Services, settled after a False Claims Act investigation conducted by the Army Criminal Investigation Command, the Defense Criminal Investigative Service and the inspector general of the Small Business Administration.

The agreement details how Arena Americas worked with Military Training Solutions LLC to obtain small business defense contracts that were represented as being performed by Military Training Solutions, but were actually performed by Arena Americas.

“As a result of this scheme, which was perpetuated at Fort Stewart, Ga., and at other military installations across the United States, millions of dollars in defense contracts wrongfully were awarded to Arena Americas instead of legitimate small businesses,” said Bobby Christine, U.S. Attorney for the Southern District of Georgia, in a statement. “The U.S. Attorney’s Office will not tolerate any attempts to illegally exploit the system for a company’s personal advantage” in obtaining the set-asides that Congress intended as a tool to help grow small businesses.

Keep reading this article at: https://m.govexec.com/contracting/2018/10/defense-contractor-who-posed-small-business-forfeits-78-million/151951

See statement by U.S. Attorney’s Office for the Southern District of Georgia at: https://www.justice.gov/usao-sdga/pr/defense-contractor-agrees-pay-united-states-78-million-settle-false-claims-act

How contractor fraud is reported shouldn’t affect how it gets investigated

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While the vast majority of federal contractors are dedicated to their craft and their country, a very few wrongdoers occasionally cast a shadow on the industry as a whole. Unfortunately, the way that the government resolves fraud allegations is often dictated not by the egregiousness of the fraud but rather by how the government learns of suspected wrongdoing.

Given this inconsistency, we suggest a more uniform approach to addressing whistleblower allegations.

As many defense contractors have painfully learned over the years, the world of federal procurement regulations is complicated, evolving, and perilous. Even technical violations of procurement regulations can bring stiff consequences. And, more and more, employees at federal contractors are speaking up when they see wrongdoing. We applaud these employees for taking their job responsibilities seriously. And, when an employee sees wrongdoing, he or she should report it.

The traditional way to blow the whistle is to report internally up the chain and—if that does not work—the whistleblower could report suspected wrongdoing to federal contracting officers or to Defense Department hotline numbers.

Keep reading this article at: https://www.govexec.com/contracting/2018/10/how-contractor-fraud-reported-shouldnt-affect-how-it-gets-investigated/151771

Suspicious contract activity proliferates — watch out!

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The Georgia Tech Procurement Assistance Center (GTPAC) continues to become aware of apparent contracting scams designed to trick unsuspecting vendors to deliver products for which they will receive no payment.

(You can view a compendium of articles about previously-identified scams at: https://gtpac.org/?s=scam.)

The latest example that’s come to our attention involves an email sent to vendors asking for a quote on some computer equipment.  The email is supposedly from a contracting representative with the Securities and Exchange Commission.

Vendors are asked to quote on name-brand portable hard drives and two brands of laptop computers.  The solicitation document appears to be a version of the federal Standard Form 1449.  But there are several suspicious elements associated with the solicitation:

  • While the email purportedly is from the SEC’s headquarters, the document indicates that the SEC office is in Germany.
  • Place of delivery is not listed.
  • The solicitation is pre-signed by the contracting officer.
  • The solicitation number is not consistent with standard numbering.
  • The phone number provided could be a cell phone number.

We have seen suspicious documents like this before.  What can result is that a vendor will respond with pricing.  Then, the scam artist will respond by saying that the quote has been accepted and directing that the products be shipped to a particular address.  After that, all communication ceases.  The vendor is cheated out of products (plus the cost of shipping), and receives no payment.

Be alert to scams like this.  If you receive something that looks suspicious, call it to our attention.  We’ll help you figure out what to do.

South Carolina ‘mastermind’ pleads guilty to cheating government for million-dollar contracts

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He betrayed his wife. He used friends as pawns in illegal schemes.

For years, he bilked the federal government out of tens of millions of dollars in fat federal military construction contracts meant for disabled veterans, women and African-Americans.

And on Tuesday of last week, Thomas Brock of Camden faced his reckoning.

“I find you guilty,” U.S. District Judge Michelle Childs told Brock, 61, in a sparsely attended hearing at the U.S. federal courthouse in Columbia, SC.

Brock will be sentenced in December and is free on bond until then. He could be sentenced to up to nine years in prison, assistant U.S. Attorney DeWayne Pearson said August 28th.

Keep reading this article at: https://www.thestate.com/news/local/crime/article217449050.html

Former company owner sentenced for $13.7 million ‘rent-a-vet’ scheme

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A former operator of a Kansas City construction company, Patriot Company, Inc., was sentenced in federal court last week for his role in a “rent-a-vet” scheme to fraudulently obtain more than $13.7 million in federal contracts.

Jeffrey K. Wilson was sentenced to 18 months in federal prison without parole. Under the terms of his plea agreement, Wilson has also consented to the federal civil forfeiture of approximately $2.1 million.

On Jan. 31, 2018, Wilson pleaded guilty to one count of government program fraud. Co-defendant Paul R. Salavitch pleaded guilty to a misdemeanor charge of making a false writing and awaits sentencing.

Wilson, who is not a veteran, managed the day-to-day operations and the long-term decision-making of Patriot Company from September 2005 to January 2014. Wilson and Salavitch falsely certified that Salavitch, who is a service-disabled veteran, was involved in the day-to-day operations of Patriot Company. Salavitch’s purported active management qualified Patriot Company to obtain set-aside contracts to which it was not entitled.

Wilson admitted he used Salavitch’s veteran and service-disabled veteran status in a “rent-a-vet” scheme to obtain 20 government contracts for which Patriot Company received more than $13.7 million.  As a result of the fraud scheme, legitimate veteran-owned-and-run businesses were not awarded these contracts. In one instance, according to court documents, Wilson brazenly challenged the government’s award of a set-aside contract to a service-disabled veteran bidder and Patriot Company fraudulently obtained that contract.

Wilson’s plea agreement cites 20 contracts with the U.S. Department of Veterans Affairs and the U.S. Army, which were fraudulently obtained by Wilson, Salavitch and Patriot Company. The contracts, which ranged as high as $4.3 million, included construction projects in Missouri, South Dakota, Texas, Nebraska, Oklahoma, Michigan, Indiana, Tennessee, Iowa, Illinois and North Dakota.

In September 2013, the Veterans Administration conducted an unannounced site visit of Patriot Company. The site inspector discovered that Salavitch was working 40 miles away at his full-time job as a federal employee with the Department of Defense in Leavenworth, Kansas.

Wilson did not stop violating the law even after the government’s site visit.  Instead, Wilson and Salavitch fought cancellation of Patriot Company’s status. In November 2013, Salavitch falsely certified to the Missouri Division of Purchasing and Materials Management that Patriot Company was a legitimate service-disabled veteran-owned small business when he knew it was not because he did not actively run the company. In December 2013, the Veterans Administration de-certified Patriot Company.

This case was investigated by the Department of Veterans Affairs – Office of Inspector General – Criminal Investigation Division, and the General Services Administration – Office of Inspector General.

Source: https://www.justice.gov/usao-wdmo/pr/former-company-owner-sentenced-137-million-rent-vet-scheme

Warning: Don’t be duped into paying for GTPAC’s services — Our services are free of charge!

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It’s come to our attention that there are businesses receiving phony invoices presumably for services received from a Procurement Technical Assistance Center (PTAC).  There is a national network of PTACs, and the Georgia Tech Procurement Assistance Center (GTPAC) is one of them.

GTPAC never charges for our counseling, training or bid match services.

The vast majority of PTACs don’t charge for their services, either.  When nominal fees are charged by a particular PTAC, those fees are clearly described in writing and in advance.

We want you to be aware of an active scam that is taking place right now.  Someone is sending out invoices in the name of the “American Procurement Technical Assistance Center.”   We know of no such organization.  However, all PTACs are members of a professional association known as APTAC — the Association of Procurement Technical Assistance Centers.  Our association never sends invoices or charges fees to PTAC clients.

The phony invoices are in the amount of $249 for “procurement technical assistance.”

If you receive such an invoice, do not pay it.

Also, if you receive such an invoice, do everyone a favor and forward it via email to GTPAC at gtpacatl@innovate.gatech.edu

 

This is a copy of the phony invoice. If you receive it, don’t pay it!   Instead, forward it to GTPAC so that we can continue to warn others about this scam.

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