Georgia Tech Procurement Assistance Center

Officer of construction company sentenced for illegally obtaining federal contracts meant for small disadvantaged businesses

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Michelle Cho, an officer of Far East Construction Corporation (Far East) and other construction companies, was sentenced on Apr. 25, 2017 to six months in prison and 24 months of supervised release on a federal charge of conspiring to commit wire fraud. Cho was also ordered to pay forfeiture in the amount of $169,166 and pay a criminal fine in the amount of $35,000.  The sentencing came about as a result of Cho’s guilty plea made on Nov. 15, 2016.

According to court documents, Cho was an initiator and mastermind of a scheme lasting more than five years to defraud a disadvantaged business assistance program of tens of millions of dollars. Cho utilized two straw companies, including Far East, to conspire with MCC Construction Company (MCC) and others to defraud the Small Business Administration (SBA).

Cho’s two companies were eligible to receive federal government contracts that had been set asides for small, disadvantaged businesses under the SBA 8(a) program. Cho and MCC understood that MCC would illegally perform all of the work on these contracts and pay three percent of the proceeds to Cho’s companies rather than have Cho’s companies perform at least 15 percent of the work as required by the SBA 8(a) program.  In so doing, MCC was able to win 27 government contracts worth over $70 million during the period 2008 to 2011. The scope and duration of the scheme resulted in a significant number of opportunities lost to legitimate small, disadvantaged businesses.

To qualify for the 8(a) program, a business must be at least 51 percent owned and controlled by a U.S. citizen (or citizens) of good character who meets the SBA’s definition of socially and economically disadvantaged. The firm must also be a small business and show a reasonable potential for success.  Participants in the 8(a) program are subject to regulatory and contractual limits. Also, under the program, the disadvantaged business is required to perform a certain percentage of the work. For the types of contracts investigated in this case, the SBA 8(a)-certified companies were required to perform at least 15 percent of the work with its own employees.

On Feb. 2, 2016, MCC agreed to pay $1,769,924 in criminal penalties and forfeiture. Thomas Harper, a former officer and owner of MCC, pleaded guilty on June 22, 2016, to conspiring to obstruct proceedings before a department or agency. He is to be sentenced on May 15, 2017. Walter Crummy, another former officer and owner of MCC, pleaded guilty on Aug. 23, 2016, to conspiring to commit wire fraud and was sentenced earlier this month to a year of probation, two months of which were home confinement, and forfeiture in the amount of $105,618.

The investigation was conducted by the FBI’s Washington Field Office, the SBA’s Inspector General, the Inspector General of the U.S. General Services Administration (GSA), the Central Field Office of the Defense Criminal Investigative Service (DCIS), and the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit (MPFU).

Source: https://www.justice.gov/opa/pr/construction-company-officer-sentenced-prison-conspiring-defraud-government

Feds say Navy contractor stole $13 million, but U.S. government still works with it

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A North Carolina-based defense contractor defrauded the U.S. government of more than $13.6 million over the course of a decade, according to documents filed in U.S. District Court in Norfolk.

But the government is still doing business with the company: Global Services Corp. of Fayetteville, N.C.

Two men – one of whom lives in Hampton Roads – have pleaded guilty, but federal prosecutors have worked the past several months to keep secret the identity of the contractor and its owner.

Court documents do not name the firm or two Newport News-based companies that they say were integral to the conspiracy. They are identified only as Firm G, Company A and Company B.

In most cases, the documents also do not name the president of the defense contracting firm – who prosecutors say was the primary beneficiary of the fraud. The documents generally identify him only by the initials “PAM.”

On one occasion, however, prosecutors filed a document in connection with an accomplice’s case that identified him as Philip A. Mearing – the president of Global Services Corp.

Keep reading this article at: http://pilotonline.com/news/local/crime/feds-say-navy-contractor-stole-million-but-u-s-government/article_f0e96b82-c45c-5577-b9f9-6a2cc5ffdfbc.html 

Military base contractor admits paying bribes and kickbacks

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A Pennsylvania man who operated a construction company that did work at construction projects at two military bases in New Jersey admitted on Feb. 21, 2017 to paying bribes and kickbacks to get the contracts.

George Grassie, 54, of Covington Township, Pennsylvania, pleaded guilty in Newark, NJ federal court to an indictment charging him with one count of conspiracy to defraud the United States and commit bribery and one count of providing unlawful kickbacks.

According to documents filed in the case and statements made in court:

  • Grassie owned a business that did construction, excavation and landscaping and did work as a subcontractor at Picattiny Arsenal (PICA) and Joint Base McGuire-Dix Lakehurst (Ft. Dix).
  • He admitted that from December 2010 to December 2013, he paid bribes valued at $95,000 to $150,000 to an individual employed by the U.S. Army Contracting Command in New Jersey to obtain and retain subcontracts and other favorable assistance at PICA and Fort Dix.
  • He also admitted that he paid kickbacks valued at $40,000 to $95,000 to Shawn Fuller and James Conway, who were then project managers for a prime contractor at PICA and Fort Dix.

Conway previously pleaded guilty to wire fraud and accepting unlawful kickbacks on August 2016. Fuller previously pleaded guilty to accepting unlawful kickbacks in November 2015.

The conspiracy charge to which Grassie pleaded guilty carries a maximum potential penalty of five years in prison. The charge for making unlawful kickbacks to which Grassie pleaded guilty carries a maximum potential penalty of 10 years in prison. Both charges carry a maximum fine of $250,000 or twice the gross gain or loss associated with the offense, whichever is greatest. Sentencing is scheduled for May 31, 2017.

Agencies responsible for investigating this case include the FBI, the Defense Criminal Investigative Service of the Dept. of Defense, and the U.S. Army’s Major Procurement Fraud Unit, Criminal Investigation Command.

Source: https://www.justice.gov/usao-nj/pr/contractor-us-military-bases-admits-paying-bribes-and-kickbacks

Second construction company owner to enter guilty plea for bribery in connection with City of Atlanta contracts

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Charles P. Richards, Jr., of Tucker, Georgia, was arraigned Wednesday, Feb. 8, 2017, on conspiratorial bribery charges for paying over $185,000 to obtain City of Atlanta contracts.

“From approximately 2010 to August 2015, Richards conspired with E.R. Mitchell to buy lucrative construction-related contracts with the City of Atlanta,” said U.S. Attorney John A. Horn. “Contractors who willingly participate in a pay-to-play contracting system subvert the process for those who try to compete fairly and ultimately undermine the public’s trust in government.”

On Jan. 25, 2017 Mitchell, owner of E.R. Mitchell Company and several subsidiaries, pled guilty to paying over $1,000,000 to an yet-to-be-named individual in exchange for City of Atlanta contracts.

“The arraignment of Mr. Richards illustrates once again that providing bribes in order to obtain government contracts, be it city, state, or federal, can land you in the defendant’s chair as easily as for those accepting the bribes. The FBI continues to work diligently with its various law enforcement partners and federal prosecutors in identifying, investigating, and presenting for prosecution all individuals engaged in these types of criminal public corruption schemes that undermine the legitimate and established practices of government,” said David J. LeValley, Special Agent in Charge, FBI Atlanta Field Office.

“The citizens of Atlanta must be able to trust that government officials will perform their duties in the best interests of the communities they serve,” said Veronica Hyman-Pillot, Special Agent in Charge, IRS Criminal Investigation. “Charles Richards Jr. undermined the process of fair and open competition when he conspired with others to pay bribes in exchange for securing lucrative contracts with the City of Atlanta. Today’s announcement demonstrates our commitment to work in a collaborative effort to promote honest and ethical government at all levels.”

According to U.S. Attorney Horn, the charges, and other information presented in court, Richards serves as the owner and/or principal of the construction companies C.P. Richards Construction Co., Inc., and C.P. Richards & Associates, Inc.

In an effort to obtain construction-related contracts with the City of Atlanta, according to the Justice Dept., Richards and defendant Elvin R. Mitchell, Jr. conspired to pay an individual to obtain government contracts. From approximately 2010 to August 2015, Richards paid over $185,000 to an individual in exchange for City of Atlanta contracts, believing that some of the money would be paid to city official/s who exercised influence over the contracting process.

According to the U.S. Attorney’s office, Charles. P Richards, Jr., 64, will plead guilty on Feb. 16, 2017, before the U.S. District Court Judge Steve C. Jones.

This case is being investigated by the Federal Bureau of Investigation and Internal Revenue Service Criminal Investigation.  First Assistant United States Attorney Kurt R. Erskine and Assistant United States Attorneys Jeffrey W. Davis, and Jill Steinberg, are prosecuting the case.

Source: https://www.justice.gov/usao-ndga/pr/second-construction-company-owner-charged-conspiring-pay-bribes-city-atlanta-contract-0

See the initial Justice Dept. announcement in this case at: https://www.justice.gov/usao-ndga/pr/construction-company-owner-charged-paying-over-1-million-bribes-city-atlanta-contracts

Company to pay fine and forfeiture of $1.8 million for obtaining federal contracts earmarked for 8(a) firms

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The Justice Department’s Antitrust Division has announced that MCC Construction Company (MCC), a construction management company and general contractor headquartered in Colorado, has agreed to pay $1.8 million in criminal penalties and forfeiture for conspiring to commit fraud by illegally obtaining government contracts that were intended for small disadvantaged businesses.  

Justice Dept. seal - CopyThe firms were certified by the Small Business Administration (SBA) as 8(a) firms.

MCC Construction Company secured millions of dollars in contracts by hiding behind two small businesses that did not perform labor on the projects. In doing so, MCC took away opportunities that could have gone to companies that are socially and economically disadvantaged.

The case against MCC was filed last month in the U.S. District Court for the District of Columbia charging the company with one count of knowingly and willfully conspiring to commit major fraud on the United States.  MCC waived the requirement of being charged by way of federal indictment, agreed to the filing of the information and accepted responsibility for its criminal conduct and that of its employees.  U.S. District Judge Ketanji B. Jackson accepted the company’s guilty plea on Feb. 2, 2016.  The plea agreement is subject to the court’s approval at a sentencing hearing scheduled for March 15, 2016.

SBA sealAccording to court documents, MCC conspired with two companies that were eligible to receive federal government contracts set aside for 8(a) firms with the understanding that MCC would, illegally, perform all of the work.  In so doing, MCC was able to win 27 government contracts worth over $70 million from 2008 to 2011.  The scope and duration of the scheme resulted in a significant number of opportunities lost to legitimate 8(a) businesses.

Under the illegal agreement, the companies awarded these government contracts were allowed to keep 3 percent of the value of the contracts for allowing MCC to use the companies small business status to win the contracts.

Court documents state that MCC violated the provisions of the SBA 8(a) program.  The SBA’s 8(a) Business Development Program is designed to award contracts to businesses that are owned by “one or more socially and economically disadvantaged individuals.”  To qualify for the 8(a) program, a business must be at least 51 percent owned and controlled by a U.S. citizen (or citizens) of good character who meet the SBA’s definition of socially and economically disadvantaged.  The firm must also be a small business (as defined by the SBA) and show a reasonable potential for success.  Participants in the 8(a) program are subject to regulatory and contractual limits.  Also, under the program, the disadvantaged business is required to perform a certain percentage of the work.  For the types of contracts under investigation here, the SBA 8(a)-certified companies were required to perform 15 percent or more of the work with its own employees.

MCC, along with the two 8(a) companies used to illegally obtain the contracts, engaged in and executed a scheme to defraud the SBA by, among other things:

  • Allowing the two 8(a) companies to retain a guaranteed percentage of each contract for simply obtaining the contracts for MCC;
  • Allowing the two 8(a) companies to perform no labor on these projects;
  • Performing the accounting and government reporting for the two 8(a) companies on certain projects;
  • Falsely representing to the government that MCC employees were in fact employees of the 8(a) companies;
  • Obtaining certain contracts on behalf of the 8(a) companies without first informing those 8(a) companies prior to bidding; and
  • Conspiring with the 8(a) companies to hire straw employees for the 8(a) companies whose labor and salaries were paid for by MCC.

For the contracts obtained through this scheme on which MCC made a profit, MCC’s profit was at least $1,269,294.  The criminal penalty in this case includes a $500,000 fine and a forfeiture money judgment of $1,269,294.

Source: http://www.justice.gov/opa/pr/mcc-construction-company-agrees-pay-nearly-18-million-conspiring-illegally-obtain-federal

Company owner going to prison for tax fraud involving 8(a) and DBE eligibility

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Financial Fraud Enforcement Task Force - DOJThe former president and majority stockholder of an Idaho construction company was sentenced to five years in prison this week following her plea of guilty to filing a false tax return and her conviction by a jury of conspiracy to defraud the United States, wire fraud, mail fraud, false statements, interstate transportation of property taken by fraud, conspiracy to obstruct justice, and obstruction of justice.

Elaine Martin, 69, of Meridian, Idaho, was the president of construction company MarCon, Inc.  In September 2013, after a 26-day jury trial, Martin was convicted of tax and fraud charges and sentenced to 84 months in prison.  In August 2015, the U.S. Court of Appeals for the Ninth Circuit vacated Martin’s sentence and her tax conviction and remanded for resentencing and further proceedings on the tax charge.  Today, Martin pleaded guilty to filing a false tax return and U.S. District Judge B. Lynn Winmill of the District of Idaho sentenced her to 60 months in prison on both the tax and fraud charges.  In addition to the prison term, Judge Winmill ordered Martin to pay restitution to the Internal Revenue Service (IRS) and Idaho Department of Transportation in the amount of $131,400.48, costs of prosecution in the amount of $22,859.60 and a forfeiture money judgment of $3,084,038.05, amounts Martin previously paid.

In the plea agreement, Martin admitted that she willfully signed false and fraudulent corporate income tax returns for Marcon Inc. for tax years 2005 and 2006.  Martin also admitted that she caused these tax returns to be false and fraudulent by keeping the unreported income off of the books and that she falsely told an IRS revenue agent, who was conducting a civil audit of Marcon, that all of Marcon’s gross receipts were deposited into its Wells Fargo operating account, when in fact, Martin was diverting and depositing gross receipts into Marcon’s Bank of Cascades account.  Martin withheld the records for Marcon’s Bank of Cascades from the individual who prepared her and Marcon’s tax returns for tax years 2005 and 2006.  Martin admitted that the total tax loss was $73,678.

Martin also admitted to conspiring to defraud the SBA 8(a) Program and the U.S. Department of Transportation, Disadvantaged Business Enterprise (DBE) Program, by submitting fraudulent tax returns and making false statements concerning her finances that caused Marcon to qualify and/or remain eligible for these programs.  Martin further admitted that her behavior affected the award of contracts pursuant to the 8(a) Program and DBE Programs.  For example, Marcon’s status as an Idaho DBE affected how and what DBE goals were set for particular construction projects and helped Marcon maintain a virtual monopoly in its geographic region between 2000 and 2006.  Marcon participated in the SBA 8(a) Program pursuant to direct negotiations with the awarding agency, rather than through fair and open competition.  Martin admitted that during the relevant time period, she would not have been awarded the 33 contracts at issue in the case but for the fraud.

As part of the plea agreement that Martin entered into today, she waived her right to further appeal.

This case is an outgrowth of the Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations.  Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants.  For more information on the task force, visit www.stopfraud.gov.

Source: http://www.justice.gov/opa/pr/former-idaho-construction-company-president-sentenced-prison-fraud-scheme

Jury finds NC couple guilty of small business fraud

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Justice Dept. seal - CopyFollowing a 13-day trial in U.S. District Court, a jury convicted Ricky Anthony Lanier, 48, and his wife Katrina Reshina Lanier, 43, both of LaGrange, N.C., of conspiracy to commit wire fraud, wire fraud, and major fraud against the United States.  Together, they orchestrated a scheme to fraudulently obtain federal contracts intended to be awarded to businesses lawfully participating in the Department of Veterans Affairs’ Service-Disabled Veteran-Owned Small Business (SDVOSB) program and the Small Business Administration’s 8(a) Business Development program.

We last reported on this case on September 15, 2014 (see: http://gtpac.org/?p=8302) when a federal grand jury indicted this couple.  They pleaded not guilty at that time.

SBA - IGSentencing is set for 9:00 a.m., on June 20, 2016, in U.S. District Court in Greeneville.  Ricky Lanier faces a possible sentence of up to 60 years in prison and $1 million in fines; Katrina Lanier faces a possible sentence of up to 50 years in prison and $750,000 in fines.  The Laniers agreed to forfeit their interests in approximately $170,000 in funds seized from bank accounts as well as five houses in Kinston, N.C., purchased with proceeds of the fraud.

SBA sealAccording to the evidence presented at trial, the Laniers conspired from November 2005 to April 2013 to defraud the United States government through a scheme to fraudulently obtain federal contracts intended for SDVOSB and 8(a) firms.  The scheme involved false representations that JMR Investments was eligible as an 8(a) business and that Kylee Construction was eligible as an SDVOSB and an 8(a) business.

VA sealRicky Lanier, who had previously owned and operated an 8(a) business receiving government contracts, became ineligible to participate in the 8(a) program after that business graduated from the 8(a) program in 2008.  Lanier used a friend and service-disabled veteran as the purported owner of Kylee Construction, representing that the friend was involved in the daily management of the business, even while the friend was working for a government contractor in Afghanistan.  The Laniers used a business owned by Ricky Lanier’s college roommate, JMR Investments, as a front to obtain construction contracts from the National Park Service and other federal agencies under the 8(a) program, misrepresenting the friend’s involvement in the management and operation of the business.

National Park ServiceThe scheme also involved sub-contracting out all or almost all of the work on the contracts in violation of program requirements.  Among other contracts, Ricky Lanier defrauded the National Park Service in connection with a contract to replace a wastewater treatment facility at the Tremont Institute in the Great Smoky Mountains National Park, falsely representing that subcontractor costs were over $400,000 more than they actually were, resulting in the award of a contract for $1.1 million when all work on the project was performed by a Kodak contractor for $550,000.  Lanier also fraudulently obtained a $1.3 million construction contract at the James H. Quillen VA Medical Center which had been set aside for SDVOSBs.

As a result of the false representations, Kylee Construction was awarded over $5 million in government contracts and JMR Investments was awarded over $9 million in government contracts, to include contracts for construction at the VA Medical Center at Mountain Home, Tenn., and in the Great Smoky Mountains National Park. The Laniers received almost $2 million in financial benefit from the scheme, using accounts of the shell companies for payment of personal expenses.

Nancy Harr, Acting U.S. Attorney for the Eastern District of Tennessee said, “The integrity of the Service-Disabled Veteran-Owned Small Business program is vital to its continued success. The U.S. Attorney’s Office will aggressively pursue and prosecute those who attempt to defraud that federal program and therefore the United States.”

Law enforcement agencies participating in the joint investigation which led to indictment and subsequent conviction of Ricky and Katrina Lanier included the Offices of Inspector General of both the VA and the SBA, with assistance from the U.S. Secret Service.

Source: http://www.justice.gov/usao-edtn/pr/federal-jury-convicts-north-carolina-couple-fraud 

Former Georgia National Guard employee and two vendors sentenced in corruption scheme

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Raytosha Elliott, a former contracting official with the Georgia National Guard, and the owners of two vendor companies have been sentenced to federal prison for a corruption scheme wherein Elliott awarded contracts to the vendors in exchange for illegal kickbacks.

Georgia National Guard“Elliott took advantage of her position with the Georgia National Guard, and awarded no-bid contracts to her friends in exchange for illegal kickbacks,” said U.S. Attorney John Horn.  “She and two of her friends stole over $150,000 in funds that were intended to maintain defense facilities and instead spent the money on themselves.”

“The sentencing of these individuals to federal prison will not only hold them accountable for their greed based criminal conduct, but will also send a clear message to others that might consider a similar scheme.  The FBI will continue to work with its various law enforcement partners to ensure that those individuals engaged in these types of activities are identified, investigated and presented for federal prosecution,” said J. Britt Johnson, Special Agent in Charge, FBI Atlanta Field Office.

FBI Seal“Corruption at any level diminishes the hard work and dedication of the thousands of government employees who are dedicated to providing honest services to the American public,” stated Veronica F. Hyman-Pillot, Acting Special Agent in Charge. “IRS Criminal Investigation stands committed to weed out individuals who misuse their job as a path to financial success by using greed and corruption.”

“This is a prime example of our determination, along with our fellow law enforcement agencies, to investigate allegations of criminal activity and corruption involving the National Guard and other DOD entities,” said Frank Robey, Director of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit.   “Regardless of the ‘scope and size’ of the allegations, our CID Special Agents are committed to working side-by-side with other agencies to help eradicate this type of activity.”

“The Defense Criminal Investigative Service is committed to protecting the integrity of the DOD contracting process, including the GA National Guard,” said John F. Khin, Special Agent in Charge, Southeast Field Office, Defense Criminal Investigative Service. “This sentencing sends a message to individuals who fail to follow the rules that along with our other law enforcement partners, violators will be brought to justice.”

“Accountability of violators is paramount when dealing with public corruption.  GBI’s partnership with the FBI in the Public Corruption Task Force is essential for continued public trust in Georgia.  When those who violate the law and violate public trust are held accountable, and go to jail – if this occurs, it sends a clear message that public corruption is not acceptable in this state,” said Vernon Keenan, Director, Georgia Bureau of Investigation.

“We hope these sentences serve as a deterrent to those who desire to pilfer the state and federal governments’ coffers. We also believe this case exemplifies how multiple agencies can work together to achieve a common goal: to serve the public who depends on us to defend the integrity of government programs. As in this case, our office will remain dedicated to protecting taxpayers’ money by continuously pursuing fraud, waste, abuse and corruption within the executive branch of state government,” said Deb Wallace, State Inspector General, Georgia Office of the Inspector General.

According to U.S. Attorney Horn, the charges and other information presented in court:  From May 2007 through April 2012, Elliott worked for the Georgia Department of Defense, the state agency charged with coordinating and supervising all agencies and functions of the Georgia National Guard.  Elliott worked as an Engineering Operations Manager at the Clay National Guard Center, located at Dobbins Air Reserve Base, in Marietta, Georgia.

In that position, Elliott worked with engineering firms to develop bid-ready construction projects, prepared bid documents, and oversaw no-bid purchase orders.  Under the rules governing the contracting process that Elliott oversaw, projects that cost less than $5,000 did not need to go through a competitive bidding process, allowing Elliott to award the contracts.  She certified that the work had been completed for those projects, and facilitated payment to the vendors who allegedly completed such projects.

Elliott awarded numerous contracts under $5,000 to vendor companies created by her friends and associates, including co-defendants Lakeysha Ellis and Angela Thicklin (f/k/a Angela Stanback Kinlaw).  In return, Ellis and Thicklin paid Elliott kickbacks, equal to 50% of the value of the contracts, for steering contracts to Ellis’ vendor company, Total Source Solution, LLC, and to Thicklin’s vendor company, 3M Construction LLC.

Elliott awarded Total Source Solution 17 contracts with a total value of approximately $75,000.  Elliott awarded 3M Construction 18 contracts with a total value of approximately $78,000.  The contracts were for a variety of services supposedly to be performed by the two companies, including electrical work, landscaping, and HVAC work.  But the work was never done.  Instead, the defendants split the money awarded under the contracts and spent it on personal items, including travel, meals, and merchandise.  As part of the scheme, Elliott owned a company named Tech Group Investments, LLC.  Ellis and Thicklin took money they received from the Georgia National Guard contracts, and paid kickbacks to Elliott through that company.  Elliott falsely certified that the work had been completed to facilitate payment by the Georgia National Guard.

Elliott and Ellis engaged in a similar fraud scheme from January 2009, through May 2011, when Ellis was an accountant at Baumueller-Nuermont Corporation, an industrial equipment company with offices in Atlanta.  Her job responsibilities included payroll and paying vendors.

While employed as Baumueller-Nuermont’s accountant, Ellis fraudulently funneled money to the defendants’ two sham companies, Total Source Solution and Tech Group Investments.  Ellis wrote corporate checks to Total Source Solution, signed her name on the checks, and forged the signature of the Vice President on the checks, to ensure that the checks could be negotiated.  Ellis recorded these payments in the check registry to reflect falsely that the checks had been issued to true vendors (such as American Express) when in fact they went to Ellis’ company.

As part of the scheme, Ellis also falsified employee records in the corporation’s payroll system to disguise payments to the defendants’ two companies.  Ellis created phantom employees by altering the names of real employees (by switching their first and last names) and slightly changing their Social Security numbers.  She then caused the payroll system to make fraudulent salary payments to Total Source Solution and Tech Group Investments for these new, non-existent employees.

Baumueller-Nuermont lost about $85,000 from this scheme.

Raytosha Elliott, 35, of Atlanta, Georgia, was sentenced yesterday to two years, ten months in prison and three years of supervised release, and ordered to pay $115,902 in restitution to the Georgia National Guard and $26,500 in restitution to Baumueller-Nuermont Corporation by U.S. District Judge Amy Totenberg.  Elliott was also ordered to pay $20,000 in restitution to WebBank based on a fraudulent loan application she submitted to the bank in September 2013.  In that application, Elliott falsely inflated Tech Group Investments’ sales and gross receipts, and provided a fraudulent federal tax return in support of those figures, to obtain the loan. She was also ordered to perform 60 hours community service.

Lakeysha Ellis, 37, of Decatur, Georgia, was sentenced to nine months in prison and three years of supervised release, and three months of home confinement.  She was also ordered to pay $74,902 in restitution to the Georgia National Guard and $81,487.88 in restitution to Baumueller-Nuermont Corporation.  Both defendants previously pleaded guilty to two counts of conspiracy.

Today, Angela Thicklin, 45, of Atlanta, Georgia, was sentenced to one year, nine months in prison and three years of supervised release including ordered to pay $78,640 in restitution to the Georgia National Guard by Judge Totenberg.  Thicklin previously pleaded guilty to one count of conspiracy.

This case was investigated by the Federal Bureau of Investigation; the Georgia Bureau of Investigation; the U.S. Department of Defense, Office of Inspector General, Defense Criminal Investigative Service; Internal Revenue Service Criminal Investigation; the U.S. Army Criminal Investigation Command; and Deputy Inspectors General of the State of Georgia Office of the Inspector General.

Assistant U.S. Attorney Stephen H. McClain prosecuted the case.

Source: http://www.justice.gov/usao-ndga/pr/former-georgia-national-guard-employee-and-two-vendors-sentenced-corruption-scheme

NC toll road moves ahead with contractor guilty of fraud

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North Carolina transportation officials are pushing ahead with an embattled toll road outside Charlotte, even after a politically connected paving contractor involved in the $840-million project pleaded guilty last year to defrauding taxpayers.

NCDOTThe state Department of Transportation announced Thursday construction had begun on the Monroe Expressway, a 20-mile highway in Union County. The project, which had been stalled for years by a lawsuit over its environmental impact, is being built by a joint venture of three companies.

One of those firms, Boggs Paving Inc. of Monroe, pleaded guilty to conspiracy in September in what federal prosecutors described as a bid-rigging and kickback scheme involving nearly $88 million in government highway construction contracts between 2003 and 2014. Company president Carl A. “Drew” Boggs III is awaiting sentencing after pleading guilty to conspiracy and money laundering. He faces up to 25 years in prison and $500,000 in fines.

Despite that, the three-company consortium, Monroe Bypass Constructors LLC, has been paid $6.8 million by the state during the eight months since the guilty pleas were entered, according to N.C. Department of Transportation spokesman Mike Charbonneau. In addition, Boggs Paving has been paid $108,290 since September for two other road projects.

Keep reading this article at: http://www.wncn.com/story/29185407/nc-toll-road-moves-ahead-with-contractor-guilty-of-fraud

Man pleads guilty to fraudulently obtaining $2.8 million in contracts meant for 8(a) and veteran-owned businesses

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Wesley Burnett, age 54, of Hermosa Beach, California, pleaded guilty on October 24, 2014, to conspiracy to commit wire fraud in connection with a scheme to fraudulently obtain more than $2.8 million in federal government contracts through the use of the Small Business Administration’s 8(a) program, designed to assist disadvantaged businesses.

According to his plea agreement, Burnett owned and operated Confederate Group LLC and Total Barrier Works (TBW).  These companies were in the business of maintaining and installing anti-terrorist systems and vehicle control equipment such as security barriers, bollards, gates, uninterrupted power systems (UPS) and other perimeter security anti-terrorist equipment.

Burnett admitted that at various times from 2007 until 2014, he falsely represented to the government that Confederate Group LLC was a “Hispanic-American owned business,” a “minority owned business,” a “service disabled veteran owned business,” and a “small disadvantaged business,” in order to win federal contracts at military bases and federal buildings that were reserved for firms in those categories. In fact, Burnett is not a member of any racial or ethnic minority, is not a disabled veteran and is not a member of a socially disadvantaged group, as those terms are defined by the Small Business Administration, and therefore his company was not qualified to receive contracts set aside for those categories. As a result of Burnett fraudulently claiming minority and/or disabled veteran status, from 2008 through 2014, Confederate Group LLC was awarded approximately $534,315, in contracts reserved for minorities and service disabled veterans.

In order to bid on the set-aside contracts, Burnett recruited individual who were members of racial or ethnic minorities, service disabled veterans, or members of socially disadvantaged groups, and offered them a percentage of the total value of any contract he won using their companies’ name. As part of the scheme, Burnett, using the name of the minority owned company bid on federal government contracts set aside for companies owned by minorities, service disabled veterans, or members of socially disadvantaged groups.  Burnett and TBW did all of the work covered by the contract, then paid the owner of the company in whose name the contract had been awarded a fixed percentage of the gross value of the contract, usually between four and five percent. To further this “pass thru” arrangement, Burnett falsely represented that TBW was a trade name for the minority owned company in whose name the contract had been awarded, when in fact TBW was a separate and distinct company.

For example, Yogesh K. Patel was the owner of United Native Technologies, Inc. (“UNTI”), which, according to its articles of incorporation, was formed to “perform information technology services to federal, state and local government, as well as commercial.”  In 2005, Patel applied for and was granted certification as a minority or socially disadvantaged owned business under the SBA’s 8(a) program. In addition to a broad scope of assistance from SBA, participants in the 8(a) program can receive sole source government contracts that are reserved for minority or socially disadvantaged owned companies.

Burnett met Patel at a business conference and the two agreed to use UNTI to bid on 8(a) set aside contracts at federal government installations, including military bases and federal buildings, with Burnett, TBW and individuals at Burnett’s direction actually performing the work necessary to fulfill these contracts. Burnett also agreed to pay Patel approximately 4.5% of the total value of any contract awarded to UNTI. As a result, between January 2010 and November 2013, UNTI was fraudulently awarded more than $1.8 million in 8(a) set-aside U.S. government contracts, while the work on the contracts was actually performed by Burnett’s company and employees.

Burnett admitted that he had similar arrangements with the owner of an 8(a) firm that did electrical and other work for government and commercial clients, and with the owner of a service-disabled veteran owned small business. Burnett also fraudulently obtained the personal identifying information of a service-disabled veteran, which he then used when bidding on federal government contracts.

Burnett faces a maximum penalty of 20 years in prison for the wire fraud conspiracy. U.S. District Judge Deborah K. Chasanow has scheduled sentencing for February 2, 2015, at 10:00 a.m.

Yogesh K. Patel, age 47, of Gaithersburg, Maryland, previously pleaded guilty to his role in the scheme and is scheduled to be sentenced on January 12, 2015, at 12:00 p.m.

The National Procurement Fraud Task Force was formed in October 2006 to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs. The Procurement Fraud Task Force includes the United States Attorneys’ Offices, the FBI, the U.S. Inspectors General community and a number of other federal law enforcement agencies. This case, as well as other cases brought by members of the Task Force, demonstrates the Department of Justice’s commitment to helping ensure the integrity of the government procurement process.

Source: http://www.justice.gov/usao/md/news/2014/BusinessOwnerPleadsGuiltyToWireFraudConspiracyToFraudulentlyObtainMoreThan2.8MillionIn.html

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