Georgia Tech Procurement Assistance Center

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

Augusta man sentenced for theft of government funds

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U.S. Attorney Sherri A. Lydon states that Phillip Thompson of Augusta, GA was sentenced for conspiracy involving theft of government funds, a violation of Title 18, United States Code, § 371.

U.S. District Judge J. Michelle Childs, of Columbia, SC sentenced Thompson to 23 months in jail after a sentencing hearing. The judge further ordered that Thompson repay $4,580,469.83 in restitution and, after his release from the Bureau of Prisons, that he serve three years on supervised release.

Facts presented in court established that Thompson worked at the Savannah River Site for Wise Services, and that, beginning in September of 2009 and continuing for several years, Thompson was involved in a scheme in which he and a co-defendant stole money using false and fraudulent invoices. An investigation by the U. S. Dept. of Energy’s Office of the Inspector General (OIG) and the Federal Bureau of Investigation (FBI) revealed that Thompson and his co-defendant stole more than six million dollars.

April G. Stephenson, Acting Inspector General for the Dept. of Energy, states: “The Office of Inspector General remains committed to ensuring the integrity of our contractors and subcontractors. Those who choose to abuse their positions of trust while hiding behind sophisticated embezzlement and fraud schemes, will be held accountable.”

The Energy Department’s OIG and the FBI investigated the case.  Assistant U.S. Attorney John C. Potterfield of the Columbia, SC office prosecuted the case.

Source: https://www.justice.gov/usao-sc/pr/augusta-man-sentenced-theft-government-funds

Read The Augusta Chronicle’s account of this story at: http://www.augustachronicle.com/news/20180703/columbia-county-man-gets-23-months-in-prison-in-mox-fraud-case

Court grapples with Albany Marine Corps Logistics Base contractor’s bribery conviction

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The owner of a trucking company who was convicted of paying bribes to rake in more than $20 million from military contracts fought for relief last Wednesday at the 11th Circuit.

Arguing before a three-judge panel in Atlanta, attorney Edward Garland said that the evidence showed only that his client, Christopher Whitman, gave gratuities to officials.   “The defense was presented for five weeks … evidence was used on the record for, what we’ll call, ‘buttering up,’” said Garland, a partner with Garland, Samuel and Loeb.

Justice Department attorney Alex Robbins told the panel meanwhile that the proper time to raise such arguments was at trial.  “Timing is everything,” Robbins said. “You need to submit your argument to the jury. … None of that happened here.”

Robbins added: “There is nothing in the record at all that suggested these payments were gratuities.”

Garland’s argument also drew skepticism from at least one judge on the panel.  “But you never argued this, did you?” said U.S. District Judge John Antoon II, sitting by designation from the Middle District of Florida.

Keep reading this article at: https://www.courthousenews.com/court-grapples-with-defense-contractors-bribery-conviction/

See our earlier reports on this case at: http://gtpac.org/?p=10102 and http://gtpac.org/?p=7589. 

Business owner sentenced to 20 months in prison for fraudulent billing scheme against federal government

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Nikita Davis, 48, a business owner with a firm in Washington, D.C., has been sentenced to 20 months in prison for a scheme in which she improperly qualified for government contracts and then fraudulently billed the United States more than $1.1 million.

Davis pled guilty in June 2017, in the U.S. District Court for the District of Columbia, to major fraud against the United States.  She was sentenced on October 20, 2017.  The plea agreement calls for her to pay $1,189,697 in restitution to the United States. Upon completion of her prison term, Davis will be placed on three years of supervised release.

Davis was the president and chief executive officer of Federal Acquisition Consultants Inc. (FACI), a company based in Washington, D.C., that specialized in acquisition and program management support. The company was formed in 2007 as an economically disadvantaged, woman-owned, small business.

According to a statement of offense submitted at the plea hearing, Davis made fraudulent representations when she applied in March 2013 for a contract under a GSA program created to streamline the federal procurement process through pre-negotiated prices and terms. GSA provided centralized procurement for the federal government through this program, known as the GSA Multiple Awards Schedule Program (GSA MAS or simply “GSA Schedule”).

The GSA awarded Davis’s company a Schedule contract in May 2013.  Later in 2013, the Department of Commerce solicited requests for quotes from Schedule contractors for work related to the mission of the Afghanistan Investment and Reconstruction Task Force.  The Task Force, part of the Commerce Department, aimed to facilitate and coordinate activities designed to help Afghanistan develop a sustainable economy, stabilize the market, and create strong Afghan-American partnerships.

Davis’s company submitted quotes and in September of 2013 was awarded seven contracts, worth a total of more than $3.1 million.  In April 2014, the Commerce Department’s Office of Inspector General initiated an investigation into Davis and the company, based on an allegation that she submitted false invoices and made false statements to government agencies.  The investigation revealed that, in obtaining the GSA Schedule contract designation, Davis made false representations about her company’s past work experience.  It also determined that Davis’s company improperly billed and collected from the government a total of $1,189,697 under the contracts by billing improperly for travel, danger pay, insurance, security and labor.

Those investigating this case included representatives of the Offices of the Inspector General for the General Services Administration and Department of Commerce.

Source: https://www.justice.gov/usao-dc/pr/business-owner-sentenced-20-months-prison-fraudulent-billing-scheme-against-federal

Atlanta contractors get prison time in contract bribery case

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Two Atlanta contractors were sentenced to prison Tuesday as part of an ongoing federal investigation into a pay-to-play scheme for city contracts.

U.S. District Judge Steve Jones sentenced Elvin R. Mitchell Jr., of Atlanta, to serve five years and pay more than $1.12 million in restitution. Mitchell, 63, pleaded guilty in January to a conspiratorial bribery and money laundering charge.

Jones also sentenced Charles P. Richards Jr., of Tucker, to serve two years and three months in prison and pay $193,000 in restitution. Richards, 65, pleaded guilty in February to a conspiratorial bribery charge.

When imposing the sentences, Jones told each man that their actions had damaged the trust and confidence of the public, cracking the foundation of government.

Keep reading this article at: https://apnews.com/530f2f16f1bc4b8b83b2cede829e2089/Atlanta-contractors-get-prison-time-in-contract-bribery-case

Also see Justice Dept. statement on this case: https://www.justice.gov/usao-ndga/pr/construction-company-owners-sentenced-federal-prison-paying-over-1-million-bribes-city

Contractor indicted in bribery, kickback scheme in Savannah

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A Lithonia, Georgia contractor has been indicted by a federal grand jury in Savannah for allegedly scheming with former Chatham Area Transit (CAT) executive director Chadwick Reese and his maintenance director to defraud the transit company out of more than $200,000.

Anthony Florence, the 50-year-old owner of SR Contracting, allegedly schemed with Reese and former maintenance director Joel Morris, 54, through a series of bribes, kickbacks and concealment for work billed, but not done, for CAT.

Florence, who supposedly was providing maintenance for bus routes, concrete repairs to parking lots and other services, submitted a series of 22 invoices to Reese for $4,750 each between Aug. 19, 2013, and Oct. 2, 2015, the indictment returned last week charged.

Those invoices covered fraud between July 2013 and November 2015, the indictment charged.

As part of the scheme cited in the indictment for mail fraud, Florence “would provide bribes and kickbacks to (Reese and Morris), including payments of tens of thousands of dollars worth of work done on the homes of each.

Keep reading this article at: http://savannahnow.com/news/2017-04-10/contractor-indicted-ongoing-chatham-area-transit-fraud-scheme

Woman in DBE front scheme gets 12 months in federal prison

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The former owner of a suburban Chicago construction business convicted of acting as an illegal front so another company could secure a lucrative city airport contract was sentenced Thursday (Mar. 16, 2017) to 12 months in federal prison.

Lawyers for Elizabeth Perino had sought probation and home confinement, but U.S. District Judge Gary Feinerman said he opted for prison to send a message to “an industry that needs to clean up its act.”

Perino’s conviction is the latest turn in an eight-year saga sparked in 2008 when Perino’s former project manager filed a whistleblower lawsuit alleging misconduct in massive projects run by industry giant McHugh Construction, a century-old company that reported more than a half-billion dollars in revenue in 2015.

That sparked a joint investigation by federal prosecutors and Illinois Attorney General Lisa Madigan resulting in the criminal charges.

Perino’s company posed as a legitimate woman-owned business, allowing Chicago-based Diamond Coring Co. to meet its requirements for hiring disadvantaged businesses in order to win a multimillion-dollar runway repair contract at O’Hare International Airport. Perino did no work for the bills submitted by her company.

Keep reading this article at: http://www.chicagotribune.com/news/local/breaking/ct-phony-woman-business-owner-sentencing-met-20170316-story.html

FAR Council finalizes rule imposing restrictions on contracting with companies with felony convictions and delinquent tax liabilities

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The FARThe Federal Acquisition Regulation (FAR) Council — comprised of the Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA) — recently finalized a rule that imposes significant restrictions on federal agencies in contracting with corporations that have federal tax liability or a recent federal felony conviction.  The final rule implements requirements created by the Consolidated and Further Continuing Appropriations Act of 2015, Pub. L. 113-235 (the CFCAA) and imposed by a December 4, 2015 interim FAR rule, which we wrote about previously.

The rule applies broadly to all DoD, GSA, and NASA procurements, and requires contractors to report any unpaid federal tax liabilities and to represent whether they have been convicted of a felony criminal violation within the previous twenty-four months.  In addition, for certain contracts in excess of $5 million, contractors must also certify that they:

  1. have filed all federal tax returns in the past three years;
  2. have not been convicted of a criminal offense under the Internal Revenue Code; and
  3. do not have any outstanding, unsatisfied federal tax assessments.

The rule imposes new requirements on procuring agencies as well: if a corporation discloses any tax delinquencies or felony convictions, the agency may only contract with it after first determining that suspension or debarment of the corporation is not necessary to protect the government’s interests.

Keep reading this article at: https://www.insidegovernmentcontracts.com/2016/10/far-council-finalizes-rule-imposing-restrictions-contracting-companies-felony-convictions-delinquent-tax-liabilities/

Jury convicts contractor of defrauding city’s womens business program

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FBI SealA federal jury on Friday (June 17, 2016) convicted a suburban Chicago construction subcontracting firm on fraud charges for scheming to help a general contractor falsely satisfy the woman’s business enterprise (WBE) requirement on city of Chicago construction projects.

As the owner of the WBE, Elizabeth Perino agreed to allow her company to be claimed as a subcontractor on city projects so that the prime contractor could satisfy its requirement to assign a portion of the work to female-owned businesses.  Perino falsified paperwork to conceal the fact that her business, Perdel Contracting Co., would perform no actual work on the projects.  As a result of Perino’s fraud, Perdel expected to receive payment equivalent to a percentage of the work that Perdel Contracting fraudulently claimed to have performed.

Perino, 62, was convicted on three counts of wire fraud and one count of mail fraud.  The conviction is punishable by a maximum sentence of 80 years in prison.  U.S. District Judge Gary Feinerman indicated he will schedule a sentencing hearing at a later date.

Background

A city of Chicago ordinance establishes an overall goal of awarding at least 5% of total annual funding of all city contracts to WBEs.  The city’s program mirrors the federal government’s WOSB, or women-owned small-business, contracting program.  For contracts with values exceeding $10,000, each contractor has to commit a certain percentage of labor to WBEs, either as a joint venture or subcontractor, or by purchasing goods or services from a WBE.  In addition to being a WBE, the Perdel firm, which specializes in concrete and carpentry work, also qualified to participate in city projects as a certified Disadvantaged Business Enterprise (DBE).  The DBE program is a requirement by the U.S. Dept. of Transportation, applicable to federally-assisted transportation projects like airports, highways, and public transit systems.

Facts

Evidence at the four-day trial revealed:

  • Perino and a co-worker agreed to act as a “pass-through” WBE/DBE on two city projects, meaning that Perdel’s employees would perform no work and Perdel’s equipment would not be used.
  • For one of the projects – at O’Hare International Airport – Perino agreed to place the general contractor’s employees on Perdel’s payroll to perform the work that would be credited to Perdel.
  • Perino also entered into a sham contract to “purchase” street sweepers from the general contractor and title them in Perdel’s name while the general contractor’s workers performed the street sweeping as purported employees of Perdel.  Perino and the general contractor further agreed that, at the conclusion of the O’Hare project, the street sweepers would be returned to the general contractor for $1 per machine, and Perdel would receive 18% on top of the labor costs and $20 per hour for the street sweepers.

The conviction was announced by the U.S. Attorney for the Northern District of Illinois, along with representatives of the Federal Bureau of Investigation, and the Inspector General’s offices of the U.S. Dept. of Transportation, the U.S. Dept. of Labor, and the City of Chicago.

Source: https://www.justice.gov/usao-ndil/pr/jury-convicts-lockport-contractor-defrauding-city-chicago-s-women-owned-business-entity

See the FBI’s 2012 announcement of the charges filed against Perino at: https://www.fbi.gov/chicago/press-releases/2012/two-area-contractors-charged-with-fraud-involving-minority-and-women-set-asides-for-government-construction-contracts

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