Georgia Tech Procurement Assistance Center

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

March 7, 2019 By Andrew Smith

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

Filed Under: Contracting News Tagged With: abuse, bribe, bribery, City of Atlanta, conspiracy, corruption, DOJ, Justice Dept., money laundering, pay-to-play, PRAD Group, state and local government, tax evasion, U.S. Attorney, witness tampering

Suspicious contract activity proliferates — watch out!

September 18, 2018 By Andrew Smith

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.

Filed Under: GTPAC News Tagged With: abuse, alert, corruption, fraud, phishing, scam, spoofing

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

August 22, 2018 By Andrew Smith

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.

Filed Under: GTPAC News Tagged With: abuse, alert, corruption, fraud, phony invoice, scam

Military bought thousands of boots labeled ‘Made In the USA’ — but they were from China

June 21, 2018 By Andrew Smith

Five executives with a former leading manufacturer of U.S. military boots have been sentenced in federal court for saying the boots were made in Tennessee when they were actually produced in China.

According to an indictment filed in U.S. District Court, the actual Chinese manufacturer of the boots was told to include “USA” on the label of Wellco boot uppers that were then shipped to the U.S. The “Made in China” tags were removed, the indictment says. Soles were affixed to the boots at Wellco’s plant in Morristown, Tennessee, and elsewhere, according to the document.

From 2006 through 2012, the U.S. Department of Defense paid at least $138 million to Wellco for military footwear, according to the indictment.

Keep reading this article at: https://taskandpurpose.com/wellco-execs-military-boots-china/

See earlier articles at:

  • Management of DoD contractor pleads guilty to ‘Made in the USA’ contract fraud
  • Five indicted in TN for fraudulent ‘Made in the USA’ sales to Armed Forces

 

Filed Under: Contracting News Tagged With: AFOSI, Berry Amendment, Chinese, corruption, DCAA, DCIS, DHS, DoD, DOJ, domestic content preference, fraud, GSA, Homeland Security, IG, indictment, Justice Dept., Made in the USA, OIG, OSI, safety, smuggling, TAA, Trade Agreements Act, wire fraud

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

March 13, 2018 By Andrew Smith

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. 

Filed Under: Contracting News Tagged With: abuse, Albany, bribe, bribery, bribes, conviction, corruption, DLA, DoD, DOJ, fraud, gratuity, Justice Dept., Labor Dept., Marine Corps, MCLB, Navy, NCIS, sentencing, theft, U.S. Attorney

Small business fraud leads to large monetary liability in recent cases

March 6, 2018 By Andrew Smith

Two Washington, D.C. area government contractors have agreed to pay the government for their respective roles in defrauding the U.S. Small Business Administration (SBA) in schemes to fraudulently obtain government contracts set aside for small businesses.  These two cases highlight the importance of small business compliance and the submission of accurate and complete certifications.

the first company had to pay $16 million for violating the False Claims Act (FCA).

In the second instance, company owners paid $1.25 million — and got prison time — for 8(a) set-aside contract fraud.

Keep reading this article at: https://www.jdsupra.com/legalnews/small-business-fraud-leads-to-large-36348/

 

Filed Under: Contracting News Tagged With: 8(a), abuse, corruption, False Claims Act, fraud, preference, set-aside, sham

Management of DoD contractor pleads guilty to ‘Made in the USA’ contract fraud

March 5, 2018 By Andrew Smith

The former president and CEO of Wellco Enterprises, Inc. (Wellco) and Tactical Holdings Operations, Inc. (Tactical Holdings), Vincent Lee Ferguson, of Knoxville, Tennessee, has pled guilty to conspiracy to commit wire fraud.

Wellco’s former sales VP, Matthew Lee Ferguson, of Geneva, Illinois, and former marketing director, Kerry Joseph Ferguson, of Houston, Texas, also pled guilty to conspiracy to commit wire fraud.  In addition, Wellco’s former VP of government contracting, Neil Streeter, of Warren, Massachusetts, and former operations manager, Stephanie Lynn (Ferguson) Kaemmerer, of Knoxville, Tennessee, pled guilty to smuggling goods into the United States.

Sentencing has been set for Vincent Lee Ferguson, Matthew Lee Ferguson, and Kerry Joseph Ferguson for June 6, 2018.  Sentencing for Neil Streeter and Stephanie Lynn Kaemmerer is set for June 11, 2018.  Conspiracy to commit wire fraud and smuggling goods into the United States both carry a maximum penalty of 20 years in prison and a fine of up to $250,000.  Each defendant was released pending sentencing.

According to information on file with the U.S. District Court, Wellco was a leading manufacturer and supplier of military footwear to the U.S. Department of Defense (DoD) and to civilian (commercial) customers for over 70 years.  From 2006 through 2012, DoD alone paid in excess of $138 million to Wellco for the supply of combat boots.  Wellco pioneered and patented the first practical method for molding and attaching a rubber sole to a shoe upper in a single operation.  During the Vietnam War, the U.S. Army adopted Wellco technology for the manufacture of its hot-weather boots for the jungles of Vietnam, a boot that became known as the “Vietnam Boot” or the “jungle boot.”   In May, 2007, in a deal involving approximately $22 million, Wellco was acquired by two investment firms, Golden Gate Private Equity, Inc. and Integrity Brands, Inc.  Wellco became a wholly owned subsidiary of Golden Gate’s portfolio company, Tactical Holdings.

In March 2006, Vincent Lee Ferguson was made President and CEO of Wellco.  At that time, he discussed a turnaround plan with Wellco’s Board of Directors for the company to increase commercial sales and “aggressively pursue” sales to the U.S. government.  From December 2008 through August 2012, he conspired with his executive team to import military-style boots that were made in China into the United States and then deceptively market and sell those boots to DoD (and other federal departments and agencies), government contractors, and the general public as “Made in the USA” and as compliant with the Berry Amendment and the Trade Agreements Act (TAA).   The Berry Amendment prohibits DoD from buying clothing that is not grown, reprocessed, reused or produced in the U.S.   The purpose of the Berry Amendment is to protect the viability of America’s textile and clothing production base.  The TAA provides that the government may acquire only “U.S.-made or designated country end products” and requires government contractors to certify that each “end product” meets applicable requirements.

By December 2008, Wellco was manufacturing certain military boot model uppers and insoles in China.  In order to conceal this fact, the conspirators required the Chinese manufacturing facility to include the American flag and “USA” on labels of certain boot uppers.  After two shipments of these deceptively marked boots were detained and seized by the U.S. Department of Homeland Security’s Customs and Border Protection, the conspirators ordered the Chinese facility to stitch tear-away “Made in China” labels in Wellco boot uppers.  After importation, the conspirators instructed Wellco factory workers in Morristown, Tennessee to tear out the “Made in China” tags prior to shipping the boots to government and commercial purchasers.

The defendants marketed and sold these Chinese-made Wellco boots as “Made in the USA.”  They also submitted false certifications to DoD and other federal agencies, and to government contractors that these boots complied with the Berry Amendment and TAA and met certain safety standards, including electrical hazard and blood-borne pathogen protections for U.S. troops.  For example, on August 15, 2012, the defendants submitted a signed “Certificate of Conformance” to a government contractor, representing that Wellco’s boot model S161 was “100% Berry Compliant” and “fully protective against Electrical Hazard,” even though the model was imported from China and not safety tested.  The boots were then supplied to troops stationed at Sheppard Air Force Base in Wichita Falls, Texas.   In total, Wellco sold at least $8.1 million of fraudulent boots.

This case was investigated by Homeland Security Investigations, Defense Criminal Investigative Service, Air Force Office of Special Investigations, General Services Administration Office of Inspector General, and Defense Contract Audit Agency.

Source: https://www.justice.gov/usao-edtn/pr/former-ceo-and-executive-management-defense-contractor-wellco-enterprises-inc-pleads

Filed Under: Contracting News Tagged With: AFOSI, Berry Amendment, Chinese, corruption, DCAA, DCIS, DHS, DoD, fraud, GSA, Homeland Security, IG, Made in the USA, OIG, OSI, safety, smuggling, TAA, Trade Agreements Act, wire fraud

Man pleads guilty to obstructing justice in Atlanta contracting corruption investigation

November 7, 2017 By Andrew Smith

Shandarrick Barnes has pleaded guilty to obstructing justice in the federal corruption investigation involving City of Atlanta government.  The defendant threw a concrete block through the window of E.R. Mitchell’s home, and placed dead rodents on his porch and elsewhere hoping to thwart his cooperation with federal law enforcement.

“Barnes threw the concrete block through Mitchell’s dining room window to get him to ‘shut up,’” said U. S. Attorney Byung J. “BJay” Pak.  “Instead, that violent act made Mitchell even more resolute in his cooperation with federal law enforcement.  Barnes now faces a significant prison sentence because he decided to obstruct a federal investigation.”

“Attempts to subvert justice, whether through intimidation of witnesses or by any other means, will not be tolerated.  The FBI will expend any resources necessary to ensure that those who seek to obstruct criminal investigations are held accountable for their actions.  This plea by Shandarrick Barnes is evidence of the FBI’s commitment to protect those willing to cooperate with law enforcement’s efforts to improve their communities,”

“Individuals who obstruct justice will be held accountable for their actions. Intimidation of witnesses is never acceptable,” said James Dorsey, Acting Special Agent in Charge, IRS Criminal Investigation.  “This investigation was complex and multifaceted, and it underscores the reason we are committed to working with our law enforcement partners to dismantle any and all public corruption schemes.”

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

  • In late July 2015, special agents with IRS and the FBI approached E.R. Mitchell for an interview relating to an ongoing investigation into corruption at the City of Atlanta.
  • During the meeting, agents discussed corruption allegations as well as potential tax improprieties.
  • Shortly after the IRS and FBI agents approached and interviewed him, Mitchell informed others that federal law enforcement had spoken with him and was asking questions.
  • Mitchell was interviewed on September 2, 2015, by the U.S. Attorney’s Office and FBI and IRS agents and confessed to regularly paying “up-front money” for City of Atlanta contracts.
  • On September 8, 2015, Mitchell returned to the office and completed a second debriefing with prosecutors and agents.
  • On September 11, 2015 at approximately 5:30 a.m., Shandarrick Barnes threw a concrete block with the words “ER, keep your mouth shut!” written on the side, through a plate glass window in Mitchell’s home.  When Mitchell emerged from the house to see who had thrown the block, he saw that dead rats had been placed on his porch, car and in his mailbox.  The police and FBI were summoned to the scene and law enforcement obtained security footage from the subdivision.  The video revealed a car that appeared to match Barnes’ vehicle left the area minutes after the block was thrown through the front window.  Further investigation by agents suggested that Barnes was involved.
  • On July 13 and August 17, 2016, Barnes was interviewed by the FBI and IRS.  During the interviews, he admitted he threw the concrete block through Mitchell’s window.  Barnes specifically acknowledged that he was aware of the IRS tax investigation into Mitchell and others and that agents had asked about Mitchell’s taxes as well as payments Mitchell made to businesses associated with Barnes’ employer.  He was well aware that Mitchell was actively cooperating with agents.  He said he was livid and his decision to throw the brick through Mitchell’s window was motivated by his desire to hinder Mitchell’s communication with agents concerning possible tax violations.  He said he felt that Mitchell’s communications to federal law enforcement would negatively affect his employer’s businesses.  Barnes was concerned that the communication with agents was detrimental to obtaining other business that he and others were actively seeking at that time.

Sentencing for Shandarrick Barnes, 41, of Atlanta, Georgia, is scheduled for February 7, 2018.  This case is being investigated by the Federal Bureau of Investigation.  Assistant U.S. Attorneys Kurt R. Erskine and Jeffrey Davis are prosecuting the case.

Source: https://www.justice.gov/usao-ndga/pr/man-pleads-guilty-obstructing-justice-city-atlanta-corruption-investigation

Filed Under: Contracting News Tagged With: bribe, bribery, City of Atlanta, corruption, FBI, investigation, IRS, local government contracting, obstruction, scandal, tax improprieties, U.S. Attorney

Atlanta contractors get prison time in contract bribery case

October 11, 2017 By Andrew Smith

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

Filed Under: Contracting News Tagged With: abuse, bribe, bribery, conviction, corruption, money laundering, pay-to-play, state and local government

City purchasing head pleads guilty to conspiracy charge

September 28, 2017 By Andrew Smith

Adam L. Smith, the former Chief Procurement Officer for the City of Atlanta, has pleaded guilty to conspiring to accept more than $30,000 in bribe payments from a vendor who obtained millions of dollars in City contracts.

“Great trust was placed in Smith as Chief Procurement Officer for the City of Atlanta, and he abused his position to serve his own financial interests,” said U.S. Attorney John A. Horn.  “Public corruption offenses, like Smith’s, can erode the confidence that the people have in government.”

“The guilty plea of former City of Atlanta Procurement Officer Adams in federal court [on Sept. 26, 2017], will ensure that he is held accountable for his greed based criminal conduct as he now awaits sentencing. It is hoped that this case serves as notice to others that similar such conduct among public officials will not be condoned and that there are severe consequences should that notice go unheeded,” said David J. LeValley, Special Agent in Charge, FBI Atlanta Field Office.

“Public service is a public trust, requiring employees to obey laws and ethical principles above private gain.  Smith abused his public trust to enrich himself at a cost to the taxpayers,” said James E. Dorsey, Acting Special Agent in Charge, IRS Criminal Investigation. “We will continue to work with the FBI and U.S. Attorney’s Office in making these public corruption investigations a priority.”

According to U.S. Attorney Horn, the charges and other information presented in court, Smith served as the Chief Procurement Officer for the City of Atlanta from 2003 to February 21, 2017, overseeing the City’s purchasing activities and its expenditure of billions of dollars in public money for projects.

The conspiracy charge filed by Horn’s office refers to a “vendor” represented by an executive with a construction firm in Atlanta, but does not identify either the vendor or the executive by name.  During Smith’s tenure as the Chief Procurement Officer for the City, he awarded contracts worth millions of dollars to the vendor’s firm and joint venture projects of which the vendor was a partner.

From at least 2015 to January 2017, Smith met privately with the vendor on multiple occasions, frequently at local restaurants. During these meetings, Smith and the vendor discussed Atlanta procurement projects, bids, and solicitations. Often at the time of these meetings, the vendor was actively seeking contracts, projects, and work with Atlanta.

After most of these meetings, the vendor and Smith met in the restaurant’s bathroom, where the vendor paid Smith approximately $1,000 in cash.  In return for the bribe payments, the vendor expected Smith to use his position and power as Atlanta’s Chief Procurement Officer to assist the vendor with contracting/procurement with Atlanta and to furnish the vendor with future benefits and favors when needed.

Given his position, Smith was required to sign annually a financial disclosure statement certifying that he had not received more than $5,000 in annual income from any corporation, partnership, proprietorship, or other business entity other than Atlanta.  Additionally, under Atlanta’s Procurement Code, Smith also had to “make a written determination as to the existence” of any “personal or organizational conflicts of interest exist” between vendors and Atlanta before awarding a vendor a solicited contract. Similarly, Atlanta’s Procurement Code mandated that Smith “certify to the City Council” that the winning vendors had disclosed to Atlanta any “organizational and personal relationships” and that the “award of the contract [was] appropriate.”

Furthermore, in exchange for those cash payments:

  1. Smith met with the vendor on a regular basis;
  2. Smith provided the vendor with information and counsel regarding Atlanta’s procurement processes (among other information);
  3. When the vendor’s firm or joint venture became the successful bidder on an Atlanta contract or request for proposal, Smith approved and submitted the award of such procurement projects or bids to Atlanta’s mayor and City Council for final authorization;
  4. Smith never disclosed his ongoing financial relationship with the vendor and/or the vendor’s firm on his Financial Disclosure Statements to Atlanta; and
  5. Smith never advised Atlanta’s City Council that the vendor’s firm or joint venture had failed to disclose its organizational and personal relationships with him.

In total, from at least 2015 to January 2017, the vendor paid Smith more than $30,000 in cash.

Adam L. Smith, 53, pleaded guilty to conspiratorial bribery.  Sentencing is scheduled for Jan. 16, 2018, before U.S. District Judge Steve C. Jones.

The Federal Bureau of Investigation and Internal Revenue Service Criminal Investigation are investigating this case.

Source: https://www.justice.gov/usao-ndga/pr/city-atlanta-s-former-chief-procurement-officer-adam-smith-pleads-guilty-taking-bribes

See federal conspiracy charge here: Conspiracy Charge – Adam Smith – 09.26.2017

Filed Under: Contracting News Tagged With: abuse, bribe, bribery, City of Atlanta, conspiracy, corruption, pay-to-play, state and local government

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