Georgia Tech Procurement Assistance Center

Contractor forfeits $1.7 million in assets, pleads guilty to delivery of cheap versions of products

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Jim A. Meron, owner of California-based WOW Imaging Products LLC and Time Enterprises LLC, has pled guilty to wire fraud related to a procurement fraud scheme involving the General Service Administration (GSA) Federal Supply Schedule program and a Department of Defense (DoD) electronic ordering system.

According to court documents, between May 2011 and July 2017, Meron used his two office supply businesses to defraud federal government agencies out of as much as $3.5 million — involving thousands of transactions — by substituting and delivering cheaper, generic versions of expensive, name-brand products his customers ordered, and pocketing the price difference. As part of his plea, Meron agreed to forfeit more than $1.7 million in assets seized during the investigation of his crimes.

Meron’s companies contracted to sell office supplies to federal agencies through two web-based government sales portals, GSA Advantage and DoD eMall.  After Meron received payments for the premium products his customers ordered, he obtained compatible products from his suppliers that cost him a fraction of what his customer paid for the brand-name products they ordered.  Meron then substituted and delivered those cheaper products for the more expensive products his customers ordered, and retained the difference in cost.  Over time, Meron extended his substitution scheme to nearly all orders for those name-brand products, and never intended to deliver what his customers ordered.

This case is the product of an investigation by GSA’s Office of Inspector General and the Defense Criminal Investigative Service.

Meron is scheduled to be sentenced on February 4, 2019.  Meron faces a maximum statutory penalty of 20 years in prison and a $250,000 fine on each count of conviction. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

Source: https://www.justice.gov/usao-edca/pr/granite-bay-man-pleads-guilty-multi-million-dollar-product-substitution-fraud-federal

Feds sue Navy contractor for environmental fraud

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The U.S. government will prosecute three whistleblower complaints against a U.S. Navy contractor accused of widespread fraud in the $1 billion cleanup of a radiation-contaminated shipyard and site of a major redevelopment project.

Seven whistleblowers have accused the contractor Tetra Tech of falsifying soil tests that were supposed to verify the decontamination of a 400-acre site where more than 10,000 homes are slated to be built in one of the largest redevelopment projects in San Francisco history.

“It was of critical importance to the United States Navy, and the public, that Tetra Tech perform accurately and fully the radiological testing and remediation at the Hunters Point site for which it was hired,” Assistant Attorney General Joseph Hunt said in a statement on Oct. 26th.  “The Department of Justice will vigorously pursue action against those who obtain federal funds based on promises they knowingly fail to keep.”

Keep reading this article at: https://www.courthousenews.com/feds-sue-navy-contractor-for-environmental-fraud/

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

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

Federal contractor sentenced for removing and transmitting classified materials

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Reality Winner was sentenced yesterday to five years and three months in prison for removing classified national defense material from a government facility and mailing it to a news outlet.

Winner was arrested by the FBI at her home in Augusta, Georgia on June 3, 2017.  The parties filed a plea agreement on June 21, in which Winner agreed to plead guilty to the one-count indictment charging her with unlawful retention and transmission of national defense information.  The parties agreed that a sentence of imprisonment for 63 months followed by a three-year term of supervised release is the appropriate disposition of the case.  The Court accepted the plea agreement at sentencing.

Winner was a contractor assigned to a unit of Fort Gordon in Georgia. She had been employed at the facility since on or about Feb. 13, 2017, and held a TOP SECRET//Sensitive Compartmented (SCI) clearance during that time.  Prior to that position, Winner had served in the U.S. Air Force from 2010-2016 and held a TOP SECRET//SCI security clearance.

  • Evidence presented at the change of plea hearing established that on or about May 9, 2017, Winner printed an intelligence report that was classified at the TOP SECRET//SCI level, and she removed it from the facility where she worked.  Information may be classified as TOP SECRET if its unauthorized disclosure can reasonably be expected to cause exceptionally grave damage to the national security of the United States.
  • Later on May 9, Winner unlawfully transmitted a hard copy of the intelligence report to an online news outlet. The intelligence report revealed the sources and methods used to acquire the information contained in the report, which, if disclosed, would be harmful to the United States and valuable to our adversaries.

Indeed, Winner, in an interview with the FBI on June 3, 2017, admitted knowing at the time she stole and transmitted the intelligence report that it contained information about intelligence sources and methods, which information she knew was valuable to adversaries of the United States.  Further, the information contained in the intelligence report had not been released to the public at the time Winner retained it and transmitted it to the online news outlet.  Winner, who had received training regarding the proper handling, marking, transportation, and storage of classified information, knew that she was not permitted to remove the intelligence report from the facility where she worked, retain it, or transmit it to the news outlet.

The investigation of this case was conducted by the FBI.

Source: https://www.justice.gov/opa/pr/federal-government-contractor-sentenced-removing-and-transmitting-classified-materials-news

See earlier article on this subject at: https://gtpac.org/2018/06/30/contractor-employee-pleads-guilty-to-espionage-in-connection-with-nsa-data-leak/

Former company president settles False Claims Act case related to defective bullet proof vests

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Richard C. Davis, the founder and former president and CEO of Michigan-based Second Chance Body Armor, Inc., recently agreed to resolve claims under the False Claims Act in connection with his role in the sale of defective Zylon bullet-proof vests purchased by the United States for federal, state, local and tribal law enforcement agencies, the Justice Department has announced.

Mr. Davis will relinquish his interest in $1.2 million in assets previously frozen by the United States and will pay an additional $125,000 to the United States.  This settlement is based on Mr. Davis’ ability to pay.

Background

Second Chance sold body armor to state, local and tribal law enforcement agencies reimbursed by the Department of Justice’s Bulletproof Vest Partnership (BVP) program and to federal agencies under contracts with the General Services Administration. The United States alleged that Second Chance’s vests were defective due to the loss of their ballistic capability when exposed to heat and humidity. The United States also alleged that by 2001, Davis was aware that Second Chance’s Zylon body armor was degrading at what he described as a “disappointing” rate.

The United States further alleged that, rather than using a $6 million payment from Toyobo Co. Ltd., the manufacturer of Zylon fiber, to fix the degradation problem, Second Chance pocketed the money and Davis and other Second Chance owners began meeting with various investment bankers in an effort to sell Second Chance. These efforts to sell the company allegedly stopped after a Forest Hills, Pennsylvania police officer was shot through his Second Chance Zylon vest in June 2003. Second Chance filed for bankruptcy in 2004 and was liquidated.

Subsequent tests by the National Institute of Justice (NIJ) of Zylon-containing vests found that more than 50 percent of used vests could not stop bullets that they had been certified to stop. The performance of Second Chance Zylon vests were reported to be among the worst.  The NIJ removed all Zylon-containing vests from its list of compliant products, and Zylon is no longer used in ballistic vests.

Settlement

“The Department of Justice will pursue those who attempt to fraudulently profit at the expense of the United States, particularly when the stakes are life or death,” said Acting Associate Attorney General Jesse Panuccio.  “Bullet proof vests protect the brave men and women of our nation’s law enforcement community, and those who manufacture and sell these products have a solemn duty to ensure their safety and efficacy.”

The settlement resolves, in part, allegations filed in a lawsuit by Aaron Westrick, Ph.D., a former employee of Second Chance, under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. The Act also allows the government to intervene and take over the action, as it did in this case as to the allegations against Davis. Dr. Westrick will receive $28,750 plus a share of whatever the government ultimately recovers from the previously frozen funds.

This settlement is part of a larger investigation of the body armor industry’s use of Zylon.  The United States has previously recovered over $132 million from 18 corporations and individuals who participated in the sale of Zylon body armor. The Civil Division has transferred over $22 million of these recovered funds to the BVP program to replace BVP funds which had been used to purchase Zylon vests. The funds transferred to the BVP program will be used to fund the purchase of additional ballistic-resistant vests for state, local and tribal law enforcement officers. The United States is continuing to pursue claims against Honeywell International Inc., which allegedly sold a laminated version of Zylon for use in police armor.

The investigation and litigation of this matter were handled by the Civil Division’s Commercial Litigation Branch; the General Services Administration, Office of the Inspector General; the Department of Commerce, Office of Inspector General; the Defense Criminal Investigative Service; the U.S. Army Criminal Investigative Command; the Department of the Treasury, Office of Inspector General for Tax Administration; the Air Force Office of Special Investigations; the Department of Energy, Office of the Inspector General; and the Defense Contracting Audit Agency.

The claims settled by this agreement are allegations only, and there has been no determination of liability.  The lawsuit partially resolved by the settlement is captioned United States ex rel. Westrick v. Second Chance Body Armor, et al., No. 04-0280 (PLF) (D.D.C.).

Source: https://www.justice.gov/opa/pr/former-second-chance-body-armor-president-settles-false-claims-act-case-related-defective

Small business advocate wins $475,000 in legal fees after 4-year fight with federal government

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After four years and expenses of more than $700,000, a California-based small business advocate on Thursday won an agreement from the Justice and Defense departments to pay his legal fees for litigation forcing the government to release confidential contracting data.

Lloyd Chapman, the outspoken founder of the Petaluma-based American Small Business League, declared victory in what he called an “historic” move by Judge William Alsup of the U.S. District Court for the Northern District of California to require the government to pay Chapman $475,000.

Neither Justice nor the Pentagon would comment on the case to Government Executive, but Chapman’s award was confirmed by his Washington attorney, Jon Cuneo of Cuneo, Gilbert & Laduca.

Keep reading this article at: https://www.govexec.com/contracting/2018/08/small-business-advocate-wins-475k-legal-fees-after-4-year-fight-government/150280/

Government contractor found guilty of theft of government property

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A former government contractor has been found guilty for his role in a scheme to unlawfully convert U.S. government property from the U.S military base at Kandahar Airfield, Afghanistan, shipping items to his home in Arizona for resale.

After a three day trial, Michael Dale Gilbert of Arizona was convicted of three counts of theft and unauthorized sale of government property and one count of interstate transportation of stolen property.  Gilbert’s sentencing is scheduled for Oct. 9, 2018 before U.S. District Judge G. Murray Snow of the District of Arizona, who presided over the trial.

According to the evidence admitted at trial, Gilbert worked at PAE Government Services, a government contractor that provides logistics and other support to the U.S. Department of State (DOS) and the U.S. Department of Defense around the globe, including Afghanistan.

  • From 2012 to 2015, Gilbert was deployed to Kandahar Airfield (KAF), where he assisted DOS with the Foreign Excess Personal Property (FEPP) program.
  • Once equipment, including computer equipment, heavy construction items and work tools, was requested through the FEPP program at KAF, Gilbert was assigned to arrange for its transfer for use or for its destruction, to prevent the items from falling into the hands of insurgents.
  • While in that role, in or around April and December of 2014, instead of facilitating the transportation or destruction of U.S government property, Gilbert shipped FEPP to the United States and transported the items to his residence in Arizona.
  • Gilbert stole FEPP items worth at least $48,900, including items recovered from his residence in Arizona valued at approximately $16,700, approximately $3,700 in sales through eBay, and goods valued at approximately $28,500 that Gilbert sold through other means, the evidence showed.

This case was investigated by the DOS Office of the Inspector General and the Special Inspector General for Afghanistan Reconstruction.

Source: https://www.justice.gov/opa/pr/government-contractor-found-guilty-theft-government-property

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

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

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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/

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