Georgia Tech Procurement Assistance Center

Judge imposes maximum sentences in Fort Gordon bid-rigging conspiracy

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Two men who took part in a bid-rigging and bribery scheme involving $54 million in contracts at Fort Gordon received the maximum prison terms of five years last Wednesday despite the recommendation from the U.S. Attorney’s office for a reduction in their sentence.

Calvin Lawyer, 60, and Dwayne O. Fulton, 59, admitted in November to their roles in the conspiracy that ran from 2008, when Lawyer retired as a full colonel and started his own business called Communications Research Engineering and Consultant Group with the goal of obtaining government contracts. But Lawyer didn’t need to compete with other contractors because he paid bribes to ensure he got no-bid contracts from his former subordinate Col. Anthony Roper.

After learning they were under investigation in 2016, Lawyer, Roper and his wife, Audra Roper, and Fulton, who worked for the large defense contractor Kratos Defense & Security Solutions inc., fabricated documents to try to cover their tracks.

Keep reading this article at: http://www.augustachronicle.com/news/20180523/judge-imposes-maximum-sentences-in-fort-gordon-bid-rigging-conspiracy

Read earlier posts about this case here:

U.S. Attorney for Southern District of GA announces results of recent procurement fraud prosecutions

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As part of a new emphasis on procurement fraud enforcement within the Southern District of Georgia, the U.S. Attorney’s Office for the Southern District of Georgia has announced the results of a series of recent procurement fraud prosecutions.

Over the past several months, the strike force’s efforts resulted in five guilty pleas and twelve civil settlements, including the following publically available actions:

  1. United States of America v. Dwayne Fulton (1:17-CR-35)
  2. United States of America v. Calvin Lawyer (1:17-CR-35)
  3. United States of America v. Anthony Roper (1:17-CR-35)
  4. United States of America v. Audra Roper (1:17-CR-35)
  5. United States ex rel. Major Contracting Services, Inc. v. Military Training Solutions, LLC and ADCO Holdings, Inc., et al. (4:16-cv-115)
  6. United States of America v. Robert Obradovich (4:18-CR-47)

These prosecutions and civil settlements with the named individuals and entities, as well as others, stemmed from a wide variety of fraudulent conduct, including bribery of public officials, illegal kickbacks, illegal arrangements between large contracting companies and certified small or 8(a) businesses acting as “front” companies, and billing for services not rendered.  Each of the individuals who has pled guilty awaits sentencing.  The total financial recovery for the United States thus far has exceeded $7.4 million.  Several of these investigations remain ongoing.

“The Southern District of Georgia is the proud home of several major military installations that serve a vital role both in our national defense and the district’s local economy,” said United States Attorney Bobby L. Christine.  “Those who do business with these installations should be on notice – ripping off the United States will not be tolerated! This office will bring to bear the full weight of our resources to hold fraudsters accountable.”

The joint strike force that led to these convictions and settlements involved agents, investigators, and auditors from the Department of Justice, Defense Criminal Investigative Service, Army Criminal Investigation Command (Major Procurement Fraud Unit), Naval Criminal Investigative Service, the Small Business Administration Office of Inspector General.  Significant and critical assistance was also provided by civilian and military personnel from the Army, Navy, and Air Force stationed at affected military installations.

“The American public expects the Department of Defense (DoD) to spend limited taxpayer funds efficiently and economically.  Bribery and other corrupt behavior by public officials and defense contractors diverts and wastes precious dollars intended to provide critical products and services for our Warfighters.  These results demonstrate the effectiveness of investigative efforts by the Defense Criminal Investigative Service to protect the integrity of all DoD programs,” said Special Agent in Charge John F. Khin, Southeast Field Office.

“These settlements stand as proof of the tenacity of our special agents,” said Frank Robey, director of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit. “It is important for those who conspired to profit from illegal payments take responsibility for their actions. The settlements hold the defendants accountable and send a message to others that these violations will be taken seriously.”

“Our partnership with the joint procurement fraud strike force ensures fair and open competition for U.S. Government contracts which support the training and readiness of Marine Corps personnel,” said H. Andrew Goodridge, Special Agent in Charge, NCIS Carolinas Field Office.

“SBA OIG will aggressively investigate allegations of fraud involving SBA’s preferential contracting programs, to include false statements made to gain access to contracting opportunities set aside for small businesses,” said SBA OIG Eastern Region Special Agent-in-Charge Kevin Kupperbusch.  “SBA’s preferential contracting programs are intended to promote the economy and grow and develop small businesses across the nation.  I want to thank the U.S Attorney’s Office and our law enforcement partners for their dedication and hard work throughout these investigations.”

SBA’s General Counsel, Christopher Pilkerton said, “These successful prosecutions demonstrate the tremendous results achieved through the combined efforts of federal agencies to uncover and forcefully respond to procurement fraud.  SBA is strongly committed to identifying and aggressively pursuing instances of fraud perpetrated by those participating in SBA’s procurement programs.”

The United States was represented by Assistant United States Attorneys Brian T. Rafferty, Shannon H. Statkus, J. Thomas Clarkson, Matthew A. Josephson, and Jonathan A. Porter.  Any claims resolved by the civil settlement agreements are allegations only and there has been no determination of liability.

Each of the civil settlements resolved potential liability under the False Claims Act.  Under the False Claims Act, whistleblowers can be entitled to a portion of the amount recovered by the United States.  The United States Attorney’s Office also reminds contractors that businesses and individuals that self-disclose potential violations can be eligible for significantly reduced penalties.

If you have any information regarding potential procurement fraud, please contact Assistant United States Attorney J. Thomas Clarkson at (912) 201-2601.

Source: https://www.justice.gov/usao-sdga/pr/southern-district-georgia-announces-results-recent-criminal-and-civil-procurement-fraud

Multiple defendants charged with 22 counts of fraud and money laundering involving $200 million in small business contracts

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A federal grand jury returned a twenty-two count indictment on April 3rd, charging three defendants with a 12-year fraud and money laundering scheme involving over $200 million in government-funded contracts intended to benefit small businesses.

The indictment names two individuals, Brian L. Ganos and Mark F. Spindler, both of Wisconsin, and the business Sonag Company, Inc. as defendants.  In a related case, Nicholas Rivecca, Sr., also of Wisconsin, agreed to plead guilty to conspiring to defraud the United States.

The indicted defendants are charged with a conspiracy to commit mail fraud and wire fraud.  The alleged conspiracy involves operating construction companies with straw owners who qualified as a disadvantaged individual or as a service-disabled veteran, but who did not actually control the companies.  The conspirators then fraudulently obtained small business program certifications to win government-funded contracts to which they were not entitled.

Specifically, court documents allege the following:

  • Nuvo Construction Company, Inc., was misrepresented in order to obtain certifications as a Small Disadvantaged Business from the U.S. Small Business Administration (SBA) and as a Disadvantaged Business Enterprise (DBE) from Milwaukee County.  However, the disadvantaged owner worked full-time for a different entity in Minnesota and did not actually control Nuvo.
  • C3T, Inc. was misrepresented to be majority owned and controlled by another individual to obtain verification as a Service-Disabled Veteran-Owned Small Business.  In reality, for long stretches, the “owner” had virtually no involvement in C3T.
  • Pagasa Construction Company, Inc. was misrepresented to be majority owned and controlled by a third disadvantaged individual in order to obtain certification as a Small Disadvantaged Business from the SBA.  In reality, the owner relied on the assistance of conspirators to form Pagasa.

The federal indictment alleges that the defendants used their certifications to obtain over $200 million in federal, state, and local contract payments.  These included federal construction contracts that were set aside for Small Disadvantaged Businesses or Service-Disabled Veteran-Owned Small Businesses.  The indictment also alleges that the scheme included using Nuvo’s DBE certification to win ready-mix concrete contracts based on the false representation that Nuvo provided ready-mix concrete independently when, in truth, Nuvo’s concrete operations depended heavily on Sonag Ready Mix.  As a part owner of Sonag Ready Mix, Nicholas Rivecca, Sr. agreed to plead guilty to that portion of the scheme.

The government alleges that the conspirators engaged in efforts to conceal the scheme and obstruct investigations into the matter; when interviewed, Ganos and Spindler each gave materially false statements to federal agents.

The indictment also alleges that Ganos conspired with Sonag Company, Inc. and others to launder proceeds of the fraud scheme in order to disguise and conceal the nature, source, and location of those fraud proceeds.  As a part of that conspiracy, Ganos is alleged to have transferred fraud proceeds from accounts of Nuvo and C3T to accounts that Ganos controlled.  The indictment further charged Ganos with three counts of concealment money laundering transactions, one of which involved the purchase of a Corvette with proceeds of the fraud scheme, and seven counts of spending money laundering transactions.

The maximum penalties for each of the wire and mail fraud-related charges are 20 years in prison, a $250,000 fine, and forfeiture of criminal proceeds.  The maximum term of imprisonment for conspiring to defraud the United States is five years.  The maximum term of imprisonment for the money laundering conspiracy and for each of the three concealment money laundering charges is 20 years in prison.  The maximum term of imprisonment for each of the seven spending laundering charges is 10 years in prison.  Each of the 11 money laundering charge also carries a fine of up to $250,000 or twice the amount laundered and subjects the defendant to forfeiture of all money and property involved in the laundering transaction.

Assets of the defendants — including real property, a 2014 Chevrolet Corvette Stingray Convertible, and more than $2.2 million seized from two bank accounts — are subject to civil forfeiture actions filed by the federal government.

The following agencies are participating in this investigation: the Federal Bureau of Investigation; U.S. General Services Administration, Office of Inspector General; Department of Veterans Affairs, Office of Inspector General; Department of Defense, Office of the Inspector General, Defense Criminal Investigative Service; U.S. Department of Transportation, Office of Inspector General; U.S. Small Business Administration, Office of Inspector General, Investigations Division; Defense Contract Audit Agency; and the U.S. Army Criminal Investigations Command Major Procurement Fraud Unit.

An indictment is only a charge and not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.

Source: https://www.justice.gov/usao-edwi/pr/multiple-defandants-charged-fraud-and-money-laundering-scheme-involving-over-200

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

Former Army officer charged with bribery and fraud in connection with Ft. Gordon contracts

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A retired Army colonel whose business company reportedly was used to commit bribery to obtain more than $20 million in government contracts has been charged with conspiracy.

A conspiracy charge was lodged Monday, Oct. 2, 2017 in U.S. District Court against Calvin Devear Lawyer that charges him with conspiracy, a crime punishable by up to five years.

According to court documents, Lawyer set up a company named Communications, Research, Engineering and Consultant Group before he retired from the Army after 20 years in February 2008. The purpose of the company was to try to win contracts with the U.S. government and private contractors.

But the company was used to bribe those responsible for awarding contracts and bid-rigging at Fort Gordon, according to the documents.

Keep reading this article at: http://chronicle.augusta.com/news/2017-10-03/former-army-officer-charged-conspiracy-bribe-and-commit-fraud-government-contracts

$20 million bribery, fraud indictment returned against military personnel at Fort Gordon

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An indictment returned by a federal grand jury accuses a Fort Gordon active-duty Army colonel, his wife and a former defense contractor employee of rigging bids to defraud the government of more than $20 million.

The indictment accuses Anthony Tyrone Roper, 55, Audra Roper, 49, and Dwayne Oswald Fulton, 58, of taking part in a bribery and kickback scheme from 2008. Col. Roper, his wife and others are accused of soliciting and accepting cash bribes in exchange for rigging the award of Army contracts.

The indictment further alleges that in an attempt to hide their bribery and fraud schemes, the Ropers and Fulton attempted to obstruct an official investigation into their criminal conduct.

Keep reading this article at: http://chronicle.augusta.com/news/2017-06-08/20-million-bribery-fraud-indictment-returned-against-military-personnel-fort-gordon

 

 

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

Augusta man pleads guilty to filing false timesheets on NSA subcontract

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Jesse James Anderson, 34, of Augusta, Georgia pled guilty last week to a charge that he made false statements, in violation of 18 U.S.C. § 1001.  The false statements concerned the number of hours he worked for a National Security Agency (NSA) subcontractor.

NSAAccording to evidence presented during the guilty plea hearing, Anderson worked as a linguist for an NSA subcontractor from February 1, 2012 to January 31, 2014.  During this time, Anderson submitted numerous timesheets falsely stating the number of hours he had worked.  In total, Anderson claimed he worked 736.25 more hours than he actually did, which caused the United States to pay out $69,276.55 more than was actually owed.

United States Attorney Edward J. Tarver said, “False claims submitted to the United States for payments not owed is theft and should be punished to the full extent of the law.  Protecting taxpayer money is a top priority for this United States Attorney’s Office.”

Anderson faces a maximum penalty of 5 years in prison and a $250,000.00 fine.  In addition, the Court can order Anderson to pay restitution in the amount of $69,276.55.

NSA Office of Inspector General Investigator Kristen M. McGrath conducted the investigation which led to the information and plea.  Assistant United States Attorney C. Troy Clark is prosecuting the case on behalf of the United States.

Source: http://www.justice.gov/usao-sdga/pr/former-employee-nsa-subcontractor-pleads-guilty-filing-false-timesheets

Former Colonel at Redstone Arsenal pleads guilty to federal charges related to inflated contract payments

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A former colonel at Redstone Arsenal pleaded guilty April 20th to federal charges stemming from inflated contract payments for work on Russian-made helicopters bound for Afghanistan to be used by Afghan forces.

Now-retired Army Col. Norbert Vergez pleaded guilty today to two counts of false statements and one count of conflict of interest, in federal court in Tuscaloosa. No sentencing date has been set, the U.S. Attorney’s Office in Birmingham said today.

U.S. Attorney Joyce White Vance said Vergez “placed his own financial ambitions and personal loyalties above his duties as a member of the armed forces.

“In doing so, he betrayed the U.S. Army values of honesty, integrity and selfless service, which are hallmarks of military service,” Vance said. “This prosecution highlights our commitment to hold responsible those who, by word and deed, corrupt the government contracting process.”

Keep reading this article at: http://www.al.com/news/huntsville/index.ssf/2015/04/former_colonel_at_redstone_ars.html

Phony small businesses pay $1.9 million to settle False Claims Act charges

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Five California-based masonry subcontractors and two individuals paid the government nearly $1.9 million to resolve allegations that they violated the False Claims Act by misrepresenting their disadvantaged small business status in connection with military construction contracts, the Department of Justice announced on April 9, 2014.  The defendants are Frazier Masonry Corp., F-Y Inc., CTI Concrete & Masonry Inc., Masonry Technology Inc., Masonry Works Inc., Russell Frazier and Robert Yowell.

“This settlement demonstrates our continuing vigilance to ensure that those doing business with the military do so legally and honestly and that taxpayer funds are not misused,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “Among the rules that military contractors and subcontractors must follow are those relating to the use and hiring of small businesses.”

The case involved contracts to construct facilities at Marine Corps bases at Camp Lejeune, N.C., and Camp Pendleton, Calif.  Under the rules of the Small Business Administration, the contracts required that a certain percentage of the work be performed by disadvantaged small businesses.  This contract requirement was intended to benefit small firms owned by women, minorities and other disadvantaged groups.

The government alleged that the defendant masonry subcontractors and their principals misrepresented to the prime contractors that they were small businesses, and that these misrepresentations caused the prime contractors to falsely certify that they had complied with the small business provisions of the contracts in claiming payment.  Russell Frazier previously pleaded guilty in related criminal proceedings to causing false statements.

The settlement resolves allegations filed in two lawsuits by Rickey Howard, a former employee of Frazier Masonry Corp., in federal court in Raleigh, N.C.  The lawsuits were filed 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.  Howard will receive $393,383. 

The cases are captioned United States ex rel. Howard v. Harper Construction Co., et al., Case No. 7:12-CV-215-D (E.D.N.C.) and United States ex rel. Howard v. RQ Construction LLC, et al., Case No. 7:13-CV-48-D (E.D.N.C.).  The claims resolved by the settlement are allegations only; there has been no determination of liability.   More details at: http://www.justice.gov/opa/pr/2014/April/14-civ-357.html. 

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