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Virginia businessman sentenced for bribery of FBI official

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Robert Bailey, 63, of Centreville, Virginia, was sentenced to 18 months in federal prison for paying a bribe to a public official, Acting U.S. Attorney Rafael M. Gonzalez, Jr. announced today.  U.S. District Judge B. Lynn Winmill also imposed a $100,000 fine and a term of three years of supervised release to follow Bailey’s prison sentence.

“When private individuals perform contracts for the government, they effectively become public servants who must uphold a public trust,” said Gonzalez.  “Mr. Bailey breached that trust and now faces the consequences of his actions.  The Court’s 18-month sentence sends the appropriate message to Mr. Bailey and other similarly-situated government contractors: take the public trust seriously or wind up behind bars.”

“Bailey bribed an FBI Contracting Officer Representative in order to gain personal advantages in the contracting process.  Today’s sentencing shows that those who seek advantages through disingenuous means like bribes will be held accountable,” said Douglas B. Bruce, Special Agent in Charge of the Department of Justice Office of the Inspector General Denver Field Office.

According to court records, in 2001, Bailey purchased L-1, a construction management and operations company located in Chantilly, Virginia.  In 2008, Bailey became a business acquaintance of a Federal Bureau of Investigation (FBI) employee when they worked together on an FBI construction project.  The FBI employee, who held the position of Management and Program Analyst, was responsible for managing construction and services contracts for FBI buildings across the country.

Continue reading at:  U.S. Department of Justice

Federal contractor indicted for stealing over $1.2 million from the U.S. Postal Service

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A federal grand jury indicted a construction contractor for stealing over $1.2 million from the United States Postal Service through a more than three-year scheme to defraud through false invoices, Acting United States Attorney Saima S. Mohsin announced today.

Mohsin was joined in the announcement by Steven Suller, Director of the Contract Fraud Investigations Division, United States Postal Service, Office of Inspector General.

Michael Rymar, 59, of Rochester Hills, stands charged with embezzling government funds from the United States Postal Service (USPS).  From 2015 to 2018, USPS engineers awarded Rymar’s company, Horizons Materials & Management LLC, with over $5 million in contracts for repairs on USPS buildings in Michigan and New York.  But the documentation Rymar provided contained false and fraudulent statements, oftentimes dramatically and falsely overstating the amount he paid subcontractors to complete the repairs.  Rymar also falsely inflated the amount he paid his own employees and the cost of materials on USPS jobs.  Over the course of the three-plus-year fraudulent scheme, Rymar stole over $1.2 million from USPS out of the $5 million in contracts he was awarded.

Continue reading at:  U.S. Department of Justice website

Potential FCA changes and enforcement priorities on the horizon

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On February 17, 2021, Senator Chuck Grassley (R-IA) and Brian Boynton, Acting Attorney General for the Department of Justice’s Civil Division, provided opening remarks at the Federal Bar Association’s annual Qui Tam Conference.  Both emphasized the key role of the FCA in combating fraud against the Government and noted an anticipated increase in FCA enforcement actions in the coming years, particularly related to the Government’s pandemic response.  In addition, Senator Grassley offered a preview of potential legislative changes to the False Claims Act, and Boynton outlined DOJ’s enforcement priorities for the coming year.

Continue reading at:  Inside Government Contracts

South Korean national pleads guilty to a scheme to defraud U.S. Department of Defense

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A South Korean national pleaded guilty today to participating in a scheme to defraud the U.S. Department of Defense.

According to court documents filed in the U.S. District Court in Columbus, Ohio, Hyun Dong Jo of the Republic of Korea was the designated manager under a Defense Logistics Agency contract to provide hazardous waste removal, testing, disposal, and related services to U.S. military installations in South Korea.  In that position, Jo participated in a scheme to falsify laboratory reports submitted under this hazardous waste contract.

From at least as early as February 2015 until at least June 2018, Jo submitted hundreds of falsified or materially altered laboratory reports, misrepresenting to U.S. military officials that laboratory testing and analysis had been performed on samples taken from U.S. military installations located in South Korea, when, in many cases, no such testing was performed.  As part of the scheme, Jo emailed the forged laboratory reports and invoices seeking payment for those reports to the Department of Defense, causing the Defense Financial Accounting Service to wire more than $280,000 in payments.

“This charge reflects the Antitrust Division’s commitment to protecting taxpayer dollars spent overseas,” said Acting Assistant Attorney General Richard Powers of the Department of Justice Antitrust Division.  “Individuals who cheat the U.S. military in the performance of contracts will be held accountable.  We hope this guilty plea will serve as a deterrent for other contractors who contemplate obtaining illicit gains through engaging in fraud while providing services for the U.S. military domestically or abroad.”

Continue reading at:  U.S. Department of Justice

Construction company owners plead guilty to defrauding SDVOSB program

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Two Texas construction company owners have pleaded guilty in a long-running scheme to defraud the United States.

Michael Wibracht of San Antonio, Texas, the former owner of several companies in the construction industry, conspired to defraud the United States in order to obtain valuable government contracts under programs administered by the U.S. Small Business Administration (SBA) for which neither his nor his co-conspirators’ companies were eligible.  One co-conspirator, Ruben Villarreal, also of San Antonio, pleaded guilty on Nov. 20, 2020, to participating in the same conspiracy.

“For many years, this conspiracy undermined the integrity of the federal procurement process,” said Acting Assistant Attorney General Richard A. Powers of the Department of Justice Antitrust Division.  “This conduct robbed opportunities from honest businesses, especially those owned by historically disadvantaged individuals and service-disabled veterans.”

Continue reading at:  U.S. Department of Justice

Senator: Pandemic makes anti-fraud law more important than ever

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A long-time Senate advocate for whistleblowers and strong oversight of agencies said on Wednesday that due to the historic spending for the coronavirus pandemic, the law that targets fraud against the federal government and in federal contracting is more important now than ever.

Sen. Chuck Grassley, R-Iowa, spoke at the Federal Bar Association’s fourth annual Qui Tam Conference.  Qui tam, a provision of the “The False Claims Act,” which was originally enacted during the Civil War, allows individuals or non-government organizations to file lawsuits on behalf of the government to disclose fraud that led to financial loss for the government.  They can be awarded between 15% and 30% of the proceeds collected.  Grassley co-authored updates to the act in 1986 and 2009.

“As the country continues to battle the global pandemic, the False Claims Act has never been more important than it is right now,” said Grassley at the virtual event.  “The massive increases in government spending to address the COVID crisis have created new opportunities for fraudsters trying to cheat the government and steal the people’s money.  As history has shown all of us, fraudsters thrive during times of crises and large-scale government spending.”

He said it’s important the Justice Department, Congress and whistleblowers “remain very vigilant” due to the trillions of dollars spent in pandemic relief.

Continue reading at:  Government Executive

 

Concrete contractor agrees to settle false claims act allegations for $3.9 million

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Colas Djibouti, a contractor for the Department of the Navy at Camp Lemonnier and Chabelley Airfield, and the U.S. Embassy in Djibouti, admitted today that it faked testing results and submitted a series of false documents and false claims to the United States as part of a scheme to defraud the United States in the sale of substandard concrete used to construct U.S. Navy airfields in Djibouti.

Colas Djibouti, a French limited liability company, is a wholly-owned subsidiary of Colas SA, a French civil engineering company.  According to documents filed in court, as part of its contracts with the Department of the Navy, Colas Djibouti was required to certify that it supplied concrete with specific composition and characteristics.  Notwithstanding these obligations, Colas Djibouti created fictitious testing results, made fraudulent representations regarding the concrete’s composition and characteristics, and knowingly provided concrete to the United States that did not comply with the specifications.

Continue reading at:  U.S. Department of Justice

Justice Department recovers over $3 billion from False Claims Act cases in FY 2019

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The Department of Justice obtained more than $3 billion in settlements and judgments from civil cases involving fraud and false claims against the government in the fiscal year ending Sept. 30, 2019, Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division announced today.  Recoveries since 1986, when Congress substantially strengthened the civil False Claims Act, now total more than $62 billion.

“The significant number of settlements and judgments obtained over the past year demonstrate the high priority this administration places on deterring fraud against the government and ensuring that citizens’ tax dollars are well spent,” said Assistant Attorney General Hunt.  “The continued success of the department’s False Claims Act enforcement efforts are a testament to the tireless efforts of the civil servants who investigate, litigate, and try these important cases as well as to the fortitude of whistleblowers who report fraud.”

Continue reading at:  U.S. Department of Justice website

How the Navy SEALs wound up buying 450 counterfeit radio antennas

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Last spring, the Pentagon spent more than $165,000 on a set of sophisticated radio antennas for a contingent of elite Navy SEALs.  Unfortunately, they were cheap knockoffs, courtesy of a California vendor apparently looking to secure some extra profit.

A search warrant application recently filed by the Defense Department provides a glimpse into how the alleged scam worked.

In April 2019, the Naval Special Warfare Command solicited bids to buy 450 VHF/UHF antennas for use by members of the Navy SEALs.  The request required the body-worn antennas come from New York-based manufacturer Mastodon Design, and that the supplier qualify as a small business.

The government used to purchase the antennas directly from Mastodon.  However, it no longer could because after Mastodon’s sale to a large multinational defense contractor, the once-boutique company no longer qualified as a small business.  This meant the Navy would have to buy Mastodon’s antennas through an authorized small distributor or reseller.

On May 1, the sales team at Mastodon got an email from the procurement department of a California company called Vizocom.  It said the company was bidding on a Navy contract and wanted to know how much 450 Mastodon antennas would cost.  Mastodon quoted a price: $165,109.50.

Vizocom then submitted its bid to the Navy for the exact same amount.  A source with direct knowledge of the situation told Quartz it was highly unusual that Vizocom wouldn’t want to make any money on the deal.  At this price, the Navy awarded Vizocom the contract.

The company, however, would never actually place the order with Mastodon.  Instead, it would import low-cost antennas from China and pass them off as from Mastodon using fake serial numbers and spec sheets, according to the search warrant application and sources with knowledge of the deal.

Continue reading at:  Yahoo Finance

Government contractor pleads guilty to fraud for paying drivers as independent contractors

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Paying workers as independent contractors instead of as employees may land a former executive in jail for criminal wire fraud.  On June 12, 2019, the former operations manager and vice president of a Florida-based mail transportation contractor pled guilty to two counts of wire fraud related to such treatment.  The Government’s case was based on pricing estimates for employee-related costs that the contractor later did not incur because it instead used independent contractors.

In the June 1, 2018 indictment of Alexei Rivero, the Government contended that Rivero purposely misclassified the drivers it hired as independent contractors.  According to the indictment, this allowed the contractor to “misappropriate” $1.5 million in USPS contract payments “designated” for fringe benefits and $1.2 million designated for payroll taxes.

Continue reading at:  Husch Blackwell’s The Contractor’s Perspective

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