Georgia Tech Procurement Assistance Center

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  Qui tam, a provision of the “The False Claims Act,” which was originally enacted during the Civil War, allows individuals or non-government organizations to file lawsuits on behalf of the government to disclose fraud that led to financial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

Retired colonel sentenced in Fort Gordon bid-rigging scheme

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A retired Army colonel involved in a $20 million bribery and bid-rigging scheme in government contracts at Fort Gordon was sentenced to five years in prison Friday.

Anthony Williams, 59, pleaded guilty to conspiracy in March for his role in the scheme that was in effect from 2008 to 2014 as the building and modernization of communications networks at Fort Gordon took place.  Williams took $1.2 million in bribes while on active duty in Washington and in charge of the billion-dollar battle command budget.

Williams conspired with retired Col. Calvin Lawyer, who left his position overseeing the fort’s building and modernization of networks to start his own business to obtain government contracts.  Col. Anthony Roper took Lawyer’s former position and steered government contracts valued at $20 million to Lawyer’s company and a second company, a subcontractor owned by Williams’ good friend, identified only as “J.D.Y.” in court documents.

It was at J.D.Y.‘s company that a no-show job was set up for Williams’ wife, who was paid $963,000.  The subcontractor was paid $13 million, a sum not included in the formal conspiracy, Senior Judge Dudley H. Bowen Jr. noted Friday.

Continue reading at:  The Augusta Chronicle

Procurement fraud is alive and well, and being punished

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The recent guilty plea of a furniture company sales executive provides a timely reminder that contractors continue to engage in procurement shenanigans–and continue to get caught.  In such circumstances, crime definitely does not pay.

On June 10, 2019, the Department of Justice announced that Steven Anstine of Overland Park, Kansas, pled guilty in federal District Court in South Carolina to one count of illegally obtaining contractor bid and proposal information in an effort to win a State Department contract to provide furniture to a U.S. embassy abroad.

Continue reading at:  Government Contracting Matters

Government settles alleged False Claims Act violations against Statesboro business

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The Sesolinc Group has agreed pay up to $2.4 million to settle allegations that they supplied defective products and submitted false claims to the Army, Department of Veterans Affairs and General Services Administration.

Based on the allegations of the unsealed complaint, Sesolinc is alleged to have violated the False Claims Act when it sold products to the United States that were not in compliance with required electrical and structural standards, said Bobby L. Christine, U.S. Attorney for the Southern District of Georgia.  After concerns were raised internally, Sesolinc, which manufactures its products in Statesboro, is alleged to have continued to deliver defective products to government customers.  As part of the settlement, Sesolinc has agreed to repair goods previously supplied to the United States and pay an additional penalty.

“If a contractor represents to the United States that it will provide products consistent with basic requirements of the government customers, this office will hold them to those promises,” said Christine.  “We will continue to vigorously pursue any contractors who try to cut corners at the taxpayers’ expense.”

“This settlement sends a clear message that defective products sold to our military will not be tolerated,” said Special Agent in Charge Cynthia A. Bruce, Defense Criminal Investigative Service (DCIS), Southeast Field Office.

Continue reading at:  Savannah Now

Former Virginia state delegate gets prison time for $80 million contracting fraud

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A former member of the Virginia General Assembly was sentenced Tuesday to 2½ years in prison for taking part in an $80 million government contracting fraud conspiracy.

Ronald Villanueva, 49, a former Republican delegate from Virginia Beach, pleaded guilty to one conspiracy charge this year and agreed to pay more than half a million dollars in restitution.

Villanueva served in the House of Delegates from 2010 until 2018; he lost his seat to a Democratic challenger in 2017.

For much of that time, Villanueva admitted, he and a partner in the tactical-gear supply business used other people as figureheads to get preferential treatment designed to help minority contractors.  They also relaunched the company at one point, changing its name from SEK to Karda, so it would qualify for contracts aimed at newer firms.

Continue reading at:  Washington Post

FinCEN reports spike in email scams

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The Financial Crimes Enforcement Network (“FinCEN”) issued an advisory and trend analysis alerting financial institutions to a recent surge in business email compromise (“BEC”) incidents, as reported in suspicious activity reports.  According to FinCEN, these reported attacks climbed from 500 per month in 2016 to over 1,100 per month in 2018, with attempted BEC thefts increasing from $110 million per month in 2016 to $301 million monthly in 2018.

According to the advisory and analysis, a BEC scam typically involves a cyber criminal emailing false invoices or payment instructions to an individual or business while impersonating a supervisor, vendor or other legitimate third party.  Once payment is made, the proceeds are fraudulently directed to a criminal-controlled account.  Sometimes the emails originate from hacked accounts, while at other times, they are made to appear as communications from trusted sources.  Victims can include businesses, government agencies, universities and non-profits, often those that make frequent wire transfers.  Most BEC incidents reportedly involve transfers to domestic accounts in the United States, likely controlled by “money mules.”

Continue reading at:  Mondaq.com

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