Georgia Tech Procurement Assistance Center

Former Army colonel pleads guilty to role in Fort Gordon fraud, kickback scheme

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A former active-duty U.S. Army colonel has pled guilty to accepting bribes in return for helping steer military contracts to a business fraudulently claiming status as a small business.

Anthony R. Williams of Vienna, VA, pled guilty to Conspiracy to Commit Bribery and felony conflict of interest in U.S. District Court, said Bobby L. Christine, U.S. Attorney for the Southern District of Georgia.

Williams faces a sentence of up to five years in prison, and has agreed to forfeit more than $1.2 million in proceeds derived from the scheme.

According to court documents and evidence entered during court proceedings, Williams, while serving as a colonel in the U.S. Army, accepted bribes to steer federal procurement contracts to the CREC Group, a company owned by Calvin Devear Lawyer, a retired U.S. Army colonel. The CREC Group had received Small Business Administration (SBA) status as a small, disadvantaged business based on false representations from Lawyer and from Dwayne Oswald Fulton, then an employee of a defense contractor.

Lawyer previously pled guilty in the case and is serving a 60-month prison sentence, while co-conspirator, Anthony Roper, a former active duty U.S. Army colonel at Fort Gordon, also pled guilty and is serving a 60-month sentence.

The cases were investigated by the United States Army Criminal Investigations Division (CID), the Defense Criminal Investigative Service (DCIS), the Small Business Administration’s Office of Inspector General, and the United States Attorney’s Office.

Source: https://www.justice.gov/usao-sdga/pr/former-army-colonel-pleads-guilty-role-fort-gordon-fraud-kickback-scheme

Bribery, fraud indictment issued for $15 million in set-asides for disabled-veteran and other small businesses

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Five men have been charged in a 71-count indictment with engaging in conspiracies to defraud several federal agencies by paying bribes and fraudulently obtaining at least $15 million in government contracts they were not entitled to though disabled-veteran set asides and other small business programs.

Indicted are: James A. Clark of Chipley, Florida, who owned several businesses, including Enola Contracting Services, Inc.; Eric L. Hogan of Bonaire, Georgia, who owned P&E Construction, LLC; Kenneth A. Latham of Albany, Georgia, who was employed by the U.S. Navy as a civilian engineering technician; James K. Alford, 55, of Bowling Green, Kentucky, who owned K&S Constructors, Inc., and Harvey Daniels, Jr. of Marianna, Florida, who owned HDJ Security, Inc.

The charges include conspiracy to commit honest services wire fraud, conspiracy to commit wire fraud, wire fraud, conspiracy to submit false claims, false claims and major fraud.

Construction projects detailed in the indictment include contracts at the Marine Corps Logistics Base in Albany, Georgia, the VA Medical Center in Louisville, Kentucky, and the NASA Plum Brook Station near Sandusky, Ohio.

According to the indictment:

  • Federal departments and agencies, as directed by Congress, work with the Small Business Administration to award portions of contracts to small businesses, with specific goals for small disadvantaged business, including service-disabled veteran-owned small businesses.
  • Businesses must register and meet a number of criteria to be classified as small disadvantaged business – also known as the 8(a) program – such as being at least 51 percent owned and controlled by socially and economically disadvantaged individuals. Businesses must also meet a number of criteria to be classified as a service-disabled veteran-owned small business, such as being at least 51 percent owned by a veteran with a service-connected disability who controls the management and daily operations of the company. Service-disabled veteran-owned small businesses are permitted to enter into joint ventures with other companies but must meet specific requirements to do so.
  • The defendants and others engaged in several criminal schemes designed to deprive the government of its right to honest services of its employees through bribes and kickbacks, and to submit false claims and defraud the United States by obtaining government contracts set aside for qualified companies to which they were otherwise ineligible to obtain by fraudulently using proxy and pass-through companies.
  • P&E, through Hogan and Clark, made false statements, misrepresentations and omissions of facts. Hogan on several occasions certified P&E was a service-disabled veteran-owned small business. It also registered as a joint venture with Enola, with Hogan listed as president and Clark as vice president of the joint venture. HDJ Security was enrolled in the 8(a) program. Daniels self-identified as the president of HDJ, the sole owner of the company and to be socially disadvantaged.

In one scheme, Latham accepted a series of bribes and kickbacks from Hogan and Clark – including cash, meals, a hunting trip,  a fence, and an all-terrain vehicle – in return for Latham using his official position with the Navy to benefit Hogan, Clark and their businesses. These benefits included assistance in finding and securing government contracts, approval of invoices for payments to pass-through companies used by Hogan and Clark to obtain set-aside contracts for which their companies were not otherwise eligible, and concealing Clark and Hogan’s use of pass-through companies to obtain bonding.

Another scheme involved defrauding the VA and the TK by fraudulently representing that P&E and Hogan independently qualified for the service-disabled veteran-owned small business program despite Clark’s involvement in providing bonding for and equity ownership in P&E.

Clark, Hogan, Alford, Daniels and others defrauded the government by using purported service-disabled veteran-owned small businesses and 8(a) businesses as proxies to bid on and obtain set-aside contracts.

Arrow Construction, which was registered in the 8(a) program, was awarded a $2.8 million contract for work at the Marine Corps Logistics Base in Albany, Georgia, in September 2011. Clark and Arrow officials Kent Reynolds and Jennifer Dillard agreed that about 90 percent of the value of the contract was passed through to Clark and Enola, in violation of the 8(a) program.

HDJ was awarded a contract for work at the Marine Corps Logistics Base in Albany, Georgia, in September 2012. HDJ was paid approximately $2.6 million. Clark, Hogan and Daniels agreed to pass through approximately 95 percent of the value of the contract to Clark, Hogan, Enola and P&E, in violation of the terms of the 8(a) program.

The VA in June 2011 awarded a contract to P&E Construction for work at the VA Medical Center in Louisville, Kentucky. The VA paid P&E approximately $4.5 million that the company would not have received if the VA knew P&E was acting as a pass-through for K&S and that it was back-bonded by Clark and Enola.

P&E submitted a winning bid in February 2013 for a contract for construction services at the NASA Plum Brook Station near Sandusky, Ohio. NASA paid P&E approximately $5.6 million that the company would not have received if NASA knew it was acting as a pass-through for K&S and that P&E was back-bonded by Clark and Enola.

If convicted, the defendants’ sentences will be determined by the Court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation.  In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.

This case was investigated by National Aeronautics and Space Administration’s Office of Inspector General, the Defense Criminal Investigative Service, Naval Criminal Investigative Service, Department of Veterans Affairs’ Office of Inspector General, Small Business Administration’s Office of Inspector General, the Defense Contract Audit Agency, and the Air Force Office of Special Investigations.

Readers are reminded that an indictment is only a charge and is not evidence of guilt.  A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.

FDA supervisor and local businessman charged in bribery scheme

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Elvis Gordon, a U.S. Food and Drug Administration (FDA) supervisor, and small business owner Ivan Ponder have been arraigned on bribery and conspiracy charges for using Gordon’s influence to divert FDA contracts to a company owned by Ponder.

“Gordon and Ponder allegedly carried out a kickback scheme that lined both their pockets with taxpayer money for nearly six years,” said U. S. Attorney Byung J. “BJay” Pak. “Gordon is charged with violating the public’s trust by taking bribes in exchange for steering FDA business to Ponder.”

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

  • Elvis Gordon is the Senior Facilities Manager of the FDA field office in Atlanta, and in that role influences the selection of businesses that do various maintenance work at the FDA building in the Atlanta area.
  • From 2010 until 2016, Gordon allegedly used his position to direct work to P&E Management, a company owned by Ivan Ponder.
  • Ponder, in turn, gave Gordon a debit card tied to P&E’s bank account, which Gordon used for shopping sprees, vacations, and dining out.
  • On one occasion, Gordon used the debit card to pay for FDA business trip expenses, for which Gordon later sought reimbursement from the FDA.
  • P&E also purchased a Cadillac Escalade for Gordon and his wife.

Elvis Gordon, 51, of Marietta, Georgia, and Ivan Ponder, 38, of Hiram, Georgia, were arraigned before U.S. Magistrate Judge Catherine M. Salinas. The defendants were indicted by a federal grand jury on October 17, 2017.

Members of the public are reminded that the indictment only contains charges.  The defendants are presumed innocent of the charges and it will be the government’s burden to prove the defendants’ guilt beyond a reasonable doubt at trial.

This case is being investigated by the U.S. Food and Drug Administration Office of Internal Affairs.

Source: https://www.justice.gov/usao-ndga/pr/fda-supervisor-and-local-businessman-charged-bribery-scheme

 

Former public transit executive charged with taking $500,000 in contract kickbacks

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A former senior manager of the Metropolitan Atlanta Rapid Transit Authority (MARTA) has been charged with conducting a false invoice scheme that resulted in MARTA paying more than $500,000 for maintenance work that was never performed and for funneling most of the money back into his personal bank accounts.

According to U.S. Attorney John A. Horn, the former MARTA executive, Joseph J. Erves “was entrusted to safeguard the taxpayer funds used to run our public transportation authority, and instead he is charged with stealing a half million dollars to buy a Porsche and other high-end purchases. This is a classic case where a public official’s short-term gain in stealing from taxpayers comes crashing down and ends with criminal charges.”

“The federal investigation and resulting federal charges against Mr. Erves will hopefully send a message to others that such ill-conceived schemes to redirect corporate or public funds to their own accounts is a criminal act with tough consequences. The FBI would like to thank the MARTA Police and their investigators for their invaluable assistance in getting this matter advanced for prosecution,” said David J. LeValley, Special Agent in Charge, FBI Atlanta Field Office.

MARTA is the principal public transportation operator in the Atlanta metropolitan area, providing fixed rail and bus service to more than 500,000 passengers per weekday. Formed in 1965, MARTA is a multi-county governmental agency with a 2016 annual budget of more than $880 million.

From 1993 to 2017, Erves worked for MARTA, ultimately serving as its Senior Director of Operations. In that position, Erves oversaw the maintenance of all of MARTA’s buses and rail cars and had the authority to approve payments up to $10,000 to vendors for work performed on behalf of MARTA.

Beginning in or about 2010, Erves retained three different vendors purportedly to perform maintenance projects for MARTA, including repairing brake testing equipment and fixing various MARTA tools and equipment. From approximately June 2010 to December 2016, Erves had fake invoices prepared on behalf of the three vendors for more than 40 maintenance projects for which no work was performed.

Erves then used the false invoices as bases to authorize payments to the three vendors. In many cases, Erves personally approved payments to the vendors knowing that the vendors had not performed any work for MARTA.

After being paid, the three vendors funneled most of the money received from MARTA into Erves’s personal bank accounts. Subsequently, Erves used the money deposited into his accounts to pay personal expenses, such as multiple purchases at high-end department stores and the purchase of a Porsche 911. Based on Erves’s authority and representations, MARTA paid the three vendors more than $500,000 for maintenance projects where no worked was actually performed.

Erves, 52, of Lithonia, Georgia, has been charged in a criminal information with one count of Federal Program Theft. Erves is expected to plead guilty to the charge shortly after arraignment.

This case is being investigated by the Federal Bureau of Investigation and the MARTA Police Department.  Assistant U.S. Attorneys Jeffrey W. Davis and Alison Prout are prosecuting the case.

For further information please contact the U.S. Attorney’s Public Affairs Office at USAGAN.PressEmails@usdoj.gov(link sends e-mail) or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga.

Source: https://www.justice.gov/usao-ndga/pr/senior-marta-executive-charged-false-invoice-scam-causing-marta-pay-500000-work-never

Contractor sentenced to prison for providing bribes in a contract fraud scheme

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Michael Allen Braun has been sentenced to 18 months in prison and $126,300 in restitution for “conspiracy to commit theft of honest services and wire fraud” and bribery of a public official.

In connection with the same case, co-conspirator Air Force Master Sergeant Cody Boone Covert was previously sentenced in February to 23 months in prison for conspiracy and bribery of a public official.

In January 2014, MSgt. Covert, 901st Aircraft Maintenance Squadron located at Hurlburt Field in Florida, was tasked by the Air Force with procuring specialized equipment in support of C-130 Special Operations Aircraft. Braun, who owned the company Trans Global Storage Solutions, conspired with Covert to obtain a contract from the Air Force. Prior to the solicitation of the contract, Braun agreed to provide Covert 45% of the profit from the contract proceeds, if Covert ensured that Trans Global won the contract. Covert submitted a request to purchase the specialized equipment. Because Covert was the requester of the equipment, he was chosen to evaluate each proposal for technical acceptance. Subsequently, Covert recommended the Trans Global proposal be accepted. After Trans Global was fraudulently awarded the $126,300 contract from the Air Force via Covert’s inside influence, Covert and Braun split the proceeds. Covert pled guilty on October 28, 2016, and Braun pled guilty on January 12, 2017.

“Corruption in the government procurement process damages the public trust and ultimately degrades the warfighting mission of the Department of Defense,” commented Special Agent-in-Charge John F. Khin, Southeast Field Office, Defense Criminal Investigative Service. “DCIS, with our investigative partners and the U.S. Attorney’s Office, continues to pursue and bring to justice those contractors who defraud military programs, especially when it jeopardizes the safety of our brave men and women in uniform.”

The case was investigated by the Air Force Office of Special Investigations, the Defense Criminal Investigative Service, and the Defense Contract Audit Agency.

Source: https://www.justice.gov/usao-ndfl/pr/federal-government-contractor-sentenced-prison-providing-bribes-government-contract

Contractor indicted in bribery, kickback scheme in Savannah

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A Lithonia, Georgia contractor has been indicted by a federal grand jury in Savannah for allegedly scheming with former Chatham Area Transit (CAT) executive director Chadwick Reese and his maintenance director to defraud the transit company out of more than $200,000.

Anthony Florence, the 50-year-old owner of SR Contracting, allegedly schemed with Reese and former maintenance director Joel Morris, 54, through a series of bribes, kickbacks and concealment for work billed, but not done, for CAT.

Florence, who supposedly was providing maintenance for bus routes, concrete repairs to parking lots and other services, submitted a series of 22 invoices to Reese for $4,750 each between Aug. 19, 2013, and Oct. 2, 2015, the indictment returned last week charged.

Those invoices covered fraud between July 2013 and November 2015, the indictment charged.

As part of the scheme cited in the indictment for mail fraud, Florence “would provide bribes and kickbacks to (Reese and Morris), including payments of tens of thousands of dollars worth of work done on the homes of each.

Keep reading this article at: http://savannahnow.com/news/2017-04-10/contractor-indicted-ongoing-chatham-area-transit-fraud-scheme

Military base contractor admits paying bribes and kickbacks

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A Pennsylvania man who operated a construction company that did work at construction projects at two military bases in New Jersey admitted on Feb. 21, 2017 to paying bribes and kickbacks to get the contracts.

George Grassie, 54, of Covington Township, Pennsylvania, pleaded guilty in Newark, NJ federal court to an indictment charging him with one count of conspiracy to defraud the United States and commit bribery and one count of providing unlawful kickbacks.

According to documents filed in the case and statements made in court:

  • Grassie owned a business that did construction, excavation and landscaping and did work as a subcontractor at Picattiny Arsenal (PICA) and Joint Base McGuire-Dix Lakehurst (Ft. Dix).
  • He admitted that from December 2010 to December 2013, he paid bribes valued at $95,000 to $150,000 to an individual employed by the U.S. Army Contracting Command in New Jersey to obtain and retain subcontracts and other favorable assistance at PICA and Fort Dix.
  • He also admitted that he paid kickbacks valued at $40,000 to $95,000 to Shawn Fuller and James Conway, who were then project managers for a prime contractor at PICA and Fort Dix.

Conway previously pleaded guilty to wire fraud and accepting unlawful kickbacks on August 2016. Fuller previously pleaded guilty to accepting unlawful kickbacks in November 2015.

The conspiracy charge to which Grassie pleaded guilty carries a maximum potential penalty of five years in prison. The charge for making unlawful kickbacks to which Grassie pleaded guilty carries a maximum potential penalty of 10 years in prison. Both charges carry a maximum fine of $250,000 or twice the gross gain or loss associated with the offense, whichever is greatest. Sentencing is scheduled for May 31, 2017.

Agencies responsible for investigating this case include the FBI, the Defense Criminal Investigative Service of the Dept. of Defense, and the U.S. Army’s Major Procurement Fraud Unit, Criminal Investigation Command.

Source: https://www.justice.gov/usao-nj/pr/contractor-us-military-bases-admits-paying-bribes-and-kickbacks

North Carolina construction company officials sentenced for DBE fraud

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U.S. District Judge Max O. Cogburn, Jr. sentenced Boggs Paving, Inc. (Boggs Paving), its president and part-owner, Carl Andrew “Drew” Boggs, III, and four others on charges stemming from the illegal use of a disadvantaged business enterprise to obtain government-funded construction contracts, it was announced November 23, 2016.

USDOTDrew Boggs, 51, of Waxhaw, N.C. was sentenced to 30 months in prison and two years of supervised release, and received a $15,000 fine after pleading guilty to conspiracy to defraud the United States Department of Transportation (USDOT) and money laundering conspiracy.  Kevin Hicks, 44, of Monroe, N.C., was sentenced to two years of probation and was ordered to pay a $2,000 fine, after pleading guilty to conspiracy to defraud USDOT and money laundering conspiracy.  Greg Miller, 61, of Matthews, N.C., was sentenced to 15 months in prison and two years of supervised release, Greg Tucker, 42, of Oakboro, N.C., was sentenced to two years of probation and was ordered to pay a $1,000 fine, and John Cuthbertson (a/k/a Styx Cuthbertson), 70, of Monroe, was sentenced to two years of probation, three of which will be served in home confinement, and was ordered to pay a $2,000 fine.  They each pleaded guilty to one count of conspiracy to defraud USDOT.  Judge Cogburn sentenced the company, Boggs Paving, to pay a $500,000 fine.  A fifth codefendant, Arnold Mann, 56, of Fort Mill, S.C., was previously sentenced to a term of probation, after pleading guilty to one count of conspiracy to defraud USDOT.

According to documents filed in the case, statements made in court and today’s sentencing hearings, from 2003 through 2013, Boggs Paving, Drew Boggs, and their codefendants engaged in a scheme by which they fraudulently obtained federally and state funded construction contracts by falsely certifying that a disadvantaged business enterprise (DBE), or a small business enterprise (SBE) would perform and be paid for portion of the work on those contracts.  The purpose of USDOT’s DBE program is to increase the participation of such businesses in federally-funded public construction and transportation-related projects.

According to court records, Boggs Paving and the codefendants used Monroe-based Styx Cuthbertson Trucking Company, Inc. (“Styx”), a road construction hauler and a certified DBE and SBE, to help obtain the government-funded construction contracts.  Court documents show that the codefendants took steps to conceal their fraud, including running payments for the work performed through a nominee bank account in Styx’s name and using magnetic decals bearing the “Styx” company logo to cover the “Boggs” logo on company trucks, among others.  According to court records, the majority of the money was funneled back to Boggs Paving and its affiliates, and John Cuthbertson, owner of Styx, received kickbacks for allowing his company’s name and DBE status to be used by Boggs Paving.

Court records show that from June 2004 to July 2013, Boggs Paving was the prime contractor on 35 federally-funded contracts, and was a subcontractor for two additional contracts, worth over $87.6 million.  Boggs Paving claimed DBE credits of approximately $3.7 million on these contracts for payments purportedly made to Styx.  Styx only received payments of approximately $375,432 for actual work on these contracts, court records show.

In court today, Judge Cogburn described the DBE program as laudable and emphasized the importance of deterrence in sentencing the defendants.

Georgia men indicted in $53 million contract fraud and illegal gratuities scheme

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A federal grand jury has returned separate indictments charging John Wilkerson, age 51, of Moultrie, Georgia, and James T. Shank, age 68, of Perry, Georgia, with a wire fraud conspiracy and offering and accepting illegal gratuities, in connection with the award of more than $53 million in federal government contracts.  The indictment was returned on October 8, 2015, and recently unsealed.

SPAWARAccording to Shank’s indictment, from August 28, 2006 until he retired on June 30, 2011, he was employed as a Program Manager at the United States Navy’s Space and Naval Warfare (SPAWAR) Systems Center. Shank worked with agencies within the Department of Defense to procure telecommunications equipment, software, and related services.

According to Wilkerson’s indictment, he was a Department of Defense Account Manager for Iron Bow Technologies, LLC (Iron Bow), which provided IT consulting and other services to government and industry customers.  Wilkerson was also part owner and operated an information technology company, Superior Communications Solutions, Inc. (SCSI).

Co-Conspirator 2 was a program manager for an information technology company, Advanced C4 Solutions, or AC4S, from 2005 until 2011.  In 2011, Co-Conspirator 2 left AC4S and went to work for Wilkerson at SCSI.

The indictments allege that from September 2009 through August 2012 Shank conspired with Wilkerson and Co-Conspirator 2, to give them and the companies they worked for and/or owned an unfair competitive advantage in obtaining government contracts. In exchange, the indictments allege that Wilkerson offered, and Shank accepted, employment with SCSI while Shank was still a government employee and while he was taking official actions that benefited Wilkerson.  In addition, Wilkerson allegedly paid Shank $86,000 in the year after Shank retired from government service, funneling the payment through two other companies in order to conceal the source of the funds.

According to the indictments, Shank improperly shared information with Wilkerson and Co-Conspirator 2, and worked with them to structure the government contracts so as to give their companies an unfair advantage over other potential bidders.

For example, according to the indictment, Shank, Wilkerson, and Co-Conspirator 2 developed a request for proposal (RFP) for DO27, a contract to supply labor services for an Air Force technology project, including for overall project management services, so that AC4S would win the contract. On June 10, 2010, DO27 was awarded to AC4S in the amount of $18,332,738.10.  Wilkerson provided Co-Conspirator 2 with a quote for labor on behalf of SCSI that was less than the quote he had previously submitted on behalf of Iron Bow as their sales representative. After SCSI was selected as a subcontractor on DO27, it subcontracted with Iron Bow to provide most of the labor SCSI was supposed to provide under DO27.  Wilkerson was able to earn income from the work Iron Bow employees were doing by having SCSI act as a middleman and charging a mark-up on Iron Bow’s work.  Wilkerson and Co-Conspirator 2 then directed an SCSI employee to create false invoices supposedly documenting the hours SCSI employees spent working on DO27, which were submitted to AC4S and paid by the United States government.  SCSI received $6,794,432.98 on DO27 out of the $18 million AC4S received for providing labor for the project.

Shank also initiated the procurement process on more than 11 delivery orders that purchased telecommunications equipment and furniture as part of the Air Force project.  Those delivery orders were issued to Iron Bow in 2010 and 2011.  Shank made sure that the delivery orders included telecommunications equipment and/or furniture that were assigned SCSI-specific part numbers, thereby guaranteeing that SCSI would receive revenue from the delivery orders.  The indictment alleges that SCSI received approximately $33 million of the $35 million paid to Iron Bow under the various furniture and equipment delivery orders.

In late 2010 or early 2011, Wilkerson offered Shank employment.  Shank did not disclose that fact to anyone at SPAWAR and did not recuse himself from any of the contracts that benefited Wilkerson. In February 2011, Co-Conspirator 2 left AC4S and went to work for Wilkerson at SCSI.  According to the indictment, Co-Conspirator 2 received a $500,000 bonus when he joined SCSI, which was paid for by profit Wilkerson had earned on the furniture contracts.

By March 2011, the Air Force project was not complete and there were a number of contract disputes related to the project. Shank was directed not to take any other action related to the project without the approval of a senior manager.  Nevertheless, the indictment alleges that in April 2011, Shank accepted more than $3.7 million worth of invoices that benefited SCSI without informing the senior manager.  After Shank accepted employment with SCSI in May 2011, but was still working for SPAWAR, he allegedly approved more than $1.1 million worth of invoices that benefitted SCSI and Wilkerson.

Shank and Wilkerson face a maximum sentence of 20 years in prison for a wire fraud conspiracy; and two years in prison for offering and accepting illegal gratuities.  Shank also faces a maximum sentence of 5 years for criminal conflict of interest. Wilkerson and Shank had initial appearances in the Northern District of Georgia on October 13 and 14, 2015, respectively, and have an initial appearance scheduled in U.S. District Court in Baltimore on October 23, 2015, at 11:00 a.m.

The National Procurement Fraud Task Force was formed in October 2006 to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs.  The Procurement Fraud Task Force includes the United States Attorneys’ Offices, the FBI, the U.S. Inspectors General community and a number of other federal law enforcement agencies. This case, as well as other cases brought by members of the Task Force, demonstrate the Department of Justice’s commitment to helping ensure the integrity of the government procurement process.

United States Attorney Rod J. Rosenstein thanked Air Force OSI and the U.S. Small Business Administration Office of Inspector General for their work in the investigation.  Mr. Rosenstein praised Assistant U.S. Attorney Leo J. Wise and Philip A. Selden, who are prosecuting the case.

Source: http://www.justice.gov/usao-md/pr/former-government-employee-and-government-contractor-indicted-53-million-procurement

Alabama contractor pleads guilty to accepting kickbacks and tax evasion

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An Enterprise, Alabama, resident pleaded guilty on Oct. 23, 2015 in U.S. District Court for the Southern District of Florida to accepting unlawful kickbacks and tax evasion, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

Justice Dept. sealAccording to court documents and statements made in open court, Victor Villalobos, 47, worked for a federal prime contractor at Fort Rucker in Alabama.  In 2009, Villalobos approached a subcontractor for this company and solicited illegal kickbacks on the federal subcontracts the subcontractor held in connection with the federal prime contractor.  Villalobos agreed that in exchange for kickback payments he would refrain from conduct that would unfavorably affect the subcontractor’s business relationship with the federal prime contractor and help ensure that the subcontractor obtained additional business.

As part of his plea, Villalobos admitted that from June 2009 to December 2014, he received approximately 57 separate wire transfers totaling more than $1.9 million in kickback payments from various foreign and domestic bank accounts controlled by the subcontractor.  At two separate meetings in 2015, Villalobos met with the subcontractor and accepted an envelope containing $5,000 in cash and a bag containing $55,000 in cash as kickback payments.  Between June 2009 and February 2015, Villalobos attempted to conceal his receipt of the kickbacks by incorporating nominee entities and opening nominee bank accounts.  Villalobos also admitted that he attempted to evade income taxes on the kickback payments by causing false federal income tax returns to be filed.

Villalobos faces a statutory maximum sentence of 10 years in prison for accepting the kickbacks and a statutory maximum sentence of five years in prison for tax evasion.  He could also be fined up to $500,000 or twice the gain from his crimes.

Acting Assistant Attorney General Ciraolo commended special agents of IRS-Criminal Investigation, the U.S. Air Force’s Office of Special Investigations and the Department of Defense’s Office of the Inspector General, who investigated this case, and Trial Attorneys Charles M. Edgar Jr. and Jason H. Poole of the Tax Division, who are prosecuting this case.  Ciraolo also thanked the U.S. Attorney’s Office of the Southern District of Florida for their substantial assistance.

Source: http://www.justice.gov/opa/pr/federal-government-contractor-pleads-guilty-accepting-kickbacks-and-tax-evasion

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