Georgia Tech Procurement Assistance Center

Atlanta businessman indicted on 51 counts including bribery, tax evasion, and money laundering

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City of Atlanta contractor Lohrasb “Jeff” Jafari has been charged in a 51 count federal indictment with conspiratorial bribery, bribery, tampering with a witness, tax evasion, money laundering, and structuring.

“Jeff Jafari allegedly paid multiple bribes to two local officials over a period of years and then attempted to obstruct the federal investigation into his misconduct,” said U.S. Attorney Byung J. “BJay” Pak. “He also failed to pay income taxes on millions of dollars he earned from city contracts.  Instead, he used the funds to live a lavish lifestyle.  Whether you bribe, take a bribe, or otherwise misuse the public’s money to enrich yourself – it’s all corruption. We will vigorously pursue any such cases.”

According to U.S. Attorney Pak, the charges, and other information presented in court on March 6, 2019:

  • Beginning at least in 2014 to January 2017, Jafari allegedly paid thousands of dollars in bribe payments to Adam Smith, the then-Chief Procurement Officer of the City of Atlanta.
  • At the time, Jafari was the Executive Vice-President of PRAD Group and did millions of dollars in work with the City of Atlanta, primarily under the City’s Architectural and Engineering contracts.
  • Jafari and Smith met at Atlanta-area restaurants where they discussed City business, among other things, and Jafari would generally pay Smith $1,000 in cash in the restaurant bathroom.
  • Jafari similarly paid bribes to a local official in DeKalb County in April and August of 2014.

According to the U.S. Attorney’s office, in exchange for Jafari’s payments to Smith, Smith provided Jafari with information and counsel regarding the City of Atlanta’s procurement processes, among other information. When PRAD Group or a joint venture in which PRAD Group was a partner became a successful proponent on a City of Atlanta contract or Request for Proposal, Smith approved and submitted the award of those projects. Smith also approved task and/or purchase orders for those projects.

In February 2017, Jafari became aware of the federal investigation into his payments to Smith, at which time he confronted Smith in an effort to intimidate and persuade Smith to provide false information to federal law enforcement about the payments, instructing Smith to deny taking bribe money from Jafari.

Between 2014 through 2016, Jafari also willfully failed to pay income taxes to the IRS. During those years, Jafari withdrew large amounts of cash from corporate bank accounts and used corporate funds for personal expenses, among other things, to avoid the assessment of income tax. In 2014, Jafari owed at least $150,000; in 2015, at least $300,000; and in 2017, at least $700,000 to the IRS. Jafari is additionally charged with numerous counts of money laundering for engaging in financial transactions with funds earned from City of Atlanta work he obtained while he was paying bribes to Adam Smith.

Members of the public are reminded that the indictment only contains charges.  The defendant is presumed innocent of the charges and it will be the government’s burden to prove the defendant’s guilt beyond a reasonable doubt at trial.  This case is being investigated by the FBI and IRS Criminal Investigation.

Source: https://www.justice.gov/usao-ndga/pr/lohrasb-jeff-jafari-indicted-51-counts-including-bribery-tax-evasion-and-money

See federal indictment here: Jeff Jafari-Indictment-03.06.2019

See September 28, 2017 article about guilty plea by City of Atlanta purchasing chief here: https://gtpac.org/2017/09/28/city-purchasing-head-pleads-guilty-to-conspiracy-charge

Former City of Atlanta official indicted for bribery, money laundering, obstruction and tax fraud in connection with City contracts

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According to an April 5th statement released by the Office of the U.S. Attorney for the Northern District of Georgia, Mitzi Bickers has been arraigned on 11 federal charges including conspiring to commit bribery, wire fraud, money-laundering, federal obstruction and tax fraud.  Bickers was indicted by a federal grand jury on March 27, 2018.

“City of Atlanta contracts always should go to the most qualified bidder through a contracting process that is fair and transparent,” said U.S. Attorney Byung J. “BJay” Pak.  “Instead, Mitzi Bickers allegedly conspired to use her influence as a high-ranking City of Atlanta official and later as a connected political consultant to steer lucrative city contracts to Elvin R. Mitchell, Jr., Charles P. Richards, Jr., and their companies through bribery.  The illicit arrangement netted over $2 million in bribes for Bickers and almost $17 million in city contracts for Mitchell and Richards, and has shaken the public’s trust in the city’s contracting process.”

“The actions of Bickers, alleged in this indictment, traded the public’s trust in a fair bidding process for personal gain,” said David J. LeValley, Special Agent in Charge of FBI Atlanta. “The FBI and its partners in law enforcement will not tolerate those who choose to try to influence established and proper government procedures.”

“Public officials need to be reminded of the trust and duty bestowed upon them by the taxpayers to serve the public’s interest not their own,” said Thomas J. Holloman, Special Agent in Charge, IRS-Criminal Investigation.  “When public officials and those seeking to do business with them break this trust by committing fraud, they will be charged to the fullest extent of the law.”

According to U.S. Attorney Pak, the charges, and other information presented in court on April 5th:

  • As the City of Atlanta’s Director of Human Services and after leaving employment with the city, Bickers allegedly conspired with contractors Elvin R. Mitchell, Jr. and Charles P. Richards, Jr. to accept bribe payments for herself and other public officials in exchange for the her agreement to obtain city contracts for Mitchell’s and Richards’ companies.  Both Mitchell and Richards have pleaded guilty to paying bribes to Bickers and are currently serving federal prison sentences for their crimes.
  • In 2009, Bickers worked on the mayoral campaign and began working for the City of Atlanta after the election.  From February 2010 to May 22, 2013, Bickers served as the City of Atlanta’s Director of Human Services.  Beginning in 2010, Mitchell and Richards agreed to pay bribes to Bickers to secure profitable City of Atlanta contracts for their businesses.  At times, the bribe payments allegedly were referred to as “up-front money.” In reality, Mitchell and Richards often paid Bickers when their companies actually received City of Atlanta contract work.
  • In exchange for the bribe payments, Bickers promised to represent Mitchell, Richards and their companies on matters relating to City of Atlanta contracting, even though she was a high-level city employee at the time.  Bickers also allegedly provided Mitchell and Richards with sensitive contracting information during the critical time when they were bidding on city contracts.  Between 2010 and 2013, Mitchell’s and Richard’s companies received multi-million dollar contracts with the city for snow removal, sidewalk repair and maintenance, and bridge reconstruction.
  • In effort to conceal her relationship with Mitchell and Richards, Bickers allegedly filed numerous false City of Atlanta Financial Disclosure Forms.  For example, in 2011, Bickers swore under penalty of perjury that she had no financial relationships with any outside businesses, even though Mitchell’s and Richards’ companies paid her over $650,000 in that year.  She used much of this money to purchase a $775,000 lakefront home in Jonesboro, Georgia, making a down payment of over a half million dollars.  In that same year, Bickers also allegedly claimed on her taxes that she made only $57,896 as a city employee, resulting in a $3,924 tax refund from the IRS.
  • In 2013, Bickers’ financial ties to the Pirouette Companies came to light and Bickers resigned her position with the City of Atlanta.  After her resignation, Bickers, Mitchell, and Richards allegedly continued the bribery scheme.  For example, Bickers helped Mitchell secure a multi-million dollar contract for snow and debris removal work after a snowstorm locked down Atlanta in 2014.  In turn, Mitchell paid Bickers and companies associated with her hundreds of thousands of dollars in bribes.  Bickers spent the proceeds of the bribery at stores like Gucci and on expensive vacations, home renovations, four Yamaha WaveRunners, a sports utility vehicle and an ATV.  Bickers is also charged with money laundering for purchasing an SUV and four WaveRunners with bribery proceeds from an account held by the Bickers Group, which was her political consulting company.

Ultimately, between 2010 and 2015, Mitchell and Richards allegedly paid Bickers and companies associated with her over $2 million in an attempt get City of Atlanta contracts through bribery.  In this same period, the City of Atlanta paid Mitchell’s and Richards’ businesses approximately $17 million for the government contracts they secured.

In September 2015, Mitchell began cooperating with FBI’s investigation into corruption at City Hall.  On September 11, 2015 at approximately 5:30 a.m., Shandarrick Barnes threw a concrete block  reading “ER, keep your mouth shut!” through a plate glass window in Mitchell’s home.  Bickers is alleged to have played a role in this attempt to obstruct the federal investigation.  Barnes will be sentenced by District Court Judge Steven C. Jones on April 9, 2018.

Mitzi Bickers, 51, of Atlanta, Georgia, was arraigned before U.S. Magistrate Judge Russell G. Vineyard.  Members of the public are reminded that the indictment only contains charges.  The defendant is presumed innocent of the charges and it will be the government’s burden to prove the defendant’s guilt beyond a reasonable doubt at trial.

This case is being investigated by the FBI and Internal Revenue Service Criminal Investigation.

First Assistant U.S. Attorney Kurt R. Erskine and Assistant U.S. Attorney Jeffrey W. Davis are prosecuting the case.

Source: https://www.justice.gov/usao-ndga/pr/former-city-atlanta-official-indicted-federal-bribery-money-laundering-obstruction-and

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

Atlanta contractors get prison time in contract bribery case

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Two Atlanta contractors were sentenced to prison Tuesday as part of an ongoing federal investigation into a pay-to-play scheme for city contracts.

U.S. District Judge Steve Jones sentenced Elvin R. Mitchell Jr., of Atlanta, to serve five years and pay more than $1.12 million in restitution. Mitchell, 63, pleaded guilty in January to a conspiratorial bribery and money laundering charge.

Jones also sentenced Charles P. Richards Jr., of Tucker, to serve two years and three months in prison and pay $193,000 in restitution. Richards, 65, pleaded guilty in February to a conspiratorial bribery charge.

When imposing the sentences, Jones told each man that their actions had damaged the trust and confidence of the public, cracking the foundation of government.

Keep reading this article at: https://apnews.com/530f2f16f1bc4b8b83b2cede829e2089/Atlanta-contractors-get-prison-time-in-contract-bribery-case

Also see Justice Dept. statement on this case: https://www.justice.gov/usao-ndga/pr/construction-company-owners-sentenced-federal-prison-paying-over-1-million-bribes-city

Court of Appeals affirms lengthy prison sentences for men engaging in DBE fraud 

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USDOTThe U.S. Attorney’s Office for the Middle District of Pennsylvania has announced that Joseph W. Nagle of Deerfield Beach, Florida and Ernest G. Fink, Jr. of Orwigsburg, Pennsylvania, the former owners of Schuylkill Products Inc., (SPI) had their sentences affirmed by the Third Circuit Court of Appeals.

Nagle was sentenced to 84 months’ imprisonment on November 30, 2015, and Fink was sentenced to 41 months’ imprisonment on February 24, 2016, for their roles in a massive conspiracy to defraud the U.S. Department of Transportation’s Disadvantage Enterprise (DBE) program.

According to USDOT, their scheme, which lasted for over 15 years and involved over $136 million in government contracts in Pennsylvania alone, is the largest reported DBE fraud in the nation’s history.

In April 2012, after a four-week jury trial, a jury convicted Nagle on 26 charges relating to the scheme, including conspiracy to defraud USDOT, mail fraud, wire fraud, and money laundering.  Fink previously pleaded guilty to conspiracy to defraud the USDOT in August 2010.

In 2014, three other former executives associated with SPI were sentenced for their roles in the scheme.

  • Romeo P. Cruz, of Westhaven, Connecticut, the former owner of Marikina Construction Corp., which operated as a front for SPI, was sentenced to 33 months’ imprisonment.
  • Timothy G. Hubler, of Ashland, Pennsylvania, SPI’s former Vice-President in charge of field operations, was sentenced to 33 months’ imprisonment.
  • Dennis F. Campbell, of Orwigsburg, Pennsylvania, SPI’s former Vice-President in charge of sales and marketing, was sentenced to 24 months’ imprisonment.

The investigation was conducted by the FBI, USDOT’s Inspector General’s Office, the U.S. Department of Labor Inspector General’s Office, and the Criminal Investigation Division of the IRS.

Source: https://www.justice.gov/usao-mdpa/pr/third-circuit-court-appeals-affirms-lengthy-prison-sentences-two-men-who-executed

 

Sentence reduced for company president who engaged in fraudulent DBE contracts worth $136 million

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DBE Fraud HotlineThe former chief operating officer and co-owner of now-defunct Schuylkill Products Inc. will spend 10 fewer months in prison, but pay the same fine, after being resentenced Wednesday in federal court in Harrisburg, Pennsylvania for his role in the largest fraud of its kind in U.S. history.

Ernest G. Fink Jr., 70, of Orwigsburg, Pennsylvania, must serve 41 months in federal prison and pay $25,100 in fines, Senior U.S. District Judge Sylvia H. Rambo ruled.

Rambo originally sentenced Fink on July 14, 2014, to 51 months in prison and $25,100 in fines after he pleaded guilty to participating in Schuylkill Products’ scheme to defraud the federal Disadvantaged Business Enterprise (DBE) program.

Federal prosecutors charged Fink and several other Schuylkill Products executives with using Marikina Engineers and Construction Corp., West Haven, Connecticut, as a front under the DBE program from 1993 until 2008 to funnel work to the Cressona company and its wholly owned subsidiary, CDS Engineers Inc.

Keep reading this article at: http://republicanherald.com/news/schuylkill-products-co-owner-resentenced-to-10-fewer-months-in-prison-1.2011402

See our earlier articles on this case:

Three-quarters of construction-related companies affected by fraud in the past year

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Three quarters (75%) of construction, engineering and infrastructure companies have experienced a fraud incident in the past year, according to the 2015 Kroll Global Fraud Report.

The findings reveal the most common type of fraud experienced in the sector was theft of physical assets or stock, experienced by 36% of construction companies, followed by vendor, supplier or procurement fraud (24%). These are some of the highest incidence rates of any sector surveyed and are second only to levels experienced by the retail industry. Respondents in this sector also reported the highest level of regulatory or compliance breach fraud (18%) of any sector surveyed.

Nine in ten (92%) respondents in the construction industry say their exposure to fraud has increased in the last year, the highest increase in fraud exposure of any sector. The biggest drivers of this are high staff turnover (49%) and entry to new, riskier markets (21%). In terms of responsibility, a senior executive or middle manager was involved in a fraud against the company at just under a third (32%) of all construction firms surveyed.

Despite problems caused by high staff turnover, only 30% of construction companies are looking to invest in background screening in the coming year and just 25% plan to spend on management controls – less than the survey average.

Percentage of construction, engineering and infrastructure companies affected by different types of fraud
Percentage of construction, engineering and infrastructure companies affected by different types of fraud

Daniel Karson, Chairman of Kroll, observed:

“One of the most telling results from this year’s report is how vulnerable to fraud companies are feeling. In one form or another, the specter of fraud arises in virtually every business relationship. What our report drives home is that fraud is often an “inside job” and that companies must address both internal and external relationships if they are to most effectively protect their money, property and private data.

“While technology has enabled new ways to perpetrate fraud, our daily work with clients confirms what the report also reveals — that old fashioned theft, bribery and kickbacks are still amazingly effective and pervasive. Human nature being what it is, fraud will always be with us, whether it occurs in a company’s corner office or a world away in its supply chain. However, there are numerous strategies, resources and best practices available to companies that can go a long way toward helping them protect themselves and their investments.”

The Kroll Global Fraud Report 2015 includes a full detailed industry analysis across a range of fraud categories and regions. To obtain a copy, visit http://www.kroll.com/global-fraud-report.

NC toll road moves ahead with contractor guilty of fraud

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North Carolina transportation officials are pushing ahead with an embattled toll road outside Charlotte, even after a politically connected paving contractor involved in the $840-million project pleaded guilty last year to defrauding taxpayers.

NCDOTThe state Department of Transportation announced Thursday construction had begun on the Monroe Expressway, a 20-mile highway in Union County. The project, which had been stalled for years by a lawsuit over its environmental impact, is being built by a joint venture of three companies.

One of those firms, Boggs Paving Inc. of Monroe, pleaded guilty to conspiracy in September in what federal prosecutors described as a bid-rigging and kickback scheme involving nearly $88 million in government highway construction contracts between 2003 and 2014. Company president Carl A. “Drew” Boggs III is awaiting sentencing after pleading guilty to conspiracy and money laundering. He faces up to 25 years in prison and $500,000 in fines.

Despite that, the three-company consortium, Monroe Bypass Constructors LLC, has been paid $6.8 million by the state during the eight months since the guilty pleas were entered, according to N.C. Department of Transportation spokesman Mike Charbonneau. In addition, Boggs Paving has been paid $108,290 since September for two other road projects.

Keep reading this article at: http://www.wncn.com/story/29185407/nc-toll-road-moves-ahead-with-contractor-guilty-of-fraud

SDVOSB fraud: Guilty plea In “rent-a-vet” case

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A Nebraska man has pleaded guilty to fraud and money laundering charges stemming from a SDVOSB “rent-a-vet” scheme under which an ineligible business received 45 SDVOSB contracts.

According to a Department of Justice press release, the man faces up to 24 months in prison and financial penalties.  He and his companies also have been suspended from government contracting and face the likelihood of debarment.

 The DOJ press release alleges that beginning in 2007, Ram Hingorani and his companies, Midwest Contracting Inc. and Midwest Paving Inc., engaged in SDVOSB fraud.  According to the press release, Hingorani used the service disabled status of a business partner, Ronald Waugh, to qualify MCI as a SDVOSB.  However, an investigation “revealed MCI was a pass-through and/or front company for Hingorani’s other businesses and that Waugh was simply a figurehead or ‘rent-a-vet’ who was being used for his SDV status.”

The government’s investigation concluded that Hingorani, a non-SDV, controlled MCI and caused MCI to falsely self-certify as a SDVOSB.  As a result of the fraudulent self-certifications, MCI was awarded 45 set-aside and sole source contracts worth approximately $23.5 million.

Hingorani faces a prison term of up to 24 months, as well as financial penalties.  Hingorani and his companies are currently suspended and face the prospect of debarment.  Hingorani’s SDV business partner, Waugh, was initially charged in the case as well, but the government has agreed to drop those charges.

Keep reading this article at: http://smallgovcon.com/debarment-and-penalties/sdvosb-fraud-guilty-plea-in-rent-a-vet-case/

 

Couple sentenced in huge State Department fraud scheme

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A former State Department contractor and her husband were sentenced to prison on Dec. 6, 2013 for orchestrating a multi-million dollar fraud scheme.

Kathleen McGrade will serve two years under the sentence meted out in federal court; Brian Collinsworth will serve 18 months for his role in the convoluted scam, according to court filings and a news release from the U.S. attorney’s office for the eastern district of Virginia.

In an August plea agreement, the couple admitted to defrauding the government and money laundering. Along with prison time, they have to forfeit houses, a yacht, a Steinway piano and other property valued at almost $7.9 million, the release said.

Keep reading this article at: http://www.federaltimes.com/article/20131206/DEPARTMENTS08/312060008/Couple-sentenced-huge-State-Department-fraud-scheme 

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