Georgia Tech Procurement Assistance Center

Georgia Tech purchasing office issues fraud alert, GTPAC warns of other fraud

By

Georgia TechGeorgia Tech’s purchasing office reports that unknown persons have been attempting to use Georgia Tech’s credit references to open accounts with vendors.

In addition, some vendors have received a mocked-up version of a Georgia Tech purchase order (PO).  These phony PO’s show a rendering similar to a real PO number issued by Georgia Tech.

Suppliers can validate official Georgia Tech Purchase Orders by going to the Vendor PO Validation page and entering the PO number received.  Vendors who have questions should feel free to contact purchasing.ask@business.gatech.edu

Last year, the Georgia Tech Procurement Assistance Center (GTPAC) warned businesses of similar scams involving colleges and universities in Mississippi and Minnesota.  For further details and advice on how to avoid this type of fraud, please read: http://gtpac.org/2015/08/26/fraud-alert-beware-of-unsolicited-purchase-orders-and-other-possible-government-scams

Additional Information:

 

 

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

By

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

Fraud alert: Beware of unsolicited purchase orders and other possible government scams

By

What would you do if you responded to a request for quotation, received an order, and shipped products — only to later discover that the entire transaction was fake?

This is what happened recently to a businesswoman who reported to the Georgia Tech Procurement Assistance Center (GTPAC) that she received purchase orders from two out-of-state public universities, one located in Mississippi and the other in Minnesota.  She responded by shipping goods, and sent along her invoice.

It turns out that the purchase orders were bogus.  This small business now finds that it will not receive payment and may not be able to recover the equipment that was shipped.

What are some of the lessons you can learn from this unfortunate experience?   Here are six tips:

  1. An unsolicited order from a governmental entity (e.g., agency, city, county, school) is a virtual impossibility.  If you didn’t submit a bid, chances are you won’t receive a purchase order.
  2. When you receive a purchase order, make sure it identifies the government official placing the order and is signed.
  3. Never assume that any purchase order is valid.  Call the point-of-contact (POC) listed on the order to make sure it is legitimate.  Be alert to the possibility that the phone number on the order might be bogus too.Fraud Waste Abuse
  4. Even if the order appears to be legitimate, conduct an Internet search for the purchasing office of the government buyer to see if the location and contact information line-up with what’s on the purchase order. If the contact phone numbers are different on the order and on the web site, call the buyer to inquire about the order — and be sure to call the buyer at the phone number listed on the government entity’s website.
  5. Also pay attention to the “ship to” location.  If it looks suspicious (i.e., it’s a location other than the government entity’s location), ask the buyer why it’s different.
  6. If, after checking, you suspect the purchase order to be fake, report the incident to the real government organization as well as to appropriate law enforcement authorities.

In the case brought to GTPAC’s attention, the business has reported the incidents to the purchasing offices of both universities.  She furnished them with copies of the documents she received — orders that are on official letterhead and appear to be legitimate.  She also reported the incidents to local law enforcement authorities who are investigating the locations where the equipment was shipped.

GTPAC recommends that all businesses stay alert to possible fraud in the government contracting process and in other government functions.  Here are some tips:

Remember the old saying, “If something looks too good to be true, it probably is.”   Whenever you receive a call, letter, fax or email about something involving government contracting — and it looks fishy — feel free to contact your team at GTPAC.  We’ll be glad to give you any facts we are aware of, along with suggestions about how you might best proceed.

 

 

 

Business owner sentenced for fraudulently obtaining $2.6 million in government contracts

By

Yogesh K. Patel, age 48, of Gaithersburg, Maryland, was sentenced August 3, 2015 to 21 months in prison followed by three years of supervised release for conspiring to commit wire fraud in connection with a scheme to fraudulently obtain more than $2.6 million in federal government contracts through a Small Business Administration (SBA) program designed to assist disadvantaged businesses.  Patel also was ordered to forfeit $554,541.07.

SBA logo smallAccording to his plea agreement and court documents, Patel owned 91% of United Native Technologies, Inc. (UNTI), which purported to perform information technology services to the government and commercial clients.  In 2005, Patel applied for and was granted certification as a socially and economically disadvantaged owned business under SBA’s program.  In addition to a broad scope of assistance from SBA, participants in the program can receive sole source government contracts that are reserved for socially disadvantaged owned companies.

In 2007, Patel met co-defendant Wesley Burnett at a business conference in Costa Rica. Burnett, who was not a member of any economically or socially disadvantaged group, had experience constructing and maintaining barriers at military and government installations.  Patel and Burnett agreed that they would use UNTI to bid on SBA set aside contracts for barrier-related work. Burnett would perform the work under the contracts and would pay Patel 4.5 percent of the value of the contracts. In preparing a bid for a contact at Andrews Air Force, which was ultimately awarded to UNTI, Burnett and Patel exchanged emails in June 2011 in which they made statements indicating that they knew this arrangement was illegal.

In 2011, Patel met another individual identified as N.P., and they agreed to a fraudulent pass-thru arrangement similar to the one Patel had entered into with Burnett.

From October 2010 to July 2013, UNTI was fraudulently awarded $2,682,430 in set-aside U.S. government contracts.

In 2011, 2012 and 2013, Patel falsely certified to the SBA that no outside entity or individual provided financial support to UNTI when in fact Burnett and N.P. provided financial support to UNTI; and that Patel ran UNTI full-time, when in fact he did not because he was receiving disability compensation from the Social Security Administration in each of those years.

From November 2012 to October 2013, Patel received $973,407.37 in government funds under the fraudulently obtained set-aside contracts.  Patel kept a portion of these funds and turned the majority of them over to Burnett.  Prior to November 2012, payments under contracts went to Burnett, who provided a portion of the funds to Patel.

Wesley Burnett, age 46, of Hermosa Beach, California, previously pleaded guilty to his role in the scheme.  Burnett was sentenced to 42 months in prison and ordered to forfeit $694,893.99.

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, demonstrates the Department of Justice’s commitment to helping ensure the integrity of the government procurement process.

The SBA’s Office of Inspector General (OIG), the U.S. Air Force Office of Special Investigations, and the Department of the Interior’s OIG participated in the investigation.

Contracting News

Read More

Contracting Tips

Read More

GTPAC News

Read More

Georgia Tech News

Read More