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

Court grapples with Albany Marine Corps Logistics Base contractor’s bribery conviction

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The owner of a trucking company who was convicted of paying bribes to rake in more than $20 million from military contracts fought for relief last Wednesday at the 11th Circuit.

Arguing before a three-judge panel in Atlanta, attorney Edward Garland said that the evidence showed only that his client, Christopher Whitman, gave gratuities to officials.   “The defense was presented for five weeks … evidence was used on the record for, what we’ll call, ‘buttering up,’” said Garland, a partner with Garland, Samuel and Loeb.

Justice Department attorney Alex Robbins told the panel meanwhile that the proper time to raise such arguments was at trial.  “Timing is everything,” Robbins said. “You need to submit your argument to the jury. … None of that happened here.”

Robbins added: “There is nothing in the record at all that suggested these payments were gratuities.”

Garland’s argument also drew skepticism from at least one judge on the panel.  “But you never argued this, did you?” said U.S. District Judge John Antoon II, sitting by designation from the Middle District of Florida.

Keep reading this article at: https://www.courthousenews.com/court-grapples-with-defense-contractors-bribery-conviction/

See our earlier reports on this case at: http://gtpac.org/?p=10102 and http://gtpac.org/?p=7589. 

Former Atlanta purchasing chief and former MARTA manager convicted of procurement bribery and theft

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The U.S. Attorney’s Office for the Northern District of Georgia announced, in separate cases, two convictions yesterday (Jan. 16, 2018) involving contracting bribes and kick-backs within two different units of metro Atlanta government.

  • Adam L. Smith, the former Chief Procurement Officer for the City of Atlanta, was sentenced to federal prison for conspiring to accept more than $40,000 in bribe payments from a vendor who obtained millions of dollars in city contracts.
  • Joseph J. Erves, former MARTA Senior Director of Operations, was sentenced to two years, nine months in federal prison for orchestrating a false invoicing scheme that resulted in MARTA paying more than $500,000 for maintenance work that was never performed and for then funneling most of that money into his personal bank accounts.

According to U.S. Attorney Byung J. “BJay” Pak, from at least 2015 to January 2017, Smith met privately with a vendor on multiple occasions, frequently at Atlanta-area restaurants. During these meetings, Smith and the vendor discussed Atlanta procurement projects, bids, and solicitations. Often at the time of these meetings, the vendor was actively seeking contracts, projects, and work with Atlanta.  After most of these meetings, the vendor and Smith met in the restaurant’s bathroom, where the vendor paid Smith approximately $1,000 in cash. In return for the bribe payments, the vendor expected Smith to use his position and power to assist the vendor with contracting/procurement with Atlanta and to furnish the vendor with future benefits and favors when needed.

In the case involving the Metropolitan Atlanta Rapid Transit Authority (MARTA), beginning in 2010, according to the U.S. Attorney’s office, Erves retained three different vendors purportedly to perform maintenance projects for MARTA. 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 receiving payment, the three vendors funneled most of the money they 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 work was actually performed.

Smith, 53, of Atlanta, GA, was sentenced to two years, three months in prison, three years of supervised release, ordered to pay $44,000 in restitution, and a $25,000 fine.  On September 25, 2017, Smith pleaded guilty to conspiratorial bribery.  According to press reports, there is an ongoing investigation of matters related to the Smith case by the U.S. Attorney’s Office, the Federal Bureau of Investigation,  and the Internal Revenue Service.

Erves, 53, of Lithonia, GA, was sentenced to two years, nine months in federal prison, and ordered to pay $522,825.45 in restitution.  Erves also previously pleaded guilty (on August 24, 2017) to one count of Federal Program Theft.  The Federal Bureau of Investigation and the MARTA Police Department are continuing an investigation of this case.

Sources:

Statement from the U.S. Attorney’s Office regarding the Smith case: https://www.justice.gov/usao-ndga/pr/city-atlanta-s-former-chief-procurement-officer-adam-smith-sentenced-federal-prison 

Statement from the U.S. Attorney’s Office regarding the Erves case: https://www.justice.gov/usao-ndga/pr/senior-marta-executive-sentenced-federal-prison-causing-marta-pay-500000-work-never

Man pleads guilty to obstructing justice in Atlanta contracting corruption investigation

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Shandarrick Barnes has pleaded guilty to obstructing justice in the federal corruption investigation involving City of Atlanta government.  The defendant threw a concrete block through the window of E.R. Mitchell’s home, and placed dead rodents on his porch and elsewhere hoping to thwart his cooperation with federal law enforcement.

“Barnes threw the concrete block through Mitchell’s dining room window to get him to ‘shut up,’” said U. S. Attorney Byung J. “BJay” Pak.  “Instead, that violent act made Mitchell even more resolute in his cooperation with federal law enforcement.  Barnes now faces a significant prison sentence because he decided to obstruct a federal investigation.”

“Attempts to subvert justice, whether through intimidation of witnesses or by any other means, will not be tolerated.  The FBI will expend any resources necessary to ensure that those who seek to obstruct criminal investigations are held accountable for their actions.  This plea by Shandarrick Barnes is evidence of the FBI’s commitment to protect those willing to cooperate with law enforcement’s efforts to improve their communities,”

“Individuals who obstruct justice will be held accountable for their actions. Intimidation of witnesses is never acceptable,” said James Dorsey, Acting Special Agent in Charge, IRS Criminal Investigation.  “This investigation was complex and multifaceted, and it underscores the reason we are committed to working with our law enforcement partners to dismantle any and all public corruption schemes.”

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

  • In late July 2015, special agents with IRS and the FBI approached E.R. Mitchell for an interview relating to an ongoing investigation into corruption at the City of Atlanta.
  • During the meeting, agents discussed corruption allegations as well as potential tax improprieties.
  • Shortly after the IRS and FBI agents approached and interviewed him, Mitchell informed others that federal law enforcement had spoken with him and was asking questions.
  • Mitchell was interviewed on September 2, 2015, by the U.S. Attorney’s Office and FBI and IRS agents and confessed to regularly paying “up-front money” for City of Atlanta contracts.
  • On September 8, 2015, Mitchell returned to the office and completed a second debriefing with prosecutors and agents.
  • On September 11, 2015 at approximately 5:30 a.m., Shandarrick Barnes threw a concrete block with the words “ER, keep your mouth shut!” written on the side, through a plate glass window in Mitchell’s home.  When Mitchell emerged from the house to see who had thrown the block, he saw that dead rats had been placed on his porch, car and in his mailbox.  The police and FBI were summoned to the scene and law enforcement obtained security footage from the subdivision.  The video revealed a car that appeared to match Barnes’ vehicle left the area minutes after the block was thrown through the front window.  Further investigation by agents suggested that Barnes was involved.
  • On July 13 and August 17, 2016, Barnes was interviewed by the FBI and IRS.  During the interviews, he admitted he threw the concrete block through Mitchell’s window.  Barnes specifically acknowledged that he was aware of the IRS tax investigation into Mitchell and others and that agents had asked about Mitchell’s taxes as well as payments Mitchell made to businesses associated with Barnes’ employer.  He was well aware that Mitchell was actively cooperating with agents.  He said he was livid and his decision to throw the brick through Mitchell’s window was motivated by his desire to hinder Mitchell’s communication with agents concerning possible tax violations.  He said he felt that Mitchell’s communications to federal law enforcement would negatively affect his employer’s businesses.  Barnes was concerned that the communication with agents was detrimental to obtaining other business that he and others were actively seeking at that time.

Sentencing for Shandarrick Barnes, 41, of Atlanta, Georgia, is scheduled for February 7, 2018.  This case is being investigated by the Federal Bureau of Investigation.  Assistant U.S. Attorneys Kurt R. Erskine and Jeffrey Davis are prosecuting the case.

Source: https://www.justice.gov/usao-ndga/pr/man-pleads-guilty-obstructing-justice-city-atlanta-corruption-investigation

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

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The 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:

Redstone Arsenal contracting officer to plead guilty to obstructing federal audit

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A Huntsville, AL woman employed by the U.S. Army Contracting Command at Redstone Arsenal has agreed to plead guilty to a charge of obstructing a federal audit, the U.S. Attorney’s Office in Birmingham said last week.

Redstone ArsenalTeresa Mayberry, 54, agreed to plead to one count of obstructing an audit in 2012 by the Department of Defense Inspector General’s office related to a federal contract for providing parts to Russian-made helicopters to be flown in Afghanistan.

The U.S. Attorney’s Office described the charge in a news release.

“Mayberry created a series of false documents that she provided to (the IG) to obstruct its 2012 audit of an Army contract to purchase parts for Russian-made Mi-17 helicopters.”

Keep reading this article at: http://www.al.com/news/huntsville/index.ssf/2015/06/redstone_arsenal_contract_offi.html

Read charges here: mayberry-charges

Read plea deal here: mayberry-plea

Former Colonel at Redstone Arsenal pleads guilty to federal charges related to inflated contract payments

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A former colonel at Redstone Arsenal pleaded guilty April 20th to federal charges stemming from inflated contract payments for work on Russian-made helicopters bound for Afghanistan to be used by Afghan forces.

Now-retired Army Col. Norbert Vergez pleaded guilty today to two counts of false statements and one count of conflict of interest, in federal court in Tuscaloosa. No sentencing date has been set, the U.S. Attorney’s Office in Birmingham said today.

U.S. Attorney Joyce White Vance said Vergez “placed his own financial ambitions and personal loyalties above his duties as a member of the armed forces.

“In doing so, he betrayed the U.S. Army values of honesty, integrity and selfless service, which are hallmarks of military service,” Vance said. “This prosecution highlights our commitment to hold responsible those who, by word and deed, corrupt the government contracting process.”

Keep reading this article at: http://www.al.com/news/huntsville/index.ssf/2015/04/former_colonel_at_redstone_ars.html

Construction company sentenced for veteran-owned business fraud

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Max R. Tafoya, 64, the owner of an Albuquerque-area construction company, and his son-in-law, Tyler Cole, 41, of Los Ranchos de Albuquerque, were sentenced Thursday on fraud charges related to claims Tafoya’s company was eligible for contracts reserved for businesses owned by service-disabled veterans.

Tafoya was sentenced to 57 months in federal prison to be followed by a year of supervised release, according to federal prosecutors. Cole was sentenced to a 37 months in prison.

Tafoya also was ordered to repay the government $1,350,000. Cole was ruled to be jointly liable for $500,000 of that amount, prosecutors said.

“Today Max Tafoya and Tyler Cole were held accountable for abusing a program that seeks to fulfill our obligation to provide disabled veterans with benefits designed to ease the losses and disadvantages they have incurred as a consequence of disabilities they sustained while serving our country,” said U.S. Attorney Damon P. Martinez. “This prosecution is part of a nationwide effort to protect service-disabled veterans who own small businesses by tightening controls to prevent fraud and abuse.”

Keep reading this article at: http://www.bizjournals.com/albuquerque/blog/morning-edition/2014/06/construction-company-owner-sentenced-for-fraud.html

Read U.S. Attorney’s statement here: http://www.justice.gov/usao/nm/press-releases/2014/Jun/200%20-%202014-06-05_tafoya_pr.html

Georgia men charged in contracting corruption schemes at Albany Marine Corps base

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Three Georgia men have been charged in a 51-count indictment for their alleged participation in fraud and corruption schemes at the Marine Corps Logistics Base (MCLB) in Albany, Ga., resulting in the loss of millions of dollars to the United States government.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Michael J. Moore for the Middle District of Georgia made the announcement after the indictment was unsealed in the Middle District of Georgia today.

Christopher Whitman, 48, co-owner of United Industrial of Georgia Inc. (also known as ULOC), an Albany-based trucking company and freight transportation broker , was indicted on 43 counts of money, property and honest services wire fraud, five counts of bribery and one count of theft of government property.  Shawn McCarty, 36, of Albany, a former employee at the MCLB-Albany, was charged with 30 counts of money, property and honest services wire fraud and one count of bribery; and Bradford Newell, 43, of Sylvester, Ga., also a former employee at the MCLB-Albany, was charged with 13 counts of money, property and honest services wire fraud, one count of bribery, and one count of theft of government property.

The three men were arrested earlier today and appeared before U.S. Magistrate Judge Thomas Q. Langstaff.   Judge Langstaff ordered the three men detained pending further hearings next week.

According to the indictment, Whitman paid nearly $1 million in bribes to Mitchell Potts, the former traffic office supervisor for the Defense Logistics Agency (DLA) at MCLB-Albany, Jeff Philpot, the former lead transportation assistant in the traffic office, and Shawn McCarty, another transportation assistant in the traffic office, to obtain commercial trucking business from the DLA.   The indictment alleges that Potts, Philpot and McCarty used their official positions to defraud the government and benefit ULOC by helping ULOC obtain transportation contracts loaded with unnecessary premium-priced requirements – including expedited service; removable gooseneck trailers, which do not require a loading dock and are therefore more expensive than standard trailers; and exclusive use, which requires that freight be shipped separately from other equipment – even if that results in a truck not being filled to capacity.  The indictment alleges that Whitman and ULOC brokered these shipments for service without the premium specifications and on fewer trucks than requisitioned by DLA, but they billed the government at rates approved by the corrupt officials.   These actions are alleged to have resulted in ULOC profits grossing more than $20 million over less than four years.

Whitman is accused of orchestrating a scheme to steal and sell surplus equipment from MCLB-Albany worth more than $1 million.   Whitman allegedly paid approximately $200,000 in total bribes to Shelby Janes, the former inventory control manager of the Distribution Management Center (DMC) at MCLB-Albany, and Newell, an assistant to Janes, who used their official positions to help Whitman steal surplus equipment from the base, including bulldozers, cranes and front-end loaders.   The indictment alleges that Whitman improved and painted the stolen equipment.

An indictment is merely a charge and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

If convicted, the defendants face up to 20 years in prison for each wire fraud count and 15 years in prison for each bribery count.   The theft count carries a maximum prison term of 10 years.  Each charged count carries a maximum fine of $250,000 or twice the gross gain.

Prior to this indictment, one former ULOC employee and three DLA officials pleaded guilty in connection with the fraud and corruption schemes alleged in the indictment.   On Oct. 10, 2013, Kelli Durham, ULOC’s former manager, pleaded guilty to conspiracy to commit wire fraud, admitting to intentionally overbilling the United States for services ULOC did not perform, resulting in losses ranging from $7 million to $20 million, and for receiving $905,685 for her role.   She faces a maximum penalty of five years in prison.   In May 2013, Potts and Philpot pleaded guilty to bribery for collectively accepting more than $700,000 in bribes; and in February 2013, Janes pleaded guilty to bribery for receiving nearly $100,000 in bribes.   The three former officials each face up to 15 years in prison.

The case is being investigated by the Naval Criminal Investigative Service, with assistance from the Dougherty County District Attorney’s Office Economic Crime Unit, Defense Criminal Investigative Service, DLA Office of the Inspector General, and the Department of Labor Office of the Inspector General.   The case is being prosecuted by Trial Attorneys Richard B. Evans and J.P. Cooney of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney K. Alan Dasher of the Middle District of Georgia.

Source: http://www.justice.gov/opa/pr/2014/January/14-crm-066.html 

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