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September 12, 2018 By AMK

Turkish man charged with conspiracy to defraud DoD of $7 million, violating Arms Export Control Act

A Turkish man who owns a New Jersey defense contracting business has been charged in a scheme to fraudulently acquire lucrative manufacturing contracts with the U.S. Department of Defense (DoD), and for conspiring to export military technical drawings to Turkey without a license from the State Department, the Justice Department announced last week.

Ferdi Murat Gul, a/k/a “Fred Gul,” of Turkey, was indicted by a federal grand jury on Sept. 5, 2018, on one count of conspiracy to commit wire fraud, six counts of wire fraud, one count of conspiracy to violate the Arms Export Control Act, and one substantive count of violating the Act. He is believed to be currently at large in Turkey.

According to the indictment:

  • Gul is the principal owner, chief executive officer, and general manager of two companies located in the United States: Bright Machinery Manufacturing Group Inc. (BMM), a defense contracting company located in Paterson, New Jersey; and FMG Machinery Group (FMG), a purported manufacturing company in Paterson and Long Island City, New York. Gul also maintains an ownership interest in HFMG Insaat (HFMG), a manufacturing company in Turkey.
  • Over approximately five years, BMM fraudulently obtained hundreds of contracts with the DoD by falsely claiming that the military parts it contracted to produce would be manufactured in the United States. From October 2010 through June 2015, the value of the contracts fraudulently awarded to BMM was approximately $7 million.
  • Gul routinely submitted electronic bids for DoD contracts that contained false representations about BMM’s purported domestic manufacturing operations. He falsely submitted quotes claiming that BMM would provide military goods manufactured in the United States, when in fact the company relied almost exclusively on Gul’s Turkish-based production facilities. In acquiring contracts, Gul routinely and unlawfully exported drawings and technical data, some of which was subject to U.S. export control laws, in order to secretly manufacture military parts in Turkey. Gul and his conspirators then fraudulently supplied those foreign-made parts to unwitting DoD customers in the United States.
  • Gul and his conspirators concealed their illicit manufacturing activities and ongoing fraud by routinely submitting forged certifications and fabricated information by e-mail to DoD representatives in New Jersey. They falsely represented that BMM and its U.S.-based subcontractors performed necessary quality control procedures in their purported domestic manufacture of military parts.

BMM fraudulently acquired 346 contracts from the DoD to domestically manufacture military parts, including parts for torpedoes for the U.S. Navy, bomb ejector racks and armament utilized in U.S. Air Force aircraft, and firearms and mine clearance systems used by U.S. military personnel abroad. Testing by the DoD revealed that some parts had numerous design flaws and non-conformities and were unusable.

The wire fraud counts each carry a maximum penalty of 20 years in prison and a fine of $250,000. The Arms Export Control Act violations each carry a maximum penalty of 20 years in prison and a $1 million fine.  The Arms Export Control Act prohibits the export of defense articles and defense services without first obtaining a license from the U.S. Department of States.

The charges and allegations in the indictment are merely accusations, and the defendant is considered innocent unless and until proven guilty.

Source: https://www.justice.gov/usao-nj/pr/owner-defense-firm-charged-conspiracy-defraud-department-defense-7-million-violate-arms

Filed Under: Government Contracting News Tagged With: abuse, Arms Export Control Act, conspiracy, DoD, DOJ, export, fraud, indictment, Justice Dept.

April 10, 2015 By AMK

Former owner of DoD contractors pleads guilty to exporting military blueprints to India

The U.S. Dept. of Justice (DOJ) has announced that the former owner of two New Jersey defense contracting businesses admitted that she conspired to send sensitive military technical data to India.

Justice Dept. sealHannah Robert of North Brunswick, New Jersey, pleaded guilty on April 1, 2015 to conspiracy to violate the Arms Export Control Act by exporting to India military technical drawings without prior approval from the U.S. Department of State.

“Hannah Robert circumvented the U.S. government and provided defense technical drawings in violation of the Arms Export Control Act,” said Assistant Attorney General Carlin.  “We will continue to pursue and hold accountable those who abuse their access to sensitive defense information.  I would like to thank all of the special agents, prosecutors and other personnel whose work led to the guilty plea in this case.”

“Hannah Robert conspired to send to another country thousands of technical drawings of defense hardware items and sensitive military data,” said U.S. Attorney Fishman.  “She was also charged with manufacturing substandard parts that were not up to spec, in violation of the contracts she signed with the Department of Defense.  Enforcement of the Arms Export Control Act is critical to the defense of our country.”

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

  • In June 2010, Robert was the founder, owner and president of One Source USA LLC, a company located at her then-residence in Mount Laurel, New Jersey, that contracted with the U.S. Department of Defense (DoD) to supply defense hardware items and spare parts.  In September 2012, Robert opened another defense company, Caldwell Components Inc., based at the same address.  Along with a resident of India identified only as “P.R.,” Robert owned and operated a third company located in India that manufactured defense hardware items and spare parts.
  • From June 2010 to December 2012, Robert conspired to export to India defense technical drawings without obtaining the necessary licenses from the U.S. Department of State.  The exported technical drawings include parts used in the torpedo systems for nuclear submarines, military attack helicopters and F-15 fighter aircrafts.

In addition to United States’ sales, Robert and P.R. sold defense hardware items to foreign customers.  Robert transmitted export-controlled technical data to P.R. in India so that Robert and P.R. could submit bids to foreign actors, including those in the United Arab Emirates (UAE), to supply them or their foreign customers with defense hardware items and spare parts.  Neither Robert nor P.R. obtained approval from the U.S. Department of State for this conduct.

On Aug. 23, 2012, P.R. e-mailed Robert requesting the technical drawing for a particular military item.  P.R.’s e-mail forwarded Robert an e-mail from an individual purporting to be “an official contractor of the UAE Ministry of Defence,” and who listed a business address in Abu Dhabi, UAE.  The UAE e-mail requested quotations for a bid for the “blanket assembly” for the CH-47F Chinook military helicopter and listed the “End User” for the hardware item as the UAE Armed Forces.  Later that same day, Robert replied to P.R.’s e-mail, attaching, among other things, the electronic file for an export-controlled technical drawing titled “Installation and Assy Acoustic Blankets, STA 120 CH-47F,” to be used in the Chinook attack helicopter.

In October 2010, Robert transmitted the military drawings for these parts to India by posting the technical data to the password-protected website of a Camden County, New Jersey, church where she was a volunteer web administrator.  This was done without the knowledge of the church staff.  Robert e-mailed P.R. the username and password to the church website so that P.R. could download the files from India.  Through the course of the scheme, Robert uploaded thousands of technical drawings to the church website for P.R. to download in India.

On June 25, 2012, P.R. e-mailed Robert, stating: “Please send me the church web site username and password.”  The e-mail was in reference to both an invoice to and a quote for a trans-shipper known to Robert as a broker of defense hardware items for an end user in Pakistan.  This individual used a UAE address for shipping purposes.  Later that day, Robert replied to this e-mail, providing a new username and password for the church website so that P.R. could download the particular defense drawings.

On Oct. 5, 2012, Robert e-mailed P.R. with the subject line “Important.”  The e-mail referenced the Pakistan trans-shipper, a separate potential sale to individuals in Indonesia and the church website: “Please quote [the Pakistan trans-shipper] and Indonesia items today[.] [Dr]awings I cannot do now as if the size exceeds then problem, I should be watching what I upload, will do over the weekend[.]  Ask me if you need any drawing . . . . Talk to you tomorrow . . . .”

There were also quality issues with the parts that Robert provided to the DoD.  After the DoD in October 2012 disclosed that certain parts used in the wings of the F-15 fighter aircraft, supplied by one of One Source USA’s U.S. customers failed, Robert and P.R. provided the principal of their customer with false and misleading material certifications and inspection reports for the parts.  These documents, to be transmitted to the DoD, listed only One Source USA’s New Jersey address and not the address of the actual manufacturer in India, One Source India.  As a result of the failed wing pins, the DoD grounded approximately 47 F-15 fighter aircraft for inspection and repair, at a cost estimated to exceed $150,000.

Until November 2012, Robert was an employee of a separate defense contractor in Burlington County, New Jersey, where she worked as a system analyst and had access to thousands of drawings marked with export-control warnings and information on this defense contractor’s bids on DoD contracts.  Robert misrepresented to her employer the nature and extent of her involvement with One Source USA in order to conceal her criminal conduct.

Count six of the superseding indictment – conspiracy to violate the Arms Export Control Act – is punishable by a maximum potential penalty of five years in prison and a fine of $250,000.  As part of her plea agreement, Robert must pay $181,015 to the DoD, which includes the cost of repair for the grounded F-15s.  Robert also consented to a forfeiture money judgment of $77,792, which represents the dollar value of Robert’s fraudulent contracts with DoD.

The Arms Export Control Act prohibits the export of defense articles and defense services without first obtaining a license from the U.S. Department of State and is one of the principal export control laws in the United States.

Source: http://www.justice.gov/opa/pr/former-owner-defense-contracting-businesses-pleads-guilty-illegally-exporting-military

Filed Under: Government Contracting News Tagged With: Arms Export Control Act, DOJ, State Dept.

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