bribery | The Contracting Education Academy

March 17, 2021 By cs

A case study of the government’s struggle to police procurement fraud

On January 5, the Pentagon’s Defense Logistics Agency (DLA) awarded a contract worth up to $33 billion over 10 years to a privately held equipment supplier called Atlantic Diving Supply, Inc., or ADS.

Only small businesses were legally permitted to bid on the contract, and ADS has been accused of defrauding the Pentagon by falsely claiming to be a small business. According to the most recent official tally of top government contractors, ADS is ranked as the 24^th largest federal contractor in fiscal year 2019 with more than $3 billion in sales and ADS is the only “small business” among the top 50 that year.

ADS’s gargantuan new award for work on a Pentagon logistics program landed after the company’s majority owner, Luke M. Hillier, personally agreed to pay $20 million in 2019 to settle civil charges that his company defrauded the same program by falsely claiming to be a small business, among other accusations. An ADS spokesperson told the Project On Government Oversight (POGO) that Hillier is “unavailable for comment” and emails to him went unanswered.

In the months before Hillier’s settlement, three non-ADS executives including a former state politician pleaded guilty in a felony scheme. According to the Justice Department, Hillier — referred to as “Person Y” in court records — allegedly created the scheme to allow ADS to benefit from contracts set aside by law for small businesses owned by socially and economically disadvantaged individuals, often women- and minority-owned ventures. Companies controlled by those non-ADS executives then allegedly would partner with ADS to perform work on the contracts. The arrangement allegedly allowed ADS to benefit even though ADS is mostly owned by Hillier and thus was not eligible to bid on the contracts directly.

Keep reading this article at: https://www.pogo.org/investigation/2021/02/how-a-small-business-kingpin-wins-billions-in-defense-contracts/

February 1, 2021 By cs

Bus brokerage exec admits to bribing Marine Corps official in exchange for $2 million in contracts

Darrel Fitzpatrick, who also went by the name Patrick Fields, pleaded guilty on January 21 to Conspiracy to Commit Bribery, in violation of Title 18, United States Code, Sections 371 and 201(b)(1). Sentencing is set for April 29, 2021.

Fitzpatrick faces up to five years imprisonment, followed by three years of supervised release, a $250,000 fine, and a mandatory special assessment of $100.

According to court papers, in 2019:

Fitzpatrick was a senior account manager at a bus brokerage company in Atlanta that provided transportation to the U.S. Marine Corps Reserves.
That same year, Fitzpatrick started a competing transportation brokerage company called National Charter Express.
Fitzpatrick agreed to pay kickbacks to Erik Martin, a civilian employee of the Marine Corps Reserves, in exchange for Martin directing contracts to the company where he worked and, subsequently, to National Charter Express.
The conspiracy resulted in at least $2,000,000 in transportation contracts being corruptly awarded to companies associated with Fitzpatrick.
In exchange for the contract awards, Fitzpatrick wired and attempted to wire Martin over $250,000 in bribes.

The Defense Criminal Investigative Service (DCIS), the Naval Criminal Investigative Service (NCIS), and the United States Secret Service investigated this case.

Source: https://www.justice.gov/usao-edla/pr/atlanta-man-admits-bribing-us-marine-corps-official-exchange-2000000-transportation

Also see “Federal Employee Pleads Guilty to Taking $250K in Bribes over Military Transport Contracts” at: https://www.military.com/daily-news/2021/01/06/guilty-plea-military-transportation-bribery-case.html

January 18, 2021 By cs

Former Army contractor executive sentenced for role in bribery and kickback schemes

An former executive of a government contractor has been sentenced for his role in a bribery and kickback scheme where he paid bribes to secure U.S. Army contracts.

John Winslett of Bristol, Rhode Island, was sentenced on Jan. 15th to 70 months in prison, followed by three years of supervised release.

According to court documents and information presented in court, Winslett admitted he paid over $100,000 worth of bribes, between 2011 and 2018, to two U.S. Army contracting officials who worked at the Range at Schofield Barracks in Hawaii.

The bribes included cash, automobiles, and firearms. In return, Army contracting officials used their positions by awarding $19 million in U.S. Army contracts to Winslett’s employer.

Winslett further admitted that he accepted $723,333 in kickbacks from a local subcontractor in exchange for Winslett assigning those contracts to that local subcontractor.

Army-CID, DCIS and the FBI investigated this case.

Source: https://www.justice.gov/opa/pr/former-government-contractor-sentenced-role-bribery-and-kickback-scheme

January 6, 2021 By cs

Former NGO procurement official pleads guilty to bribery in connection with USAID contracts

A former non-governmental organization (NGO) procurement official pleaded guilty in late December to paying bribes to NGO procurement officers in exchange for sensitive procurement information related to NGO contracts funded in part by the U.S. Agency for International Development (USAID).

The USAID contracts were for the procurement of food and supplies that would ultimately be provided to those affected by various humanitarian crises, including refugees displaced by the conflict in Syria.

Ernest Halilov, 42, a citizen of Turkmenistan, pleaded guilty on Dec. 23, 2020 to one charge of federal programs bribery. Sentencing is scheduled for March 26, 2021.

According to admissions as part of his plea agreement:

From January 2011 through December 2016, Halilov coordinated a bid-rigging scheme to bid on contracts procured by NGOs and funded by USAID, to support the agency’s response to various humanitarian crises.
Specifically, Halilov bribed two NGO officers in order to obtain confidential procurement information, such as bid evaluation information, specifications, and internal vendor rankings.
In turn, Halilov would provide this information to his preferred companies in exchange for kickbacks, ensuring that the companies had an advantage over other bidders, thus increasing their ability to win NGO-procured contracts.
Halilov also admitted that he instructed a witness to lie to law enforcement agents and destroy emails related to the investigation.

USAID-OIG investigated this case.

Source: https://www.justice.gov/opa/pr/former-ngo-procurement-official-pleads-guilty-bribery

November 30, 2020 By cs

Contractor admits to giving gifts to USDA officials to influence contract awards and obstructing federal grand jury investigation

The former vice president and CEO of Communications Resource, Inc. (CRI), has pled guilty in federal court in the District of Columbia to one count of conspiracy to violate the Procurement Integrity Act and one count of obstruction of justice.

According to court papers, Eric Schneider of Virginia admitted to giving gifts to multiple officials at the U.S. Department of Agriculture (USDA) to influence the award of contracts worth over $19.2 million to CRI and another company he controlled.

Schneider admitted to giving USDA officials Corvette wheels, concert tickets, PGA tour tickets, meals, alcohol, strip clubs, parking, concierge medical services, prescription drugs, and other cash tips.
Schneider further admitted that, as part of the conspiracy, he drafted or instructed employees to draft procurement documents in such a way as to favor the award of a multi-million dollar contract to CRI.
Schneider then provided the documents to a USDA official to whom he provided gifts, for use in the procurement process as if they had been prepared by the USDA.
Schneider also admitted to directing two of his company’s employees to destroy documents responsive to a federal grand jury subpoena.

Schneider pled guilty in U.S. District Court for the District of Columbia. A sentencing date has not yet been set. The maximum penalty for conspiracy is five years in prison and a fine of not more than $250,000 or twice the pecuniary gain or loss of the offense. The maximum penalty for obstruction of justice is ten years of imprisonment.

The Washington Field Office of the Federal Bureau of Investigation, and the Beltsville Field Office of the United States Department of Agriculture, Office of the Inspector General (OIG) investigated the case, along with assistance from the Department of Health and Human Services OIG, the Department of State OIG, and the Small Business Administration OIG.

Source: https://www.justice.gov/usao-dc/pr/usda-contractor-admits-giving-gifts-usda-officials-influence-award-contracts-and

On January 5, the Pentagon’s Defense Logistics Agency (DLA) awarded a contract worth up to $33 billion over 10 years to a privately held equipment supplier called Atlantic Diving Supply, Inc., or ADS.

Darrel Fitzpatrick, who also went by the name Patrick Fields, pleaded guilty on January 21 to Conspiracy to Commit Bribery, in violation of Title 18, United States Code, Sections 371 and 201(b)(1). Sentencing is set for April 29, 2021.

An former executive of a government contractor has been sentenced for his role in a bribery and kickback scheme where he paid bribes to secure U.S. Army contracts.

A former non-governmental organization (NGO) procurement official pleaded guilty in late December to paying bribes to NGO procurement officers in exchange for sensitive procurement information related to NGO contracts funded in part by the U.S. Agency for International Development (USAID).

The former vice president and CEO of Communications Resource, Inc. (CRI), has pled guilty in federal court in the District of Columbia to one count of conspiracy to violate the Procurement Integrity Act and one count of obstruction of justice.

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