corruption | The Contracting Education Academy

February 14, 2019 By AMK

Former COR sentenced to 5 years in prison for conspiracy and bribery

Jerry T. Vertefeuille of Niceville, Florida was sentenced on Feb. 12th to 60 months in prison. Co-defendant Christopher A. Carter of Fort Walton Beach, Florida is scheduled to be sentenced on February 15th.

Vertefeuille pleaded guilty to conspiracy (to commit theft of honest services and wire fraud), bribery of a public official, and obtaining and disclosing procurement information.

Vertefeuille was a federal Contracting Officer Representative (COR) for the 96 Test Wing Maintenance Group (96 MXG) at Eglin Air Force Base. His duties included overseeing maintenance work and initially approving purchases and invoices.

In 2007, Vertefeuille helped Carter, as the owner of TCC Services, Unlimited, LLC, win a paint booth maintenance contract, as well as multiple contract renewals. Vertefeuille received kickbacks in exchange for approving Carter’s fraudulent invoices and recommending the renewal of TCC’s contract.

U.S. Attorney Keefe said: “Public corruption is an attack on the rule of law, which is the mission of the Department of Justice and the cornerstone of American government. The U.S. Attorney’s Office, along with local, state, and federal law enforcement agencies, is committed to upholding the public’s faith in honest services and enforcing high ethical standards.”

“Corruption in the government procurement process damages the public trust and ultimately degrades the warfighting mission of the Department of Defense,” commented Special Agent in Charge John F. Khin with the southeast field office of the Defense Criminal Investigative Service (DCIS). “DCIS, along with our investigative partners, remains committed to pursuing and bringing to justice anyone who uses fraud and deception to undermine the critical missions of the Department of Defense and the safety of our communities.”

Source: https://www.justice.gov/usao-ndfl/pr/former-government-contracting-officer-representative-sentenced-60-months-prison

November 16, 2018 By AMK

Captain from Georgia is latest Navy officer caught in ‘Fat Leonard’ corruption

The 350-pound Leonard Glenn Francis — known in Navy circles as “Leonard the Legend” for his wild-side lifestyle — spent decades cultivating relationships with Navy officers, many of whom developed a blind spot to his fraudulent ways. In the past three years, 33 defendants have been charged and 22 have pleaded guilty, many admitting to accepting things of value from Francis — also known as “Fat Leonard” — in exchange for helping the contractor win and maintain contracts and overbill the Navy by millions of dollars.

On Tuesday, Nov. 13, 2018, another Navy captain pleaded guilty to criminal conflict of interest charges and a former Navy master chief was sentenced to 17 months in prison today on corruption charges. The defendants are among the latest U.S. Navy officials to plead guilty and be sentenced in the expansive corruption and fraud investigation involving foreign defense contractor “Fat Leonard” Francis and his Singapore-based ship husbanding company, Glenn Defense Marine Asia (GDMA).

Jeffrey Breslau of Cumming, Georgia pleaded guilty to one count of criminal conflict of interest before U.S. District Judge Janis Sammartino of the Southern District of California. Breslau was charged in September 2018. Retired Master Chief Ricarte Icmat David of Concepcion, Tarlac, Philippines, was sentenced by Judge Sammartino, who also ordered him to serve a year of supervised release and pay restitution of $30,000. David was charged in August 2018 and pleaded guilty in September to one count of conspiracy to commit honest services wire fraud.

According to admissions made as part of his guilty plea, from October 2009 until July 2012, Breslau was a captain in the U.S. Navy assigned as director of public affairs for the U.S. Pacific Fleet, headquartered in Pearl Harbor, Hawaii. As part of his duties, Breslau was involved in devising the Navy’s public affairs communications strategy, and provided public affairs guidance to Pacific Fleet components and other Navy commands. From August 2012 until July 2014, Breslau was assigned to the commanding officer for the Joint Public Affairs Support Element in Norfolk, Virginia, where he was responsible for leading joint crisis communications teams.

Breslau admitted that from March 2012 until September 2013, while serving in the Navy, he provided Francis with public relations consulting services, including providing advice on how to respond to issues and controversies related to Francis’s ship husbanding business with the Navy. These included issues related to port visit costs, allegations of malfeasance such as the unauthorized dumping of waste, disputes with competitors, and issues with Pacific Fleet and contracting personnel. During the course of his consulting agreement with Francis, Breslau authored, reviewed or edited at least 33 separate documents; authored at least 135 emails providing advice to Francis; provided at least 14 instances of “talking points” in advance of meetings between Francis and high ranking Navy personnel; and “ghostwrote” numerous emails on Francis’s behalf to be transmitted to Navy personnel. During the course of this consulting agreement, Francis paid Breslau approximately $65,000 without Breslau disclosing the agreement to the Navy, Breslau admitted.

As part of his guilty plea, David admitted that he was assigned various logistics positions with the Navy’s Seventh Fleet, including with the Fleet Industrial Supply Center in Yokosuka, Japan from June 2001 to July 2004; on the USS Essex from July 2004 to August 2007; on the USS Kitty Hawk from September 2007 to August 2008; and on the USS George Washington from September 2008 to July 2010. In these positions, David was responsible for ordering and verifying goods and services for the ships on which he served, including from contractors during port calls. Throughout this period, David received from Francis various things of value, including five star hotel rooms during every port visit, he admitted.

David further admitted that he repeatedly facilitated fraud by allowing Francis and GDMA to inflate the husbanding invoices to bill for services never rendered. For example, David instructed Francis to inflate invoices for the USS Essex’s anticipated November 2007 port visit to the Philippines. As David transitioned to a new position aboard the nuclear aircraft carrier USS Kitty Hawk, on or about May 8, 2008, Francis’s company paid approximately 84,637.00 Hong Kong Dollars (HKD) for hotel reservations at the Grand Hyatt Hong Kong for Navy personnel assigned to the USS Kitty Hawk including 10,396 HKD for David’s four-night stay in a Harbor View Room, David admitted.

Francis pleaded guilty in 2015 to bribery and fraud charges, admitting that he presided over a massive, decade-long conspiracy involving “scores” of U.S. Navy officials, tens of millions of dollars in fraud and millions of dollars in bribes and lavish gifts, including luxury travel, airline upgrades, five-star hotel accommodations, top-shelf alcohol, the services of prostitutes, Cuban cigars, Kobe beef and Spanish suckling pigs.

The case was investigated by DCIS, NCIS and the Defense Contract Audit Agency.

For earlier reports on this scandal, see: https://contractingacademy.gatech.edu/?s=fat

Source: https://www.justice.gov/opa/pr/former-us-navy-captain-pleads-guilty-and-former-master-chief-petty-officer-sentenced-sweeping

August 9, 2018 By AMK

How to spot 4 common types of public sector procurement fraud

Both public sector procurement and private sector procurement are excellent fields full of incredibly talented people, but every so often problems still come up.

Fraud isn’t something you want to experience in any field, and procurement is no different.

This is the first article in a series that will examine the most common types of public sector procurement fraud to help you keep up-to-date on red flags you should look out for.

In this article, we’ll cover all of the key points about 4 common types of public sector procurement fraud:

Eliminating or reducing competition
Biased supplier selection
“Corrupt” contract negotiation or management
Over- or false payment

Keep reading this article at: https://www.publicspendforum.net/blogs/peter-smith/2017/02/26/public-sector-procurement-fraud-the-four-common-types

June 15, 2018 By AMK

$20 million lawsuit settled alleging contractor falsely overcharged Navy for ship husbanding services

Inchcape Shipping Services Holdings Limited and certain of its subsidiaries (collectively, Inchcape) have agreed to pay $20,000,000 to resolve allegations that they violated the False Claims Act by knowingly overbilling the U.S. Navy under contracts for ship husbanding services, the Department of Justice has announced.

Inchcape is a marine services contractor headquartered in the United Kingdom.

Inchcape provided goods and services to Navy ships at ports in several regions throughout the world, including southwest Asia, Africa, Panama, North America, South America and Mexico. Inchcape provided ships with food and other subsistence items, waste removal, telephone services, ship-to-shore transportation, force protection services and local transportation. The lawsuit alleged that from 2005 to 2014, Inchcape knowingly overbilled the Navy for these services by submitting invoices that overstated the quantity of goods and services provided, billing at rates in excess of applicable contract rates, and double-billing for some goods and services.

“Federal contractors may only charge the government for costs allowed by their federal contracts,” said Acting Assistant Attorney General Chad A. Readler, head of the Justice Department’s Civil Division. “The Department of Justice will take action against contractors that knowingly submit inflated claims to the armed forces—or any other agency of the United States—as those inflated claims wrongfully divert taxpayer dollars.”

“We trust contractors supporting our warfighters to act with the utmost integrity and expect them to comply with their obligations to bill the government as called for by their contracts,” said U.S. Attorney for the District of Columbia Jessie K. Liu. “This settlement reflects our Office’s strong commitment to holding accountable those who violate these fundamental principles, no matter where they may be located.”

“This settlement demonstrates that the Department of the Navy will continue to hold contractors accountable for the agreements they make to supply our fleet,” said Secretary of the Navy Richard V. Spencer. “The Department expects strict adherence to higher standards within the Department and expects the same from its contractors.”

“Fraud is an abuse of the system that siphons resources away from the American warfighter,” said Jeremy Gauthier, Special Agent in Charge of the Naval Criminal Investigative Service’s Washington D.C. field office. “NCIS will continue to work with our law enforcement partners to hold responsible those who would put personal gain above corporate integrity.”

The lawsuit was brought under the qui tam, or whistleblower, provisions of the False Claims Act by three former employees of Inchcape, Noah Rudolph, Andrea Ford and Lawrence Cosgriff. Under the act, a private citizen may bring suit on behalf of the United States for false claims and share in any recovery. The government may intervene in the case, as it did here. The False Claims Act allows the government to recover treble damages and penalties from those who violate it. As part of today’s resolution, the whistleblowers will receive approximately $4.4 million.

The case was handled jointly by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office of the District of Columbia, with assistance from the Department of the Navy and the Naval Criminal Investigative Service.

The case is captioned United States ex rel. Rudolph v. Inchcape Shipping Services Holdings Limited, et al., No. 1:10-cv-01109 (D.D.C). The claims alleged in the case are allegations only, and there has been no determination of liability.

Source: https://www.justice.gov/usao-dc/pr/united-states-settles-lawsuit-alleging-contractor-falsely-overcharged-united-states-navy

March 14, 2018 By AMK

COR sentenced to prison for soliciting $320,000 in bribes from Afghan contractors

A former employee of the U.S. Army Corps of Engineers (USACE) based in Afghanistan was sentenced on Mar. 8, 2018 to 100 months in prison for soliciting approximately $320,000 in bribes from Afghan contractors in return for his assistance in U.S. government contracts.

Mark E. Miller, 49, of Springfield, Illinois was also ordered to serve three years of supervised release following his prison sentence and forfeit $180,000 and a Harley-Davidson motorcycle. Miller previously pleaded guilty to a one-count information charging him with seeking and receiving bribes.

Miller admitted worked for the USACE from 2005 until 2015, including in Afghanistan from 2009 to 2012, and maintained a residence in Springfield during that time. From February 2009 to October 2011, Miller was assigned to a military base, Camp Clark, in eastern Afghanistan. He was the site manager and a contracting officer representative (COR) for a number of construction projects in Afghanistan.

On Dec. 10, 2009, the USACE awarded a contract worth approximately $2.9 million to an Afghan construction company for the construction of a road from eastern Afghanistan to the Pakistani border. This contract later increased in value to approximately $8,142,300. Miller oversaw the work of the Afghan company on this road project, including verifying that the company performed the work called for by the contract and, if so, authorizing progress payments to the company by the USACE.

As part of his guilty plea, Miller admitted that, in the course of overseeing the contract with the Afghan company, he solicited from the owners of the company approximately $280,000 in bribes in return for making things easier for the company on the road project, including making sure the contract moved along and was not terminated. He further admitted that, after the contract was no longer active, he solicited an additional $40,000 in bribes in return for the possibility of future contract work and other benefits.

This matter was investigated by the Federal Bureau of Investigation, the Defense Criminal Investigative Service, the Special Inspector General for Afghanistan Reconstruction, and the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit, with assistance from the U.S. Postal Inspection Service, Fort Worth Division. The Dept. of Justice Criminal Division’s Fraud Section and the U.S. Attorney’s office of the Central District of Illinois prosecuted this case.

Source: https://www.justice.gov/opa/pr/former-employee-us-army-corps-engineers-afghanistan-sentenced-prison-soliciting-approximately

Jerry T. Vertefeuille of Niceville, Florida was sentenced on Feb. 12th to 60 months in prison. Co-defendant Christopher A. Carter of Fort Walton Beach, Florida is scheduled to be sentenced on February 15th.

Both public sector procurement and private sector procurement are excellent fields full of incredibly talented people, but every so often problems still come up.

A former employee of the U.S. Army Corps of Engineers (USACE) based in Afghanistan was sentenced on Mar. 8, 2018 to 100 months in prison for soliciting approximately $320,000 in bribes from Afghan contractors in return for his assistance in U.S. government contracts.

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