corruption | The Contracting Education Academy

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

February 26, 2018 By AMK

Bribes and kickbacks at Joint Base Charleston lead to sentencing

U.S. Attorney Beth Drake announced on Feb. 23, 2018 that Barbara Powell was sentenced in federal court in Charleston, South Carolina, for bribery of a public employee, in violation of 18 U.S.C. § 201.

Powell has been sentenced to 6 months imprisonment, 3 years supervised release, and a $12,500 fine.

The investigation in this case proved the existence of public corruption in construction contracts at the Joint Base in Charleston (JBC). JBC was formed in 2010 when the Naval Weapons Station and the Charleston Air Force base merged. As a large and aging military base, JBC hires private companies on a regular basis to renovate and/or build facilities.

Barbara Powell was a Contracting Officer (CO) at JBC, and her duties included awarding and administering construction contracts to private companies on behalf of the federal government. From 2011 until 2015, Powell solicited and received dozens of bribes from subcontractors at JBC. The value of the bribes exceeded $15,000. In return for these bribes, Powell steered projects to some subcontractors to the detriment of other subcontractors, and she forwarded the bid proposals of some subcontractors to other subcontractors that paid her bribes. Federal COs are prohibited by law from providing confidential pricing information to anyone outside the government.

The case was investigated by the Defense Criminal Investigative Service, the Federal Bureau of Investigation, and the Air Force Office of Special Investigations.

Source: https://www.justice.gov/usao-sc/pr/goose-creek-woman-sentenced-receiving-kickbacks

November 28, 2017 By AMK

Former procurement officer indicted on wire fraud and money laundering charges

A federal grand jury sitting in the District of New Mexico returned an 11-count indictment against a former procurement officer employed at Sandia National Laboratories (SNL), a nuclear research and development facility of the U.S. Department of Energy (DOE), for orchestrating a scheme to obtain a $2.3 million contract through fraudulent means.

Carla Sena, 55, of Albuquerque, New Mexico was charged with three counts of wire fraud, one count of major fraud against the United States and seven counts of money laundering.

According to the indictment, SNL was managed and operated by Sandia Corporation (Sandia) during the relevant time period. In late 2010, Sena was assigned by Sandia to manage the bidding process for the award of a contract for moving services at SNL. In anticipation thereof, Sena created New Mexico Express Movers LLC (Movers LLC), prepared a bid on Movers LLC’s behalf, and submitted the bid to Sandia under someone else’s name to conceal her involvement. Sena made several material and fraudulent misrepresentations in Movers LLC’s bid that would have resulted in disqualification, but she used her position at SNL to ensure that these misrepresentations went undetected. Sena also used her position to access other bidders’ documents and information that she in turn leveraged to ensure award of the contract to Movers LLC. As a direct result of Sena’s scheme to defraud, Movers LLC received approximately $2.3 million in DOE funds. The indictment further alleges that, between December 2011 and April 2015, Sena transferred via negotiated checks at least $643,000 of these fraudulently obtained proceeds to legitimate businesses owned by her father with the intent to conceal her subsequent use of the proceeds for personal gain.

The indictment is the result of an ongoing investigation by the DOE Office of Inspector General and is being prosecuted by the Criminal Division’s Public Integrity Section.

The fact that a defendant has been charged with a crime is merely an accusation, and the defendant is presumed innocent unless proven guilty.

Source: https://www.justice.gov/opa/pr/former-procurement-officer-federally-funded-nuclear-research-and-development-facility

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.

U.S. Attorney Beth Drake announced on Feb. 23, 2018 that Barbara Powell was sentenced in federal court in Charleston, South Carolina, for bribery of a public employee, in violation of 18 U.S.C. § 201.

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