DCIS | The Contracting Education Academy

February 14, 2019 By cs

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

December 31, 2018 By cs

Manufacturer agrees to pay $400,000 to settle False Claims Act violations

The United States Attorney’s Office for the Middle District of Pennsylvania has announced that Arvco Container Corporation of Kalamazoo, MI has agreed to pay $400,000 to settle False Claims Act allegations in connection with a contract with the Defense Logistics Agency (DLA) in New Cumberland, PA.

Arvco Container Corporation (Arvco) violated subcontract limitations imposed by federal regulations and the terms of a contract to provide corrugated boxes to the federal government from August 3, 2010 through August 3, 2014. The contract was awarded by the DLA to Fibre Technologies LLC (Fibre) located in Reading, PA.

The contract was set-aside for eligible HUBZone small businesses in accordance with program requirements administered by the U.S. Small Business Administration (SBA).

Federal regulations and the terms of the contract limited Fibre’s ability to subcontract the manufacturing of the boxes to no more than 50 percent. Arvco performed 100 percent of the manufacturing requirement.

Arvco’s gross profits for the performance of the contract total $246,682 which will be returned to DLA. Arvco also agreed to pay a civil penalty amount of $153,318.

Limitations on subcontracting provisions in federal contracts are designed to ensure that otherwise ineligible businesses do not use small or disadvantaged businesses merely as vehicles to access set-aside contracts.

This case was investigated by the U.S. Attorney’s Office for the Middle District of Pennsylvania, the SBA’s Office of Inspector General, and the Defense Criminal Investigative Service.

Readers are reminded that the claims resolved by the settlement are allegations only, and there has been no determination of liability.

Source: https://www.justice.gov/usao-mdpa/pr/michigan-corrugated-manufacturer-agrees-pay-400000-settle-false-claims-act-violations

November 16, 2018 By cs

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

November 12, 2018 By cs

Northrop Grumman pays $27.5 million under False Claims Act

Nothrop Grumman Corp. on has agreed to forfeit $27.5 million under the False Claims Act while acknowledging that some employees inflated their work hours on bills for two battlefield communications contracts with the Air Force.

“Contractors that knowingly inflate their bills to the government will face serious consequences,” said Assistant Attorney General Joseph Hunt of the Justice Department’s Civil Division, in an announcement. “This settlement demonstrates, once again, that we will not tolerate those who falsely charge the armed forces or any agency of the United States to illegally profit at the expense of the American taxpayer.”

The Falls Church, Va.-based Northrop Grumman Systems Corp. agreed to settle over charges on the Air Force’s Battlefield Airborne Communications Node contract and the Dynamic Re-tasking Capability contract awarded during July 1, 2010, and Dec. 31, 2013. That action resolves allegations that the firm “billed the Air Force for labor hours purportedly incurred by individuals stationed in the Middle East who had not actually worked the hours claimed,” Justice said.

Keep reading this article at: https://www.govexec.com/contracting/2018/11/northrop-grumman-pays-2745-million-under-false-claims-act/152572

See Dept. of Justice announcement here: https://www.justice.gov/usao-sdca/pr/northrop-grumman-subsidiary-agrees-pay-3165-million-overbilling-us-air-force-civil-and

August 3, 2018 By cs

3M to pay $9.1 million, resolving allegations it sold DLA defective hearing protection devices

The Department of Justice has announced that the 3M Company (3M), headquartered in St. Paul, Minnesota, has agreed to pay $9.1 million to resolve allegations that it knowingly sold the dual-ended Combat Arms Earplugs, Version 2 (CAEv2) to the United States military without disclosing defects that hampered the effectiveness of the hearing protection device.

“The Department of Justice is committed to protecting the men and women serving in the United States military from defective products and fraudulent conduct,” said Acting Assistant Attorney General Chad A. Readler of the Department’s Civil Division. “Government contractors who seek to profit at the expense of our military will face appropriate consequences.”

“Through rigorous enforcement of the False Claims Act, we protect taxpayer dollars from waste, fraud, and abuse,” said U. S. Attorney Sherri Lydon for the District of South Carolina. “And in this case in particular, we are proud to defend the integrity of our military programs and ensure that our men and women in uniform are adequately protected as they serve our country.”

“Today’s settlement will ensure that those who do business with the government know that their actions will not go unnoticed,” said Frank Robey, director of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit. “Properly made safety equipment, for use by our Soldiers, is vital to our military’s readiness. Our agents will respond robustly to protect the safety of our military.”

“This settlement demonstrates the commitment of the Defense Criminal Investigative Service and our law enforcement partners to hold companies accountable for supplying substandard products, in particular products that could directly impact our service members’ health and welfare. DCIS protects the integrity of Defense Department programs by rooting out fraud, waste, and abuse that negatively affect the wellbeing of our troops,” said Special Agent in Charge Robert E. Craig, Jr., DCIS Mid-Atlantic Field Office.

The settlement announced today resolves allegations that 3M violated the False Claims Act by selling or causing to be sold defective earplugs to the Defense Logistics Agency. Specifically, the United States alleged that 3M, and its predecessor, Aearo Technologies, Inc., knew the CAEv2 was too short for proper insertion into users’ ears and that the earplugs could loosen imperceptibly and therefore did not perform well for certain individuals. The United States further alleged that 3M did not disclose this design defect to the military.

The allegations resolved by the settlement were brought in a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act. The act permits private parties to sue on behalf of the government when they believe that defendants submitted false claims for government funds and to share in any recovery. As part of today’s resolution, the whistleblower will receive $1,911,000.

The settlement was the result of a coordinated effort by the Civil Division of the Department of Justice, the United States Attorney’s Office for the District of South Carolina, the Army Criminal Investigation Command, and the Defense Criminal Investigative Service.

The case is captioned United States ex rel. Moldex-Metric v. 3M Company, Case No. 3:16-cv-1533-MBS (D.S.C.). The claims resolved by the settlement are allegations only, and there has been no determination of liability.

Source: https://www.justice.gov/opa/pr/3m-company-agrees-pay-91-million-resolve-allegations-it-supplied-united-states-defective-dual

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.

Nothrop Grumman Corp. on has agreed to forfeit $27.5 million under the False Claims Act while acknowledging that some employees inflated their work hours on bills for two battlefield communications contracts with the Air Force.

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