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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 26, 2016 By AMK

Florida woman charged in 18-count indictment for conspiracy to illegally export systems, components and documents to China

An 18-count superseding indictment was unsealed last Thursday (Apr. 21, 2016) charging Amin Yu, 53, of Orlando, Florida, with acting as an illegal agent of a foreign government in the United States without prior notification to the Attorney General, conspiring to defraud the United States and to commit offenses against the United States, committing unlawful export information activities, smuggling goods from the United States, conspiring to and committing international money laundering and making false statements to the U.S. Citizenship and Immigration Services.

Justice Dept. sealThe indictment was announced by Assistant Attorney General for National Security John P. Carlin and U.S. Attorney A. Lee Bentley III of the Middle District of Florida.

According to the superseding indictment, from at least 2002 until approximately February 2014, Yu obtained systems and components for marine submersible vehicles from companies in the United States.  She did so at the direction of co-conspirators working for Harbin Engineering University (HEU), which is a state-owned entity in the People’s Republic of China.  Yu proceeded to illegally export the systems and components to China for use by her co-conspirators in the development of marine submersible vehicles – unmanned underwater vehicles, remotely operated vehicles and autonomous underwater vehicles – for HEU and other state-controlled entities.  It is alleged that Yu illegally exported items by failing to file electronic export information as required by U.S. law and also by filing false electronic export information.  In particular, Yu completed and caused the completion of export-related documents in which she significantly undervalued the items that she had exported and also provided false end-user information for those items.

An indictment is merely an allegation and every defendant is presumed innocent unless, and until, proven guilty.

If convicted, Yu faces a maximum penalty of 20 years in federal prison on each of the money laundering counts.  She faces a maximum sentence of 10 years in prison for acting as an illegal agent of a foreign government and faces a maximum sentence of five years in prison on all other counts.  The indictment also notifies Yu that the United States intends to forfeit approximately $2,668,648.92, the alleged traceable proceeds of the offenses.

This case was investigated by the FBI, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the Internal Revenue Service-Criminal Investigation and the Naval Criminal Investigative Service.  The case is being prosecuted by Assistant U.S. Attorney Daniel C. Irick of the Middle District of Florida and Trial Attorneys David C. Recker and Thea D. R. Kendler of the National Security Division’s Counterintelligence and Export Control Section.

Source: https://www.justice.gov/opa/pr/florida-woman-charged-18-count-indictment-conspiracy-illegally-export-systems-components-and

Filed Under: Government Contracting News Tagged With: China, conspiracy, DoD, DOJ, export, false statements, fraud, indictment, Justice Dept., money laundering, national security, smuggling

February 20, 2014 By AMK

China makes another bid to join WTO procurement agreement

China offered a revised bid to enter the World Trade Organization’s Government Procurement Agreement, which guarantees members mutual private-sector access to government procurements worth more than a low threshold.

This comes in as China’s fifth bid since 2007.

In December, 2013, at the annual session of the U.S.-China Joint Commission on Commerce and Trade, China agreed to submit a revised offer in 2014 that would be in line with those of other GPA members, a December 2013 Office of U.S. Trade Representative fact sheet says.

The WTO GPA allows private sector access to government procurements worth more than $202,000 between countries who have joined the agreement. Certain services are barred from WTO GPA coverage, including services in support of the overseas military, dredging, federally funded research centers and ship repairs; the WTO also allows procurements to be excluded from agreement coverage on national security grounds.

Keep reading this article at: http://www.fiercegovernment.com/story/china-makes-another-bid-join-wto-procurement-agreement/2014-02-13 

Filed Under: Government Contracting News Tagged With: Buy American Act, export, import, Trade Agreements Act, WTO

January 13, 2012 By AMK

SBA, to be elevated to Cabinet level, is among agencies Obama wants consolidated

On Friday (Jan. 13, 2012) President Obama announced he will ask Congress for the power to merge six federal trade and commerce agencies, the Wall Street Journal reported.

The WSJ report said Obama will ask Congress for “reorganizational” power. The last president to have this power was Ronald Reagan.

The new power would allow the president to propose mergers in order to save money and make the government work more efficiently, according to the report.

The plan would allow Obama to propose mergers that would be “guaranteed an up-or-down vote from Congress within 90 days,” the report said.

The six agencies Obama wants to consolidate include the Commerce Department‘s core business and trade functions, the Small Business Administration, the Office of the U.S. Trade Representative, the Export-Import Bank, the Overseas Private Investment Corporation and the Trade and Development Agency.

The report cited a White House official who said the merger would save taxpayers around $3 billion over the next decade by eliminating duplicate overhead costs.

In addition, between 1,000 and 2,000 jobs would be eliminated through attrition, according to the WSJ.

Filed Under: Government Contracting News Tagged With: budget cuts, Commerce Dept., consolidation, export, import, reorganization, SBA, Trade Agreements Act

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