Fraud | The Contracting Education Academy

October 15, 2018 By cs

Two intelligence officials and a business owner indicted for bid rigging

Three individuals have been indicted by a federal grand jury on a variety of charges relating to procurement fraud and unlawfully disclosing and obtaining bid information concerning a contract estimated to be worth almost $1.5 million.

Kevin Kuciapinski was an active duty U.S. Air Force Major working at the National Reconnaissance Office (NRO). Randolph Stimac was an employee of the National Security Agency (NSA). Both were stationed at the Aerospace Data Facility-Colorado on Buckley Air Force Base. The third defendant, Mykhael Kuciapinski was the owner and CEO of Company G, a company that attempted to do business with the U.S. Government. She was also the wife of Kevin Kuciapinski through July 2015.

According to the indictment released by the Justice Department, beginning on August 1, 2013, and continuing through November 24, 2015, the defendants conspired with each other to unlawfully obtain and disclose source selection information prior to the award for services related to a contract for services related to NSA, a category of intelligence that involves the collection, processing, and dissemination of foreign communications in order to obtain foreign intelligence necessary to the national defense, national security, or the conduct of the foreign affairs of the United States. The alleged plan and purpose of the conspiracy was for Kevin Kuciapinski and Randolph Stimac to provide a competitive advantage to defendant Mykhael Kuciapinski’s bid or proposal by providing her information and source selection information for the contract in question.

This case was investigated by the NRO Office of the Inspector General, NSA, Defense Criminal Investigative Services, Air Force Office of Special Investigations, and the IRS-Criminal Investigation.

The charges contained in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.

Source: https://www.justice.gov/usao-co/pr/two-intelligence-officials-and-business-owner-indicted-bid-rigging

September 21, 2018 By cs

VA official charged with taking bribes to help associates rig federal contracting process

Three men were arrested in Colorado on Wednesday of this week pursuant to warrants issued in connection with an indictment charging them with conspiring to pay and receive bribes in exchange for creating an opportunity to commit a fraud against the U.S. Department of Veterans Affairs (VA).

The defendants are also charged with paying and receiving bribes, or aiding and abetting the payment of bribes.

Dwane Nevins, a VA contracting official at the time of the alleged crimes, was separately charged in another count with extortion under color of official right and in two counts with violating the federal conflict of interest statute.

The following is alleged in the indictment:

Dwane Nevins — a small business specialist at the VA’s Network Contracting Office in Colorado — agreed to take bribes offered by Robert Revis, Anthony Bueno and an undercover FBI agent to help them manipulate the process for bidding on federal contracts with the VA.
Revis and Bueno, working with Nevins, agreed to submit fraudulent bids from service-disabled-veteran-owned small businesses under contract with their consulting company so that federal contracts would be set aside for only those companies. As Bueno allegedly explained, they would then “own all the dogs on the track.”
Nevins, Bueno and Revis worked to conceal the nature of the bribe payments by either kicking back to Nevins a portion of the payments made to their consulting company, or by asking their consulting company’s clients to pay Nevins for sham training classes related to federal contracting.

The indictment also alleges that, after complaining about not being paid by Revis and Bueno for his participation in the scheme, Nevins used his official position at the VA to extort approximately $10,000 from an undercover FBI agent, telling the agent that “the train don’t go without me. You know what I mean? I’m the engine. I’m the caboose. I’m the engine room.” Nevins also allegedly told the undercover FBI agent: “This is a business and businessmen need to get paid . . . . so I can have my Christmas, you know what I’m saying?”

The indictment alleges that the conspirators attempted to rig the process related to two particular contracts, both of which related to medical equipment and not to the construction of any VA facilities. The first contract related to the procurement of LC bead particle embolization products by a VA hospital in Salt Lake City, and the second contract related to the procurement of durable medical equipment for VA facilities located throughout the region.

The case was jointly investigated by the Federal Bureau of Investigation, the U.S. Department of Veterans Affairs Office of Inspector General, and the U.S. Small Business Administration Office of Inspector General.

Readers are reminded that the defendants are presumed innocent unless and until proven guilty in a court of law.

September 17, 2018 By cs

Men indicted for providing falsely-labeled body armor

Two Florida executives made their initial appearance in federal court on Sept. 7, 2018 on charges related to falsely-labeled hard body armor plates they provided to the United States government.

According to allegations in the indictment, Dan Thomas Lounsbury, Jr., of South Palm Beach, is the founder, sole owner, and CEO of Tactical Products Group, LLC (TPG), a Florida-based manufacturer and re-seller of various products to military, law enforcement, and private security clients. Andres Lopez-Munoz, 34, of Boynton Beach, is TPG’s Vice President for Sales and Federal Contracting.

In 2012, TPG was selected as a sub-contractor on a contract to provide certain goods, including ten sets of hard body armor plates, to the United States government.

The government had requested a specific type of plate, and Lounsbury and Lopez-Munoz both knew that no substitutions were allowed.
Furthermore, Lounsbury and Lopez-Munoz both knew that these plates would be used to protect government personnel. The consequence of a failure of body armor is death or serious bodily injury.
Nevertheless, Lounsbury and Lopez-Munoz worked together to procure cheaper substitute plates, and then to put fraudulent labels on these substitute plates falsely stating that they were the type of plates that the government had required.
Some of these cheaper substitute plates were far outside their warranty period, were not as protective as the false labels claimed, and had the potential to “delaminate,” meaning that the adhesive binding the layers of the body armor plate could fail, under certain conditions.

Lounsbury and Lopez-Munoz are both charged with conspiracy to defraud the government with respect to claims and wire fraud. Lounsbury is additionally charged with false, fictitious, or fraudulent claims. If convicted, they face a maximum penalty of 20 years in prison. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.

Readers are reminded that an indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.

Source: https://www.justice.gov/usao-edva/pr/men-indicted-providing-falsely-labeled-body-armor

September 12, 2018 By cs

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

August 15, 2018 By cs

Millions flow to Pentagon’s banned contractors via a back door

Some of the world’s largest companies have benefited from a little-known law that lets the Defense Department override decisions barring contractors accused or convicted of bribery, fraud, theft, and other crimes from doing business with the government.

International Business Machines Corp., Boeing Co., BP Plc, and several other contractors have received special dispensation to fulfill multimillion-dollar government contracts through “compelling reason determinations.” That process allows the Defense Department in rare cases to determine that the need to fulfill certain contracts justifies doing business with companies that have been suspended from government work.

The 22 determinations were released by the General Services Administration at the request of Bloomberg Government, allowing for the first collective examination of the cases and the system that allowed them.

The determinations, also referred to as waivers or overrides, included contracts to provide food services for Defense Department personnel at an Army base in Afghanistan, “vital” web-hosting services for an agency that serves the Pentagon and the U.S. intelligence community, and aviation fuel sold to the Defense Logistics Agency.

Keep reading this article at: https://about.bgov.com/blog/millions-flow-pentagons-banned-contractors-via-back-door/

See further analysis at: https://www.forbes.com/sites/charlestiefer/2018/08/05/study-of-waivers-of-federal-contractor-debarments-leads-to-review-of-major-criminal-charges/#654bac3c6ac3

Three individuals have been indicted by a federal grand jury on a variety of charges relating to procurement fraud and unlawfully disclosing and obtaining bid information concerning a contract estimated to be worth almost $1.5 million.

Three men were arrested in Colorado on Wednesday of this week pursuant to warrants issued in connection with an indictment charging them with conspiring to pay and receive bribes in exchange for creating an opportunity to commit a fraud against the U.S. Department of Veterans Affairs (VA).

Two Florida executives made their initial appearance in federal court on Sept. 7, 2018 on charges related to falsely-labeled hard body armor plates they provided to the United States government.

Some of the world’s largest companies have benefited from a little-known law that lets the Defense Department override decisions barring contractors accused or convicted of bribery, fraud, theft, and other crimes from doing business with the government.

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