Kickback | The Contracting Education Academy

November 16, 2018 By cs

CDC senior contracting officer sentenced for failing to disclose payments from contractor

As a result of his Nov. 8, 2017 indictment, Carlos Smiley was sentenced to federal prison on Nov. 15, 2018 for making false statements in his annual conflict of interest certification.

Smiley was a long-time federal employee, having served in positions at NASA’s Marshall Space Flight Center in Huntsville, Alabama and at DoD’s Army Aviation Systems Command in St Louis, Missouri. At the time of his indictment, he was a senior contracting branch chief at the Centers for Disease Control and Prevention (CDC) in Atlanta, and the president of the Atlanta chapter of the National Contract Management Association.

According to U.S. Attorney Byung J. “BJay” Pak, the charges and other information presented in court are:

On February 16, 2012 and January 7, 2013, Smiley completed Confidential Financial Disclosure Reports required by his position as a CDC Contracting Officer. Both times, Smiley answered “no” to the question asking whether he had received outside income.
Between September 2011 and January 2012, Smiley received several payments from A-TEK, a Virginia-based holding company that was seeking to do business with the CDC during that time.
CDC previously granted Smiley’s request to operate a company called Charisma III, Inc. as an outside business activity. After that, Smiley ostensibly received payments through Charisma III for real estate investment advice.
In 2012, A-TEK was awarded a single-source contract for the staffing of CDC field stations overseas. Smiley signed the contract as the approving contracting officer for CDC. A-TEK turned down the contract after learning of the relationship between Smiley and a representative of its holding company, who was also an A-TEK employee until fired for his conduct. Smiley failed to disclose six payments for a total of $30,600.
In 2015, CDC investigators confronted Smiley about the payments. He admitted to receiving them and to having invented the Charisma III officer whose fictitious name appeared on the purported agreement between Charisma III and the holding company for real estate investment advice.

Carlos Smiley of Roswell, Georgia was sentenced to three months in federal prison by U.S. District Judge Thomas W. Thrash, Jr. on November 15, 2018.

Smiley was also sentenced to one year of supervised release and 200 hours community service following his release from prison. He was also fined $5,000.

Smiley was convicted of the charge on July 19, 2018, after pleading guilty to making false statements.

The case was investigated by the Department of Health and Human Services, Office of the Inspector General.

Source: https://www.justice.gov/usao-ndga/pr/cdc-senior-contracting-officer-sentenced-failing-disclose-payments-contractor

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

February 26, 2018 By cs

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 8, 2017 By cs

‘Fat Leonard’ probe expands to ensnare more than 60 admirals

The “Fat Leonard” corruption investigation has expanded to include more than 60 admirals and hundreds of other U.S. Navy officers under scrutiny for their contacts with a defense contractor in Asia who systematically bribed sailors with sex, liquor and other temptations, according to the Navy.

Most of the admirals are suspected of attending extravagant feasts at Asia’s best restaurants paid for by Leonard Glenn Francis, a Singapore-based maritime tycoon who made an illicit fortune supplying Navy vessels in ports from Vladivostok, Russia to Brisbane, Australia. Francis also was renowned for hosting alcohol-soaked, after-dinner parties, which often featured imported prostitutes and sometimes lasted for days, according to federal court records.

The 350-pound Francis, also known in Navy circles as “Leonard the Legend” for his wild-side lifestyle, spent decades cultivating relationships with officers, many of whom developed a blind spot to his fraudulent ways. Even while he and his firm were being targeted by Navy criminal investigators, he received VIP invitations to ceremonies in Annapolis and Pearl Harbor, where he hobnobbed with four-star admirals, according to photographs obtained by The Washington Post.

Keep reading this article at: https://www.washingtonpost.com/investigations/fat-leonard-scandal-expands-to-ensnare-more-than-60-admirals/2017/11/05/f6a12678-be5d-11e7-97d9-bdab5a0ab381_story.html

August 23, 2017 By cs

Active-duty Navy commander pleads guilty to conspiring with foreign defense contractor to defraud Navy

The latest development in the years-long “Fat Leonard” Navy contract corruption scandal is a guilty plea by an active-duty U.S. Navy commander in connection with his efforts to obstruct a federal criminal investigation of the owner and chief executive officer of a multi-national defense contracting firm headquartered in Singapore.

The plea was entered last week by Bobby Pitts who served as the officer in charge of the Navy’s Fleet Industrial Supply Command (FISC) in Singapore.

This development is the most recent in a string of guilty pleas, indictments and convictions – spanning more than three years – related to alleged fraudulent activities of Glenn Defense Marine Asia (GDMA) and its chief executive, Leonard Glenn “Fat Leonard” Francis. So far, 27 individuals have been charged in connection with the corruption and fraud investigation into GDMA. Of those charged, at least 20 are current or former Navy officials and five are GDMA executives. Several additional cases are pending. Francis’ reputation for corruption and bribery in recent years has led him to be nicknamed “Fat Leonard.” (For background, see The Washington Post article, “The Man Who Seduced the 7th Fleet,” here.)

Bobby Pitts, 48, of Chesapeake, Virginia, pleaded guilty to one count of conspiracy to defraud the U.S. in connection with the NCIS’s investigation of Francis. Pitts is set to be sentenced on December 1, by U.S. Magistrate Judge Bernard Skomal of the Southern District of California, who accepted his plea on August 15, 2017.

According to admissions made as part of his plea agreement, Pitts, as part of his duties in Singapore during the period August 2009 to May 2011, learned that the Naval Criminal Investigative Service (NCIS) and several civilian employees of the Navy were investigating whether Francis was over-billing the Navy on ship husbanding contracts. Pitts had access to internal Navy documents pertaining to investigative steps that the Navy was considering and admitted that he shared this information with Francis, with the intent to impede and obstruct the Navy’s oversight of its contracts with GDMA. On Nov. 23, 2010, for example, Pitts forwarded to a representative of GDMA an internal Navy email discussing FISC’s intention to contact officials with the Royal Thai Navy to determine whether GDMA had been billing the U.S. Navy for services in fact rendered by the Thai government.

In pleading guilty, Pitts admitted, among other things, to working with Francis and other foreign-defense-contractor personnel to help them cover up GDMA’s overcharging practices with respect to providing protection to U.S. Navy forces deployed in the Western Pacific.

So far, 18 of 27 defendants charged in the U.S. Navy bribery and fraud scandal have pleaded guilty. All defendants are presumed innocent unless and until convicted beyond a reasonable doubt in a court of law.

The case is being prosecuted by the Fraud Section of the Justice Department’s Criminal Division and Assistant U.S. Attorneys from the Southern District of California.

Source: https://www.justice.gov/opa/pr/active-duty-us-navy-commander-pleads-guilty-conspiring-foreign-defense-contractor-defraud-us

For more information on this prosecution, see: http://contractingacademy.gatech.edu/?s=fat

As a result of his Nov. 8, 2017 indictment, Carlos Smiley was sentenced to federal prison on Nov. 15, 2018 for making false statements in his annual conflict of interest certification.

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.

The “Fat Leonard” corruption investigation has expanded to include more than 60 admirals and hundreds of other U.S. Navy officers under scrutiny for their contacts with a defense contractor in Asia who systematically bribed sailors with sex, liquor and other temptations, according to the Navy.

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