tax evasion | The Contracting Education Academy

February 26, 2016 By AMK

Effective today, COs prohibited from making awards to companies with felonies or delinquent taxes

The Federal Acquisition Regulation has been updated to “prohibit the Federal Government from entering into a contract with any corporation having a delinquent Federal tax liability or a felony conviction under any Federal law, unless the agency has considered suspension or debarment of the corporation and has made a determination that this further action is not necessary to protect the interests of the Government.”

This rule takes effect February 26, 2016.

Contractors responding to federal solicitations are now required to state in their offers to the government whether they are a corporation with: 1) a delinquent federal tax liability or 2) a felony conviction under federal law. When an offeror provides “an affirmative response” in connection with either of these representations, the contracting officer (CO) is required to request additional information from the offeror and to notify the “agency official responsible for initiating debarment or suspension action.”

The new rule further provides that the contracting officer “shall not make an award to the corporation unless an agency suspending or debarring official has considered suspension or debarment of the corporation and determined that this further action is not necessary to protect the interests of the Government.”

The implementing clause can be found at FAR 52.209-5 – Certification Regarding Responsibility Matters.

January 11, 2016 By AMK

Former contracting official gets 30 months in prison for Iraq contract bribes

A former U.S. Department of Defense (DoD) contracting official was sentenced on Friday (January 8, 2016) to 30 months in prison for his role in a bribery scheme involving U.S. government contracts in Iraq.

James Edward Addas, 55, of Stafford, Virginia, previously pleaded guilty to charges of bribery and tax evasion. Senior U.S. District Judge Claude M. Hilton of the Eastern District of Virginia handed down Addas’ sentence today.

According to admissions made in the plea agreement, in August 2004, Addas was a contracting official at the Iraq/Afghanistan Joint Contracting Command in the U.S. Embassy in Baghdad when the owner and CEO of a contracting company based in Jordan offered to pay him a total of $1 million in return for assistance in obtaining U.S. government contracts for major electrical construction projects and related services in Iraq.

The contractor made an initial cash payment of $50,000 in a paper sack, which was handed to Addas inside the “Green Zone” of the U.S. Embassy compound. With Addas’ assistance, the contractor’s companies subsequently received at least 15 contracts, with a total value of more than $28 million awarded to the companies. In addition to the initial payment, the contractor later sent funds to Addas via wire transfers that totaled more than $455,000 and paid for other items valued at more than $70,000. Addas did not declare any of this income on his filed federal tax returns.

Source: http://www.justice.gov/opa/pr/former-contracting-official-sentenced-30-months-bribery-relation-us-government-contracts-iraq

August 7, 2015 By AMK

Federal contractor indicted for kickbacks and tax evasion

An Enterprise, Alabama, resident was arrested this week after a federal grand jury indicted him on one count of accepting unlawful kickbacks from 2009 through 2014, and five counts of tax evasion for tax years 2009 through 2013.

According to the allegations in the indictment, Victor Villalobos worked for a federal contractor in Fort Rucker, Alabama, identified in the indictment as Company A, that furnished supplies, materials equipment and services to the government. In 2009, Villalobos approached an individual identified in the indictment as Person X, who owned and operated Company B, a subcontractor of Company A based in Fort Lauderdale. Villalobos solicited illegal kickbacks as payment on the federal subcontracts that Person X held in connection with Company A’s prime contract.

Villalobos agreed that in exchange for kickback payments he would refrain from conduct that would unfavorably affect Person X’s business relationship with Company A and would also help ensure that Person X obtained additional subcontracting business. On Jan. 26, 2015, Villalobos met with Person X and accepted an envelope containing $5,000 in cash. They met again approximately two weeks later and Villalobos accepted a bag containing $55,000 in cash as kickback payments. From June 2009 to December 2014, Villalobos received approximately 57 separate wire funds transfers totaling more than $1.9 million in kickback payments from various foreign and domestic bank accounts controlled by Person X.

Villalobos concealed these kickbacks by incorporating nominee entities, opening nominee bank accounts and failing to report the illegal kickback payments as income on his individual federal income tax returns for 2009 through 2013.

If convicted, Villalobos faces a statutory maximum sentence of 10 years in prison for the illegal kickback scheme and a statutory maximum sentence of five years in prison for each count of tax evasion. He also faces potential fines of up to $250,000 on each count.

Special agents of IRS-Criminal Investigation, the U.S. Air Force’s Office of Special Investigations and the U.S. Department of Defense’s Office of the Inspector General investigated this case.

An indictment merely alleges that crimes have been committed. The defendant is presumed innocent until proven guilty beyond a reasonable doubt.

Source: http://www.justice.gov/opa/pr/federal-government-contractor-indicted-involvement-illegal-kickback-scheme-and-tax-evasion

August 5, 2015 By AMK

Husband and wife admit to military contracting fraud and other schemes

Defendants pleaded guilty last week to fraudulently obtaining over $30 million in government service contracts using false representations, embezzling over $1.6 million from employee benefits plans, and evading taxes.

Shaun Tucker (a/k/a “Shawn Turner,” and “Mark Tyler”), age 49, and his wife, Joanne Tucker (a/k/a “Joanne Krcma,” “Jill Swanson,” and “Jocelyn Turner”), age 50, both of Keymar, Maryland, pleaded guilty on July 27, 2015 to the charges in connection with defrauding the United States.

The guilty pleas were announced by United States Attorney for the District of Maryland, the U.S. Department of Labor’s Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, the Internal Revenue Service’s Criminal Investigation Field Office, the Labor Department’s Employee Benefits Security Administration, the Defense Department’s Criminal Investigative Service, the Small Business Administration’s Inspector General, and the Air Force Office of Special Investigations.

According to their pleas, the Tuckers were controlling officers and majority shareholders of Quantell, Inc. and Intaset Technologies Corporation from 2007 to 2010. Quantell and Intaset provided labor services to federal government agencies. In 2010, the Tuckers sold Intaset, but continued to have influence on the operation of Intaset.

Federal Procurement Fraud

From 2007 to 2013, the Tuckers and their co-conspirators, including Jonathan Mickle, made false representations to the government regarding the eligibility of Quantell and Intaset for small business, Service Disable Veteran Owned Small Business and other set-aside contracts, including the 2007 Camp Lejeune contract, 2007 Battle Creek, Michigan contract, 2008 Andrews Air Force Base contract, 2008 Beale Air Force Base contract, 2011 Langley Air Force Base contract and 2011 Camp Lejuene contract. The Tuckers and co-conspirators falsely represented the past revenues, ownership, controlling officers, distribution of profits, location and other key attributes of Quantell and Intaset to multiple federal agencies. When bid protests were lodged by competing firms, the Tuckers and co-conspirators prepared and submitted false responses. The Tuckers’ actions cause other companies, which the government actually meant to support with set-aside contracts, to lose out on valuable opportunities to provide contracting services to the federal government.

The Tuckers used the money from the government contracts for their own personal benefit, including building, purchasing and leasing a 5,000 square foot residence in Swanton, Maryland; additions to the real property in Taneytown, Maryland, including a personal residence, gym, bar and break room equipped with high definition TVs, top of the line weight equipment, video games and combat wrestling equipment; additions to the real property in Keymar; 45 foot sailboat named “Quantell;” 2008 Audi A8; 2011 BMW; and mortgage payments related to real estate, watercraft and vehicles.

The Tuckers and their co-conspirators used aliases and false identities to communicate with the U.S. Department of Defense (DOD) in order to falsely portray the past performance of Quantell. They created a fake corporate entity name Staff-It with a fake period of performance from 2005 to 2008 involving more than $12 million of work by Quantell for Staff-It, and falsely indicated that Quantell was supplying service workers at military treatment facilities for Staff-It. Then they created phone lines and had conspirators participate in false phone conversations with DOD representatives so as to deceptively win the 2011 Camp Lejeune contract. The Tuckers and their co-conspirators carried out similar schemes with respect to other past performances, establishing internet phone lines to spoof the location of businesses, and labeling the phone lines based on the fake company contact person.

The Tuckers admit that as a result of the procurement fraud conspiracy, the full value of the contracts awarded to Quantell and Intaset based on false representations was at least $30 million.

Employee Benefit Fraud

Moreover, the service contracts awarded by the United States to Quantell and Intaset, as well as the McNamara-O’Hara Service Contract Act (SCA), required Quantell and Intaset to provide bona-fide health and welfare benefits to the service contract employees of Quantell and Intaset hired to do the work for the federal government. From 2008 to at least 2012, however, the Tuckers stopped contributing the SCA funds to any bona-fide health and welfare plan. Instead, the Tuckers lied to employees of Quantell and Intaset, and to multiple federal agencies, regarding the compliance of Quantell and Intaset with the SCA, so that the Tuckers and their co-conspirators, including Jonathan Mickle, could divert at least $1.6 million in SCA monies paid by the government to Quantell and Intaset under service contracts for their own personal benefit. The Tuckers and their co-conspirators used shell companies and companies that they were associated with to conceal the diversion of SCA funds to them. The Tuckers falsely told employees that they would be receiving health and welfare benefits, when they knew in fact that the money was being diverted to buy luxury vehicles, make improvements on the Tuckers’ residences.

The Tuckers admit that as a result of the fraud involving employee benefits, more than $1.6 million of the SCA funds were fraudulently diverted for the co-conspirators’ benefit from at least 350 individual employees.

Tax Fraud

Finally, the Tuckers attempted to evade income tax due of $492,961 for tax years 2009, 2010 and 2011.

The Tuckers and the government have agreed that if the Court accepts the plea agreements, Shaun Tucker will be sentenced to eight years in prison and Joanna Tucker will be sentenced to between six and 18 months in prison. Shaun Tucker further agrees to pay forfeiture of at least $30 million and Joanne further agrees to pay forfeiture of at least $20 million, and that their residence in Keymar is subject to forfeiture. Both Tuckers also agree to pay restitution of at least $1.6 million in connection with the employee benefit fraud, and pay restitution to the IRS of $492,961 for tax evasion. U.S. District Judge J. Frederick Motz has scheduled sentencing for both Tuckers for November 20, 2015, at 12:00 p.m.

In a related case, co-conspirator Jonathan Mickle, age 43, of Asheville, North Carolina, formerly of Taneytown, Maryland, pleaded guilty on June 25, 2015 to conspiracy to commit wire fraud and tax fraud in connection with the fraud schemes. Judge Motz has scheduled sentencing for November 3, 2015, at 2:15 p.m.

The National Procurement Fraud Task Force was formed in October 2006 to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs. The Procurement Fraud Task Force includes the United States Attorneys’ Offices, the FBI, the U.S. Inspectors General community and a number of other federal law enforcement agencies. This and other cases brought by members of the Task Force demonstrate the Department of Justice’s commitment to helping ensure the integrity of the government procurement process.

Source: http://www.justice.gov/usao-md/pr/husband-and-wife-admit-procurement-fraud-scheme-and-embezzling-employee-benefits

April 7, 2015 By AMK

Congress wants contractors to pay their taxes — here’s how

A new bill introduced last week is the latest attempt to prevent tax delinquents from winning federal contracts — or competing for government work at all.

This is the second bill attempting to force contractors to pay their taxes — a nearly identical bill was introduced in the last Congress. It comes despite existing acquisition provisions that require contractors to disclose any tax debts before they bid for work.

“Legislation that codifies, clarifies, and offers minimally invasive improvements to the Federal Acquisition Regulation could be beneficial,” said Alan Chvotkin, executive vice president and general counsel at the Professional Services Council, in testimony submitted for a hearing before the House Committee on Oversight and Government Reform’s government operations panel. “However, such legislation must be tailored carefully to avoid creating new challenges or points of confusion.”

In a nutshell, the latest bill states that any executive agency issuing a solicitation for a contract in an amount greater than the simplified acquisition threshold — currently $150,000 — must require all offerors to certify they have no so-called seriously delinquent tax debt. They also must authorize the Treasury Department to disclose information about that seriously delinquent tax debt.

Keep reading this article at: http://www.bizjournals.com/washington/blog/fedbiz_daily/2015/03/the-hill-wants-to-get-governmentcontractors-to-pay.html?page=all

A former U.S. Department of Defense (DoD) contracting official was sentenced on Friday (January 8, 2016) to 30 months in prison for his role in a bribery scheme involving U.S. government contracts in Iraq.

An Enterprise, Alabama, resident was arrested this week after a federal grand jury indicted him on one count of accepting unlawful kickbacks from 2009 through 2014, and five counts of tax evasion for tax years 2009 through 2013.

Defendants pleaded guilty last week to fraudulently obtaining over $30 million in government service contracts using false representations, embezzling over $1.6 million from employee benefits plans, and evading taxes.

Search this Website