Archive

November 21, 2018

Andrew Otero and his company, A&D General Contracting, Inc. (“A&D”) were convicted of multiple charges after they were found guilty of constructing a scheme to defraud the Department of Veterans Affairs and the Army Corps of Engineers in order to obtain approximately $11 million in federal government construction contracts or task orders set aside for small businesses owned by disabled veterans. Otero, as shown by evidence at trial, does not have any military experience. Yet he and his co-conspirator Roger Ramsey, a veteran, and on behalf of his company, Action, formed a joint venture and falsely represented to the government that Action and the JV met the qualifications to be a service-disabled veteran-owned small business (“SDVOSB”), thus enabling them to bid on the contracts. Additionally, evidence at trial showed that the JV’s daily operations and decision-making did not function as would a legitimate SDVOSB. All four defendants are also facing civil charges. Sentencing will take place on February 19, 2019.    DOJ

November 16, 2018

The owners and CEOs of the largest e-waste recycling company in Washington State have pled guilty and agreed to pay $1.1 million for lying to the public and to public agencies about recycling electronics in an environmentally safe manner. As the largest participant in the state's "E-Cycle Washington" program, Craig Lorch and Jeff Zirkle's company, Total Reclaim, was paid millions of dollars by customers like the City of Seattle to properly handle and dispose of millions of pounds of mercury-containing e-waste. However, through tracking devices hidden in surrendered products, local nonprofit Basel Action Network found that Total Reclaim was in fact secretly shipping their e-waste to Hong Kong, where they were dismantled without any sort of safety precautions. USAO WDWA

November 14, 2018

The United States and three South Korea-based companies, SK Energy Co. Ltd., GS Caltex Corporation, and Hanjin Transportation Co. Ltd., have reached an agreement to resolve criminal and civil claims arising from the defendants' alleged bid-rigging and price-fixing in contracts to supply fuel to U.S. military bases in South Korea.  As a result of this conduct, the Department of Defense paid substantially inflated prices for fuel supply services in South Korea. Defendants agreed to plead guilty to criminal charges and pay a total of $236 million -- $82 million in criminal fines and $154 million for civil antitrust and False Claims Act violations related to the bid-rigging conspiracy.  The False Claims Act civil investigation resulted from a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act.  The settlement is part of an ongoing federal investigation into bid rigging, price fixing and other anticompetitive conduct targeting U.S. Department of Defense fuel supply contracts in South Korea; the defendants have agreed to cooperate with that investigation.  DOJ

November 14, 2018

Former contractors George Patton and Henry Patton have pleaded guilty to defrauding the United States in federal contracts worth over $10 million. According to the DOJ press release, George Patton was barred from conducting business with the federal government but conspired with his brother, Henry, and wife, Lindsey, to obtain additional federal contracts by naming them owners of his new businesses. Separately, George and Lindsey Patton were also accused of evading about $61,000 in taxes, which, after penalties and interest, translated to a loss of $107,000. All three face sentencing early next year. DOJ

November 13, 2018

Naum Morgovsky and Irina Morgovsky were sentenced following their guilty pleas for conspiracy to illegally export components for the production of night-vision and thermal devices to Russia in violation of the Arms Export Control Act, and for laundering the proceeds of the scheme.  The defendants purchased products using their U.S. business, Hitek International, representing that the products would not be exported.  The couple then shipped the products to Moscow-based Infratech using a variety of front companies and shipping methods.  They were sentenced to 108 months and 18 months, respectively, were assessed a $1 million fine, and forfeited $223 thousand.  DOJ

November 13, 2018

Two foreign airlines, British Airways and Iberia Airlines, have agreed to pay $5.8 million to resolve allegations brought under the False Claims Act that they falsely reported timestamps for deliveries made abroad. As part of their contracts with the United States Postal Service (USPS) to deliver U.S. mail to recipients at foreign posts, such as military bases, the airlines were required to submit accurate delivery information in order to obtain payment, but were found to have falsified that information instead. DOJ

November 8, 2018

The United States charged two South Korean nationals, Hyeong-won Lee and Dong-guel Lee, of defrauding the federal government in connection with two multimillion dollar construction contracts their employer, South Korea-based SK Engineering & Construction Co., Ltd., (SK), had with the U.S. Army. From 2008 to 2017, acting on behalf of SK, the two allegedly submitted fraudulent subcontracts that were based on millions of dollars of kickbacks that SK paid to a U.S. official in exchange for being awarded the contracts. While the fraud was being investigated, the two also took pains to disguise the kickbacks and fraud even further by ordering employees to burn boxes of evidence and persuading them not to testify. DOJ; USAO WDTN

November 5, 2018

The owner of WOW Imaging Products LLC and Time Enterprises LLC pled guilty to defrauding government agencies of approximately $3.5 million over the course of six years. Beginning in 2011, Jim A. Meron allegedly profited substantially from office products his companies sold to federal agencies through sales portals run by the General Services Administration (GSA) and Department of Defense (DoD). Although Meron’s government clients placed orders for premium products, he often sent products that cost a fraction of what they paid, pocketing the difference in price. In addition to forfeiting $1.7 million in assets, Meron now faces a maximum of 20 years and hundreds of thousands of dollars in fines; his sentencing is scheduled for February 2019. USAO EDCA

November 2, 2018

Northrop Grumman Systems Corporation (NGSC), a subsidiary of Northrop Grumman Corporation, has agreed to pay a total of $31.65 million to settle False Claims Act-based civil and criminal allegations concerning fraudulent billing of the U.S. Air Force. NGSC allegedly overbilled for time that its Middle East-based employees spent working on the Battlefield Airborne Communications Node (BACN) and Dynamic Re-tasking Capability (DRC) contracts. According to NGSC timesheets, employees were putting in exactly 12-13.5 hours a day, seven days a week, for multiple years. At one location alone, the overbilling resulted in a loss of more than $5 million. DOJ; USAO SDCA

October 26, 2018

A former U.S. Department of Veterans Affairs official, James King, pleaded guilty to demanding and receiving bribes from three for-profit schools, Atius Technology Institute, Eelon Training Academy, and School A, in exchange for enrolling disabled military veterans in those schools.  All three school owners sent King and other VA officials false information about the education being provided to veterans.  King facilitated over $2 million in improper payments from the VA using the veterans’ federal benefits. DOJ