Bribery and Bid-Rigging

August 10, 2017

Virginia Beach-based contractor ADS Inc. and its subsidiaries agreed to pay $16 million to settle allegations that they violated the False Claims Act by conspiring with and causing purported small businesses to submit false claims for payment in connection with fraudulently obtained small business contracts.  The settlement further resolves allegations that ADS engaged in improper bid rigging relating to certain of the fraudulently obtained contracts.  The settlement ranks as one of the largest recoveries involving alleged fraud in connection with small business contracting eligibility.  The purported small businesses affiliated with ADS include Mythics Inc., London Bridge Trading Co. Ltd., and MJL Enterprises LLC, which falsely claimed to be an eligible service-disabled veteran-owned company, and SEK Solutions LLC and Karda Systems LLC, both of which falsely claimed to qualify as socially or economically disadvantaged businesses under the Small Business Administration’s 8(a) Business Development Program.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by Ameliorate Partners LLP.  It will receive a whistleblower award of roughly $2.9 million.  DOJ

June 8, 2017

Kevin David McGovern was sentenced to 24 months in prison and he and his companies, CMG Construction, Inc. and MC Equipment Holdings, LLC, to pay roughly $4.6 million for engaging in a pay-to-play scheme on the Rocky Boy’s Indian Reservation. DOJ (DMT)

March 7, 2017

German auto parts maker Kiekert AG agreed to plead guilty and pay a $6.1 million criminal fine for its role in a conspiracy to rig bids of side-door latches and latch minimodules. DOJ

December 15, 2016

ThunderCat Technology, LLC agreed to pay $1 million to settle civil False Claims Act, Anti-Kickback Act, and Procurement Integrity Act claims relating to bid rigging and kickback schemes in connection with six government procurements.  According to the government, ThunderCat solicited or submitted inflated third party bids or “loser bids” during competitions for five government contracts and/or purchase orders awarded by the Department of Homeland Security on behalf of the U.S. Customs and Border Protection and U.S. Citizenship and Immigration Services and one government contract awarded by the General Services Administration.  In connection with one CBP contract, ThunderCat agreed to pay CPB employees 10 percent of ThunderCat’s profits on the contract in exchange for procurement sensitive independent government cost estimates prior to ThunderCat’s submission of its proposal.  DOJ(EDVA)

October 19, 2016

Karen L. Finley, former CEO of a traffic light enforcement camera vendor, was sentenced to 14 months in prison for her role in a multi-year bribery and fraud scheme under which her company made campaign contributions to elected public officials in Columbus and Cincinnati Ohio with the understanding that the officials would assist the company in obtaining or retaining municipal contracts.  DOJ

August 9, 2016

John Bennett, the former chief executive at Bennett Environmental Inc., a Canada-based company that treats and disposes of contaminated soil, was sentenced to serve 63 months in prison and pay roughly $3.8 million in restitution in connection with the payment of kickbacks to obtain subcontracts at a New Jersey Superfund site overseen by the EPA and Army Corps of Engineers.  According to court documents, Bennett conspired with others at Bennett Environmental to pay kickbacks, that included money wired to a co-conspirator’s shell company, lavish trips and entertainment expenses and personal gifts in an effort to guarantee the award of soil treatment contracts to his company.  As a result, Bennett Environmental was fraudulently awarded tens of millions of dollars in soil treatment and disposal contracts and the company won contracts at higher prices than it otherwise would have bid.  DOJ

June 9, 2016

Ivan Dwight Brannan and David R. Nelson, a former agent and a former driver for a large national trucking company, were sentenced to prison for 48 months (and a $120,000 fine) and 24 months (and a $10,000 fine) for paying bribes to officials at the Marine Corps Logistics Base in Albany, Georgia, in order to obtain lucrative freight-hauling business.  The officials who they bribed, Mitchell Potts and Jeffrey Philpot, were previously sentenced to 10 years and 7 years in prison, respectively.  DOJ

May 6, 2016

New York announced the sentencing of the remaining three defendants in an elaborate bid-rigging conspiracy that illegally steered multi-million dollar public works contracts for Monroe County to favored and connected companies, resulting in the restraint of competition. The four defendants were originally indicted in November 2013 and charged with a scheme to rig the bidding processes for a number of multi-million dollar public works contracts in Monroe County. Those contracts included a $99 million contract to provide upgrades and maintenance for the County’s IT infrastructure (the “IT project”), and a $212 million contract to provide upgrades and maintenance for the County’s public safety and security systems (the “Public Safety project”). NY

March 29, 2016

Former Navy noncommissioned officer Donald P. Bunch was sentenced to 24 months in prison for accepting cash bribes from vendors while he served in Afghanistan.  According to the plea agreement, Bunch worked as a U.S. Navy E8 senior chief at the Humanitarian Assistance Yard at Bagram Airfield in Afghanistan.  The HA Yard purchased supplies from local Afghan vendors for use as part of the Commander’s Emergency Response Program, which enabled U.S. military commanders to respond to urgent humanitarian relief requirements in Afghanistan.  Bunch admitted accepting roughly $25,000 in bribes from the vendors for securing for them more frequent and lucrative contracts.  Bunch sent greeting cards stuffed with proceeds of the bribes to his wife and used the money to pay for the construction of a new home.  DOJ

March 25, 2016

U.S. Navy Capt. Daniel Dusek was sentenced to 46 months in prison for giving classified information to a foreign defense contractor in exchange for prostitutes, luxury travel and other gifts.  He is the highest-ranking official charged in a massive Navy bribery scandal.  Dusek admitted he used his influence as Deputy Director of Operations for the Seventh Fleet, headquartered in Yokosuka, Japan, and later as executive officer of the USS Essex and the commanding officer of the USS Bonhomme Richard, to benefit Leonard Glenn Francis and his company, Glenn Defense Marine Asia.  DOJ