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Defense Contract Fraud

This archive displays posts tagged as relevant to fraud in defense and military contracts. You may also be interested in the following pages:

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March 5, 2019

The United States reached a $25 million settlement against an Afghan delivery and transport subcontractor accused of violating the False Claims Act. From 2010 to 2012, Hikmat Shadman Logistics Services Company (HSLSC) and its owner, Hikmatullah Shadman, allegedly overcharged the United States millions of dollars by inflating their rates to well above those of competitors, falsifying thousands of documents, and charging for work that was never performed. In addition to the civil charges, HSLSC faced criminal charges for paying bribes to at least two U.S. service members to influence the awarding of contracts. As part of the criminal settlement, the company and its officers have agreed to seek no further business with the United States and to refrain from applying for travel visas to the United States. DOJ; USAO DC

February 22, 2019

Mark Cundiff of Macon, Georgia, was sentenced to three years in prison and ordered to pay restitution of $380,000 to the federal government.  Cundiff, a former DOD employee at Robins Air Force Base, was responsible for soliciting bids for new contracts at the base.  Cundiff accepted cash payments of $2,000-$8,00 monthly over the course of almost ten years from co-defendant Raymond Williams (previously sentenced to five years in prison) in exchange for drafting bid solicitation Performance Work Statements in such a way that the contracts could only be met by Williams and his companies, US Technology Corporation and US Technology Aerospace Engineering Corporation.  The UST companies and Williams received almost $14.5 million in government contracts as a result of the bribery scheme.  USAO MD GA

January 29, 2019

E.M. Photonics, Inc. (“EMP”) and its Chief Executive Officer, Eric Kelmelis, will pay $2.75 million to resolve allegations that they violated the False Claims Act by seeking disbursements from federal agencies for falsified labor costs and duplicative work in order to maximize charges to contracts awarded by federal agencies. From January 2009 to April 2014, EMP received funds under seven different contracts and grants awarded through the federal Small Business Innovation (“SBIR”) and Small Business Technology Transfer (“STTR”) programs. EMP and Kelmelis directed EMP employees, or caused others to direct EMP employees, to complete false timesheets and submit false invoices and public vouchers for direct labor that did not occur. EMP and Kelmelis also sought and received SBIR/STTR funding for work already performed and funded by another government agency and falsely certified that such work was, in fact, non-duplicative. The government alleged that both of these schemes were designed to maximize charges to each contract or grant. DOJ

December 19, 2018

Arvco Container Corporation of Kalamazoo, Michigan, will pay $400,000 to settle allegations that it violated the False Claims Act by performing 100% of the manufacturing work on a contract that had been awarded by the Defense Logistics Agency to Fibre Technologies LLC in Reading, Pennsylvania, subject to a HUBZone small business program that barred Fibre from subcontracting the entire manufacturing.  USAO MD Pa

December 17, 2018

Progressive Technology Federal Systems, Inc. and its CEO, John Yokley, have agreed to pay $110,000 to resolve allegations under the federal False Claims Act that they misrepresented a consultant's security clearance and failed to disclose a conflict of interest in bidding to perform IT work for the Army and Air Force.  PTFS bid on the contract through the cooperative purchasing program of the National Institutes of Health’s Information Technology Acquisition and Assessment Center, NITAAC, which enables federal agencies to contract for information technology services. USAO CO

Catch of the Week — DOJ Nets 3 South Korean Companies in Bid Rigging Scheme

Posted  11/16/18
Our Catch of the Week celebrates DOJ’s massive $236 million settlement with three South Korean-based companies accused of rigging bids to inflate the cost of fuel supplied to U.S. Army, Navy, Marine Corps, and Air Force bases in South Korea, the investigation of which was initiated by a whistleblower represented by Constantine Cannon. The three companies, SK Energy Co. Ltd., GS Caltex Corporation, and Hanjin...

Three South Korean Companies to Pay $236 Million, Resolving Civil and Criminal Liability for Bid Rigging Alleged in Constantine Cannon Whistleblower Suit

Posted  11/14/18
Bid Rigging Fuel South Korea
The Justice Department announced that SK Energy Co. Ltd., GS Caltex Corporation, and Hanjin Transportation Co. Ltd. collectively agreed to pay $236 million for their respective roles in a decade-long conspiracy to rig bids and fix prices, thereby overcharging the U.S. Government on contracts to supply fuel to U.S. military bases throughout South Korea. The deal resolves False Claims Act allegations against the three...

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 have agreed to cooperate with that investigation.  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

Catch of the Week – Northrop Grumman Systems

Posted  11/8/18
Northrop Grumman Systems Corporation agreed to a $31.65 million settlement to resolve allegations that it overstated employee hours on two government contracts related to battlefield communications services for the United States Air Force.  Of the total settlement, $27.45 million was paid to resolve civil allegations that NGSC violated the False Claims Act, and $4.2 million was forfeited by the company to resolve...
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