Army Reserve Staff Sergeant Pleads Guilty to Bulk Cash Smuggling and Theft of Government Property While Serving in Afghanistan

A Fort Buchanan Army Reserve Staff Sergeant pleaded guilty today to bulk cash smuggling of $113,050 and theft of government property worth $6,302 while serving in Afghanistan.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Rose Emilia Rodriguez-Velez of the District of Puerto Rico, Special Agent in Charge Carlos Cases of the FBI’s San Juan Division Field Office, Special Agent in Charge Gary J. Hartwig of U.S. Immigration and Customs Enforcement Homeland Security Investigations (ICE-HSI) Chicago Field Office, Special Inspector General for Afghanistan Reconstruction John F. Sopko, Director Frank Robey of the U.S. Army Criminal Investigation Command’s (CID) Major Procurement Fraud Unit, Acting Special Agent in Charge Paul Sternal of the Defense Criminal Investigative Service’s (DCIS) Mid-Atlantic Field Office and Brigadier General Keith M. Givens, Commander of the Air Force Office of Special Investigations (AFOSI) made the announcement.

Luis Ramon Casellas, 42, of Canovanas, Puerto Rico, pleaded guilty before U.S. Magistrate Judge Camille L. Velez-Rive of the District of Puerto Rico to three counts of bulk cash smuggling and one count of theft of government property.  Sentencing before U.S. District Judge Carmen Consuelo Cerezo of the District of Puerto Rico will be scheduled at a later date.

Since 2009, Casellas has been an Army Reservist Staff Sergeant on active status based at Fort Buchanan in Guaynabo, Puerto Rico.  In April 2013, Casellas was deployed by the Army to Kandahar Airfield in Afghanistan.  As part of his duties, Casellas was responsible for helping to break down smaller bases in preparation for the withdrawal of U.S. military forces from Afghanistan.  These duties included retrieving U.S. government property for future use and selling unsuitable material as scrap to Afghan contractors.

Between June 17 and Aug. 9, 2013, Casellas was the leader of a three-person Army team that went to a Forward Operating Base (FOB) in Afghanistan to help break down that base.  In connection with his plea, Casellas admitted that, while this team was at the FOB, he stole tools and equipment, including laptops, belonging to the U.S. Department of Defense.  Casellas also admitted that, in July 2013, Casellas sent approximately eight boxes from the FOB through the U.S. Postal Service addressed to his wife in Puerto Rico, and that the boxes contained some of the stolen government property and undeclared U.S. currency totaling $50,500.

In addition, in August 2013, Casellas sent two boxes from Kandahar through UPS, again addressed to his wife, that were marked as “gifts for family.”  In connection with his plea, Casellas admitted that, although he declared that the items inside the boxes were valued at $700 and $400, respectively, one box contained some of the stolen government property as well as $41,750 in U.S. currency, and the other box contained $20,800 in U.S. currency.  These boxes were intercepted by U.S. Customs in Louisville, Kentucky.

This case was investigated by the Special Inspector General for Afghanistan Reconstruction, the FBI, ICE-HSI, Army CID, DCIS and AFOSI.  This case is being prosecuted by Trial Attorney Daniel P. Butler of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Julia M. Meconiates of the District of Puerto Rico.

 

Three Owners and CEO of Contracting Company Indicted for Bribing Army National Guard Colonel

Three owners and the CEO of a government contracting company headquartered in Falls Church, Virginia, all of whom are retired Army National Guard colonels, were indicted today for their alleged participation in a scheme to bribe an active-duty Army National Guard colonel in order to obtain millions of dollars of Army National Guard marketing, retention and recruitment contracts.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Dana J. Boente of the Eastern District of Virginia, Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington, D.C., Field Office, Acting Special Agent in Charge Paul Sternal of the Defense Criminal Investigative Service (DCIS) Mid-Atlantic Field Office and Director Frank Robey of the U.S. Army Criminal Investigative Command’s Major Procurement Fraud Unit (Army-CID) made the announcement.

“As alleged in the indictment, four retired colonels have been charged with using their corporate marketing firm to funnel bribe payments to high-ranking accomplices in the Army National Guard to corruptly obtain lucrative marketing contracts,” said Assistant Attorney General Caldwell.  “This case is emblematic of the Criminal Division’s ongoing efforts to root out corruption wherever it may be found, including at the highest ranks of our armed services.”

“These criminal charges reflect our continued commitment to rooting out public corruption wherever it occurs,” said U.S. Attorney Boente.  “The public contracting process should be one of integrity and fairness, and these cases should send a strong message that public corruption will be vigorously prosecuted in the military as well as other areas of government.”

“The FBI’s top criminal priority is investigating and stopping corrupt officials and the organizations they do business with,” said Assistant Director in Charge McCabe.  “These indictments outline a significant bribery scheme that undermined a fair government contracting process.”

“The actions of the defendants have brought them dishonor and erode confidence in the integrity of a contracting process intended to support their fellow citizen soldiers,” said Acting Special Agent in Charge Sternal.  “The Defense Criminal Investigative Service, alongside its law enforcement partners and the U.S. Attorney’s Office, remain vigilant and committed to bringing individuals who subvert the acquisition system to justice.”

“Today’s indictment illustrates our commitment and cooperation shared between law enforcement agencies investigating this type of corruption and bribery,” said Director Robey.  “It is unconscionable how these former military officers betrayed the offices they once held for monetary gain.”

Edwin Stuart Livingston III, 67, of The Villages, Florida; Ronald Joseph Tipa, 68, of Sunny Isles Beach, Florida; Thomas Edward Taylor, 66, of Alexandria, Virginia; and Ross Bernard DeBlois Sr., 55, of Fairfax Station, Virginia, are each charged by indictment with one count of conspiracy to commit bribery, one count of bribery of a public official, one count of conspiracy to commit honest services fraud and five counts of honest services fraud.

According to the indictment, Livingston, Tipa, Taylor and John Jones, 77, a retired brigadier general from the New York Army National Guard, each owned 25 percent of MPSC and constituted MPSC’s Board of Directors.  DeBlois was the company’s CEO.

The National Guard Bureau (NGB) is a joint activity of the U.S. Department of Defense (DOD), the state units of the Army National Guard and the Departments of the Army and Air Force.  The NGB oversees the distribution of federal funding provided to the Army National Guard and its state units.

The DOD provides millions of dollars in federal funds to the NGB for, among other things, advertising, marketing and sponsorships in order to recruit new Army National Guard members.  The NGB then uses these funds to promote the Army National Guard on a national level by entering into marketing contracts.

According to the allegations in the indictment, in 2010 or 2011, Livingston and Tipa offered Robert Porter, 50, who then was an active-duty colonel in the Army National Guard who held a high-level position at the NGB, a deal in which MPSC would pay Porter 1 percent of the value of all contracts he steered to MPSC.  The indictment alleges that Porter was to receive the bribe payment after he retired from the NGB and began working for MPSC, and that the payment was to be concealed as an “incentive fee” or “bonus” payment in MPSC payroll records.

According to the indictment, during 2011 and 2012, Porter allegedly steered at least three NGB marketing contracts to MPSC, which were worth a total of approximately $5.5 million.  The indictment alleges that, during a July 2014 meeting of MPSC’s board of directors, DeBlois confirmed that three contracts were awarded to MPSC while Porter was “in uniform.”  Thereafter, Livingston, Tipa, Taylor and Jones allegedly unanimously voted to make the promised bribe payment to Porter.  The indictment further alleges that, between July and September 2014, MPSC made three payments to Porter, each for over $10,000.

In September 2014, Porter pleaded guilty to conspiracy to commit bribery and bribery of a public official, and in February 2015, Jones pleaded guilty to conspiracy to commit bribery and bribery of a public official in connection with this scheme.

The charges and allegations contained in the indictment are merely accusations.  The defendants are presumed innocent unless and until proven guilty.

The case was investigated by the FBI’s Washington Field Office, DCIS Mid-Atlantic Field Office and Army-CID’s Major Procurement Fraud Unit.  The case is being prosecuted by Trial Attorney Alison L. Anderson of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Jonathan Fahey of the Eastern District of Virginia.

Individuals with information regarding bribery or corruption within the NGB’s retention and recruitment contracting process or at MPSC should contact the FBI’s Washington Field Office at (202) 278–2000.

Former Army National Guard Soldier Sentenced to 57 Months in Prison for Lead Role in Fraudulent Military Recruiting Referral Bonus Scheme

A former member of the U.S. Army National Guard was sentenced today to serve 57 months in prison for leading a conspiracy to obtain approximately $244,000 in fraudulent recruiting referral bonuses from various U.S. military components and their contractor, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division.

Former U.S. Army National Guard Specialist Xavier Aves, 42, of San Antonio, was sentenced by Chief U.S. District Judge Fred Biery in the Western District of Texas.  In addition to his prison term, Chief Judge Biery sentenced Aves to serve three years of supervised release and ordered Aves to pay $244,000 in restitution, jointly and severally with co-conspirators.

On Sept. 16, 2011, a grand jury in the Western District of Texas returned a 41-count indictment against Aves and five co-defendants, in which Aves was charged with one count of conspiracy to commit wire fraud, 30 counts of wire fraud and 10 counts of aggravated identity theft.

On Feb. 3, 2012, Aves pleaded guilty to one count of conspiracy to commit wire fraud and one count of aggravated identity theft.

The case against Aves and his co-defendants arose from an investigation concerning allegations that former and current soldiers and military and civilian contract recruiters in the San Antonio area engaged in a wide-ranging scheme to obtain fraudulent recruiting referral bonuses.  To date, 11 individuals have been charged, 10 of whom have pleaded guilty and been sentenced.  The investigation is ongoing.

According to court documents, between 2005 and 2008, the U.S. Army, the U.S. Army Reserves and the National Guard Bureau entered into contracts with Document and Packaging Broker Inc. to administer recruiting bonus programs designed to offer monetary incentives to soldiers who referred others to serve in the U.S. military.  In addition, the Army managed its own recruiting bonus programs, which offered referral bonuses to soldiers who referred other individuals to serve in the Army or Army Reserves after registering online as recruiting assistants (RA) or sponsors.

Through these recruiting programs, a participating soldier could receive up to $2,000 in bonus payments for every person he referred to join the U.S. military.  Based on certain milestones achieved by the referred soldier, a participating soldier would receive the recruiting bonus payments in the form of direct deposits and pre-paid debit card payments.

According to court documents, between February 2006 and February 2011, Xavier Aves, Christopher Castro, Grant Bibb, Paul Escobar, Richard Garcia, Ernest Gonzales and others paid military recruiters, including Jesus Torres-Alvarez, for the names and social security numbers of potential soldiers.  Aves, Castro, Bibb, Escobar, Garcia, Gonzales and others used the information they obtained from recruiters to claim credit in their online RA and sponsor accounts for referring certain new soldiers to join the military, when in fact they did not refer those individuals.

Aves orchestrated the scheme by serving as a key intermediary between the recruiters and the participating RAs.  Aves arranged for the money to be split among his co-conspirators and directed a portion of the proceeds to be wired to his and his girlfriend’s personal bank accounts.

As a result of the fraudulent referrals, Aves and his co-conspirators received a total of approximately $244,000 in fraudulent recruiting bonuses.

The case is being prosecuted by Trial Attorneys Edward J. Loya Jr., Brian A. Lichter, Mark J. Cipolletti and Sean F. Mulryne of the Criminal Division’s Public Integrity Section.  The case is being investigated by agents from the San Antonio Fraud Resident Agency of the Major Procurement Fraud Unit, U.S. Army Criminal Investigation Division.