Category Archives: US Army-Criminal Investigative Division

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

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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.

 

Army National Guard Official Pleads Guilty for Accepting $30,000 Bribe

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An Army National Guard official pleaded guilty today for accepting a $30,000 bribe in exchange for steering a $3.6 million contract to a retired sergeant major of the Minnesota Army National Guard and his consulting company.  Today’s guilty plea is the eighth in connection with an investigation into corruption within the National Guard Bureau related to the awarding of 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, U.S. Attorney Loretta E. Lynch of the Eastern District of New York, Assistant Director in Charge Andrew McCabe of the FBI’s Washington Field Office, Special Agent in Charge Robert E. Craig Jr. 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.

Jason Rappoccio, 39, of Hampton, South Carolina, pleaded guilty before U.S. District Judge Liam O’Grady of the Eastern District of Virginia to one count of conspiracy to commit bribery and one count of bribery.  Rappoccio was indicted on Sept. 25, 2014, and will be sentenced on May 22, 2015.

According to plea documents, Rappoccio, who was an active duty sergeant first class in the Army National Guard, admitted to accepting a $30,000 bribe from Timothy Bebus, a retired sergeant major of the Minnesota Army National Guard and owner of Mil-Team Consulting and Solutions LLC (Mil-Team).  In exchange, Rappoccio agreed to recommend the award of a $3.6 million contract to Mil-Team and to steer the contract to a Small Business Administration (SBA) 8(a) certified company, chosen by Bebus, that would sub-contract the work to Mil-Team.

Rappoccio admitted that he received the $30,000 bribe in installments to conceal the payment.  Bebus gave $6,000 in cash directly to Rappoccio at a meeting in Arlington, Virginia.  The remaining $24,000 was paid in a cashier’s check in the name of Rappoccio’s wife.

Rappoccio also admitted that days after receiving the $30,000 bribe, he solicited and received airline tickets for two of his family members from Bebus.  Three months later, Rappoccio also received NFL tickets worth $1,328 from another co-conspirator.  At the time that he accepted these additional benefits, Rappoccio agreed to steer an additional $4 million contract to Bebus and his company.

The case is being investigated by the FBI’s Washington Field Office, with assistance from DCIS’s Mid-Atlantic Field Office and Army-CID’s Expeditionary Fraud Resident Agency’s Major Procurement Fraud Unit.  The case is being prosecuted by Trial Attorney Alison L. Anderson of the Criminal Division’s Fraud Section, Assistant U.S. Attorney Jonathan Fahey of the Eastern District of Virginia and Assistant U.S. Attorneys Marisa Seifan and Martin Coffey of the Eastern District of New York.

Iron Mountain Companies Pay $44.5 Million to Settle Alleged False Billings for Storing Government Documents and Data

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Iron Mountain Incorporated and Iron Mountain Information Management LLC (collectively Iron Mountain) has paid $44.5 million to resolve allegations under the False Claims Act that Iron Mountain overcharged federal agencies for record storage services under General Services Administration (GSA) contracts, the Department of Justice announced today.  Iron Mountain is a records storage company headquartered in Boston.

“Protecting the federal procurement process from false claims is central to the mission of the Department of Justice,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division.  “We will continue to ensure that when federal monies are used to purchase commercial services the government receives the prices and services to which it is entitled.”

“This settlement illustrates our commitment to protecting the integrity of federal contracting programs,” said U.S. Attorney Benjamin B. Wagner for the Eastern District of California.  “Federal agencies rely on pricing information under the Multiple Award Schedule program in particular, and deserve the full benefit of applicable contract terms.”

This settlement relates to contracts under which Iron Mountain provided record storage services to government entities from 2001 to 2014 through GSA’s Multiple Award Schedule (MAS) program.  The MAS program provides the government with a streamlined process for procurement of commonly used commercial goods and services.  The settlement resolves allegations that Iron Mountain failed to meet its contractual obligations to provide GSA with accurate information about its commercial sales practices during contract negotiations, and failed to comply with the price reduction clause of the GSA contracts by not extending lower prices to government customers during its performance of the contracts.  It also resolves an allegation that Iron Mountain charged the United States for storage meeting National Archives and Records Administration requirements when the storage provided did not meet such requirements.

“My office will continue working diligently to make sure American taxpayers are getting the best value for every dollar spent,” said Acting Inspector General Robert C. Erickson for GSA.

The civil settlement resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery.  The civil lawsuit was filed in the Eastern District of California by Brent Stanley, a former Iron Mountain employee, and Patrick McKillop, who worked in the records management industry.  Collectively, they will receive $8,010,000.

The settlement with Iron Mountain was the result of a coordinated effort among the U.S. Attorney’s Office for the Eastern District of California, the Civil Division’s Commercial Litigation Branch, the GSA’s Office of the Inspector General, the Defense Criminal Investigative Service, the Defense Contract Audit Agency, the NASA Office of Inspector General, the U.S. Department of Veterans Affairs’ Office of Inspector General, the U.S. Department of Agriculture’s Office of Inspector General, U.S. Army Criminal Investigation Command, and the U.S. Department of Housing and Urban Development’s Office of Inspector General.

The lawsuit is captioned United States ex rel. Brent Stanley and Patrick McKillop v. Iron Mountain Incorporated, Civil Action No. 11-3260 (E.D. Cal.).  The claims resolved by this settlement are allegations only, and there has been no determination of liability.

Federal Contractors Eyak Technology LLC and Eyak Services LLC Resolve False Claims Act and Anti-Kickback Act Allegations

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Alaska and Virginia-based technology contractors Eyak Technology LLC (EyakTek) and Eyak Services LLC (ESL) have agreed to pay $2.5 million and relinquish any rights to additional payments from the United States to resolve allegations that they submitted false claims to the U.S. Army Corps of Engineers, the Justice Department announced today.  EyakTek and its sister company, ESL, provide healthcare, information technology, communications and infrastructure services to the U.S. government.  Both are subsidiaries of The Eyak Corporation, headquartered in Anchorage, Alaska.

“Federal government contractors and their employees must adhere to high standards in their dealings with the government,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division.  “We will vigorously pursue those who pay kickbacks or otherwise engage in conduct that undermines the integrity of the contracting process.”

From 2005 to 2011, EyakTek held a $1 billion prime contract with the U.S. Army Corps of Engineers known as the Technology for Infrastructure, Geospatial, and Environmental Requirements contract.

The government alleged that, between Sept. 12, 2007, and Oct. 4, 2011, EyakTek’s then-director of contracts, Harold Babb, accepted kickbacks from several subcontractors of EyakTek and ESL in return for using his position to direct subcontracts to them.  EyakTek and ESL allegedly submitted invoices to the Army Corps that included charges for work that was never performed by the subcontractors and lacked internal controls to detect the improper charges.

In March 2012, Babb pleaded guilty to bribery and kickback charges.  The U.S. District Court for the District of Columbia sentenced him to serve 87 months in prison, to be followed by 36 months of supervised release and more than $9 million in restitution for his role in the kickback scheme.

The Army Corps stopped payments to EyakTek and ESL when the alleged scheme came to light.  As part of the settlement, EyakTek and ESL will withdraw any appeals seeking the return of those funds, and relinquish all rights to any payments that have been withheld.

“This settlement demonstrates our willingness to use every tool of civil and criminal law in our arsenal to defend the American taxpayer from corruption in contracting,” said U.S. Attorney Ronald C. Machen Jr. for the District of Columbia.  “The criminal investigation into this wide-ranging bribery and kickback scheme has now resulted in the convictions of 20 individuals, including EyakTek’s former contracts director.  We have aggressively pursued asset forfeitures in the criminal proceedings to make the taxpayer whole and to deprive wrongdoers of their ill-gotten gains.  This civil settlement sends a message to contractors who try to cheat in the competition for government funds.”

“This is yet another prime example of our commitment, along with other fellow law enforcement agencies to hold people and companies accountable for each and every detail of their contracts with the U.S. government and the U.S. Army,” said Director Frank Robey of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit.  “Our agents will continue to aggressively investigate and identify any potential abuses that arise in regard to the contracting process.”

“Manipulations of the Department of Defense procurement process will not be tolerated,” said Special Agent in Charge Robert Craig for the Defense Criminal Investigative Service (DCIS) Mid-Atlantic Field Office.  “Today’s settlement demonstrates the commitment by DCIS and its partner agencies to hold accountable companies who attempt to bypass federal contracting laws.”

Today’s settlement is the result of a coordinated effort among the department’s Civil Division, the U.S. Attorney’s Office for the District of Columbia, the U.S. Army Corps of Engineers, DCIS, the Defense Contract Audit Agency, the Army’s Major Procurement Fraud Unit and the Small Business Administration.

The claims settled by this agreement are allegations only, and there has been no determination of liability.

Defense Contractor Pleads Guilty to Major Fraud in Provision of Supplies to U.S. Troops in Afghanistan

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Supreme Foodservice GmbH, a privately held Swiss company, and Supreme Foodservice FZE, a privately-held United Arab Emirates (UAE) company, pleaded guilty today to major fraud against the United States and agreed to resolve civil violations of the False Claims Act, in connection with a contract to provide food and water to the U.S. troops serving in Afghanistan, the Justice Department announced today.  The companies pleaded guilty in the Eastern District of Pennsylvania (EDPA) and paid $288.36 million in the criminal case, a sum that includes the maximum criminal fine allowed.

In addition, Supreme Group B.V. and several of its subsidiaries have agreed to pay an additional $146 million to resolve a related civil lawsuit, as well as two separate civil matters, alleging false billings to the Department of Defense (DoD) for fuel and transporting cargo to American soldiers in Afghanistan.  The lawsuit was filed in the EDPA, and the fuel and transportation allegations were investigated by the Southern District of Illinois and the Eastern District of Virginia, respectively, along with the Department’s Civil Division.

“The civil resolutions and agreements reflect the Justice Department’s continuing efforts to hold accountable contractors that have engaged in war profiteering,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division.  “The department will pursue contractors that knowingly seek taxpayer funds to which they are not entitled.”

“These companies chose to commit their fraud in connection with a contract to supply food and water to our nation’s fighting men and women serving in Afghanistan,” said U.S. Attorney Zane David Memeger for the Eastern District of Pennsylvania.  “That kind of conduct is repugnant, and we will use every available resource to punish such illegal war profiteering.”

The Criminal Fraud

In 2005, Supreme Foodservice AG, now called Supreme Foodservice GmbH, entered into a contract with the Defense Supply Center of Philadelphia (DSCP, now called Defense Logistics Agency – Troop Support) to provide food and water for the U.S. forces serving in Afghanistan.  According to court documents, between July 2005 and April 2009, Supreme Foodservice AG, together with Supreme Foodservice KG, now called Supreme Foodservice FZE, devised and implemented a scheme to overcharge the United States in order to make profits over and above those provided in the $8.8 billion subsistence prime vendor (SPV) contract.  The companies fraudulently inflated the price charged for local market ready goods (LMR) and bottled water sold to the United States under the SPV contract.  The Supreme companies did this by using a UAE company it controlled, Jamal Ahli Foods Co. LLC (JAFCO), as a middleman to mark up prices for fresh fruits and vegetables and other locally-produced products sold to the U.S. government, and to obscure the inflated price the Supreme companies were charging for bottled water.  The fraud resulted in a loss to the government of $48 million.

Supreme AG, Supreme FZE and Supreme’s owners (referred to in court documents as Supreme Owners #1 and #2) made concentrated efforts to conceal Supreme’s true relationship with JAFCO, and to make JAFCO appear to be an independent company.  They also took steps to make JAFCO’s mark-up on LMR look legitimate, and persisted in the fraudulent mark-ups even in the face of questions from DSCP about the pricing of LMR.

Even though the SPV contract stated that the Supreme food companies should charge the government the supplier’s price for the goods, emails between executives at the companies (referred to as Supreme Executive #1, #2, etc) reveal the companies’ deliberate decision to inflate the prices. Among other things, Supreme Owner #1 increased the mark-up that JAFCO would impose on non-alcoholic beer from 25 percent to 125 percent.  On or about Feb. 16, 2006, during a discussion about supplying a new product to the U.S. government, one Supreme executive wrote to another, “I am very sure the best option is to buy it from Germany and mark up via [JAFCO], like [non-alcoholic] beer.”

In early March 2006, after a DSCP contracting officer told the Supreme food companies that she wanted to see a manufacturer’s invoice for specific frozen products, Supreme Foodservice GmbH lowered its prices for those products to prices that did not include a JAFCO mark-up.  On March 14, 2006, instead of disclosing that the initial pricing had included a mark-up, a Supreme executive misled the DSCP representative by saying, “Based on more realistic quantities, we have been able to negotiate a better price,” to explain the change in pricing.

In June 2006, when a DSCP contracting officer raised questions about pricing focusing on four specific items, Supreme executives again misled the DSCP, claiming that the high prices were for a high quality of product, and offering to sell lower quality products for lower prices.  Supreme Foodservice GmbH did this even after analyzing its JAFCO margin on the four items in question and finding its profit margins were between 41 and 56 percent.

In September 2007, after a fired Supreme executive threatened to tell the DSCP about the fraud, his former employer entered into negotiation of a “separation agreement” with that executive to induce that executive not to disclose the ways in which the Supreme food companies were overcharging the DSCP.  The agreement stated that the executive would receive, among other things, a payment of 400,000 euros in September 2010, provided that the executive did not cause: a deterioration in the economic situation linked to the SPV contract; the termination of the SPV contract; or a decrease in the price levels for products, specifically including LMR and bottled water provided to the U.S. government.

Defendant Supreme GmbH pleaded guilty to major fraud against the United States, conspiracy to commit major fraud and wire fraud.  Supreme FZE, which owns JAFCO, pleaded guilty to major fraud against the United States.  The Supreme companies agreed to jointly pay $48 million in restitution and $10 million in criminal forfeiture.  Each company also agreed to pay $96 million in criminal fines.  In addition, as a result of the criminal investigation, the Supreme companies paid $38.3 million directly to the DSCP as a refund for separate overpayments on bottled water.

The Civil Settlements

In a related civil settlement, Supreme Group agreed to pay another $101 million to settle a whistleblower lawsuit, filed in the U.S. District Court for the EDPA by a former executive, which alleged that Supreme Group, and its food subsidiaries, violated the False Claims Act by knowingly overcharging for supplying food and water under the SPV contract.  The payment also resolves claims that, from June 2005 to December 2010, the Supreme food companies failed to disclose and pass through to the government rebates and discounts it obtained from its suppliers, as required by its SPV contract with the United States.

“Today’s results are part of an ongoing effort by the Defense Criminal Investigative Service (DCIS) and its law enforcement partners to protect the integrity of the Department of Defense’s acquisition process from personal and corporate greed,” said Deputy Inspector General for Investigations James B. Burch for the U.S. Department of Defense’s Office of the Inspector General.  “The Defense Criminal Investigative Service will continue to pursue allegations of fraud and corruption that puts the Warfighter at risk.”

“We are very pleased with this resolution, and are gratified that the public can now see what we’ve been aggressively investigating,” said Director Frank Robey of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit (MPFU).  “Companies that do business with the government must comply with all of their obligations, and if they overcharge for supplying our men and women in uniform who are bravely serving this nation, they must be held accountable for their actions.”

Separately, Supreme Site Services GmbH, a Supreme Group subsidiary, agreed to pay $20 million to settle allegations that they overbilled for fuel purchased by the Defense Logistics Agency (DLA) for Kandahar Air Field (KAF) in Afghanistan under a NATO Basic Ordering Agreement.  The government alleged that Supreme Site Services’ drivers were stealing fuel destined for KAF generators while en route for which the company falsely billed DLA.

“It is important that government contractors supporting conflicts abroad be held accountable for their billings to the government,” said U.S. Attorney Dana J. Boente for the Eastern District of Virginia.  “The DoD investigating components are instrumental in protecting the interests of the government, and their efforts in this investigation are to be commended.”

Supreme Group’s subsidiary Supreme Logistics FZE also has agreed to pay $25 million to resolve alleged false billings by Supreme Logistics in connection with shipping contracts between the U.S. Transportation Command (USTRANSCOM), located at Scott Air Force Base in Illinois, and various shipping carriers to transport food to U.S. troops in Afghanistan during Operation Enduring Freedom.  The shipping carriers transported cargo destined for U.S. troops from the United States to Latvia or other intermediate ports, and then arranged with logistics vendors, including Supreme Logistics, to carry the cargo the rest of the way to Afghanistan.  The United States alleged that Supreme Logistics falsely billed USTRANSCOM for higher-priced refrigerated trucks when it actually used lower-priced non-refrigerated trucks to transport the cargo.

“The U.S. Attorney’s Office for the Southern District of Illinois is committed to protecting the integrity of all of the vital missions carried out at Scott Air Force Base, including the mission of the U.S. Transportation Command,” said U.S. Attorney Stephen R. Wigginton for the Southern District of Illinois.  “These vital services carried out by the brave men and women of the armed forces of the United States deserve, and will receive, our full support, and this office will do everything possible to protect their missions.”

“These settlements are victories for American taxpayers,” said Special Inspector General John F. Sopko for Afghanistan Reconstruction.  “It sends a clear signal that whether a case involves a mom and pop outfit or a major multinational corporation, we will work tirelessly with our investigative partners to pursue justice any time U.S. dollars supporting the mission in Afghanistan are misused.”

The EDPA lawsuit was initially filed under the qui tam or whistleblower provisions of the False Claims Act, by Michael Epp, Supreme GmbH’s former Director, Commercial Division and Supply Chain.  The False Claims Act prohibits the submission of false claims for government money or property and allows the United States to recover treble damages and penalties for a violation.  Under the Act’s whistleblower provisions, a private party may file suit on behalf of the United States and share in any recovery.  The case remained under seal to permit the United States to investigate the allegations and decide whether to intervene and take over the case.  Epp will receive $16.16 million as his share of the government’s settlement of the lawsuit.

The criminal and civil matters in the EDPA were the result of a coordinated effort by the Department of Justice’s Civil Division, the U.S. Attorney’s Office for the Eastern District of Pennsylvania, DCIS, U.S. Army’s Criminal Investigative Command’s MPFU and the FBI.

The investigation of Supreme Site Services ’ alleged false billings for fuel was conducted by the Civil Division and the U.S. Attorney’s Office for the Eastern District of Virginia, and the investigation of Supreme Logistics’ alleged false invoices for transportation was handled by the Civil Division and the U.S. Attorney’s Office for the Southern District of Illinois.  Both matters were investigated by the Defense Contract Audit Agency Office of Investigative Support, the Army Audit Agency, the International Contract Corruption Task Force, the U.S. Army’s Criminal Investigative Command’s Major Procurement Fraud Unit, the DoD Office of Inspector General’s DCIS, the Special Inspector General for Afghan Reconstruction, the U.S. Air Force Office of Special Investigations and the Naval Criminal Investigative Service.

The claims resolved by the civil settlements are allegations only, except for the conduct for which the Supreme food companies have pleaded guilty.

Five Army National Guard Officials and One Civilian Charged with Bribery

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Four retired and one active-duty Army National Guard officials and one civilian have been charged for their alleged participation in bribery schemes related to the awarding of millions of dollars of Army National Guard marketing, retention and recruitment contracts.  Two of the retired Army National Guard officials and the civilian pleaded guilty for their roles in the schemes.

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, U.S. Attorney Loretta E. Lynch of the Eastern District of New York, Assistant Director in Charge Andrew McCabe of the FBI’s Washington Field Office, Special Agent in Charge Robert E. Craig Jr. 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 captured by its motto, the Army National Guard is ‘always ready, always there’ for the American people,” said Assistant Attorney General Caldwell.  “Unfortunately, today’s charges expose National Guard officials who were ‘always ready’ to pocket bribes and ‘always there’ to take kickbacks.  In return, the charged officials allegedly subverted the open bidding process and illegally steered millions of taxpayer dollars to the bribe-payers through marketing and advertising contracts.  Corruption should know no place in American government, but least of all in the military that so honorably serves our country.  The Criminal Division is committed to rooting out corruption wherever we find it, including in the military, so that we can ensure that no one is putting the public’s trust up for sale.”

“These criminal charges and guilty pleas 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.”

“This investigation has sadly reminded us that even some members of our military are willing to trade on the trust their country placed in them to line their pockets with the profits of corrupt activities,” said U.S. Attorney Lynch.  “We and our law enforcement partners will constantly guard against and root out such corruption wherever we find it.”

Charles Sines, 56, of Stafford, Virginia, a retired colonel from the United States Army National Guard; Wesley Russell, 48, of Albany, Indiana, a retired lieutenant colonel from the Indiana Army National Guard; and Jason Rappoccio, 39, of Hampton, South Carolina, an active-duty sergeant first class from the Army National Guard are charged with conspiracy to solicit bribes and the solicitation of bribes.  Russell and Rappoccio allegedly asked for and received bribes, and Sines allegedly provided bribes.

Robert Porter, 50 of Columbia, Maryland, a retired colonel from the Army National Guard, and Timothy Bebus, 44, of Forest Lake, Minnesota, a retired sergeant major of the Minnesota Army National Guard and owner of Mil-Team Consulting and Solutions LLC, each pleaded guilty in the Eastern District of Virginia in September 2014 to conspiracy to commit bribery and bribery of a public official.  Julianne Hubbell, 45, of Brooklyn Park, Minnesota, a civilian who partnered with her brother, Bebus, as the vice president of operations of Mil-Team, also pleaded guilty in September 2014 to conspiracy to commit bribery.  Sentencing hearings for Bebus and Hubbell are scheduled for Jan. 23, 2015, and for Porter on Jan. 30, 2015.

“The alleged steering of large government contracts is offensive to active duty, reserve and retired members of the National Guard Bureau who took an oath to support and defend the Constitution,” said FBI Assistant Director in Charge McCabe.  “It is also offensive to average American citizens who trust their government and its contractors to use taxpayer money wisely.  We urge anyone who has knowledge of corruption and abuse in federal government contracting to contact the FBI.”

“The Department of Defense places special trust and confidence in its service members, particularly those in positions to influence the expenditure of taxpayer dollars,” said DCIS Special Agent in Charge Craig.  “Guardsmen hold a unique position in our society, representing both their state and military service.  The alleged behavior uncovered in this investigation was a disservice to both, but in no way typical of those honorable women and men that serve in our Army and Air National Guard.  Identifying and investigating fraud and public corruption remains the highest of priorities for the Defense Criminal Investigative Service.  Alongside our law enforcement partners, we will continue to aggressively pursue allegations of fraud impacting Department of Defense resources.”

“We have highly-trained, Army CID special agents who are extremely talented and very capable of rooting out this type of corruption within our ranks,” said Army-CID Director Robey.   “People must realize, both in and out of uniform, that fraud will not be tolerated within the Army and Department of Defense, and greed cannot and will not trump duty and honor.”

As set forth in the indictments and other publicly-filed documents, the National Guard Bureau is a joint activity of the U.S. Department of Defense (DOD), state Army National Guard units and the Departments of the Army and Air Force.  The National Guard Bureau, located in Arlington, Virginia, oversees the distribution of federal funding provided to the Army National Guard and its state units.

The DOD provides millions of dollars of federal funds to the Army National Guard for, among other things, advertising, marketing and sponsorships in order to recruit new members.  The National Guard Bureau uses these funds to promote the Army National Guard by entering into advertising, marketing and sponsorship contracts.  For example, through advertising, marketing and sponsorship contracts, the National Guard was an official sponsor of Dew Tour, Warrior Dash, and American Motorcycle Association Supercross’s events, where recruiters handed out promotional items and recruited new members.  The National Guard also had a contract to sponsor Michael Jordan’s AMA Superbike team.

The National Guard Bureau can avoid a competitive bid process by awarding these federally-funded marketing contracts to Small Business Administration (SBA) certified 8(a) companies, which are minority-owned businesses.  The National Guard Bureau also provides a portion of the federal funds to the state units to allocate.

The indictments allege that Sines and Rappoccio evaded the competitive bid process by using 8(a) companies to award contracts in exchange for bribes.

According to allegations in the indictment against him, Sines founded a company, Financial Solutions, after retiring from the Army National Guard as a colonel.  Sines allegedly paid Porter, a then-active-duty colonel in the Army National Guard, a percentage of all contracts that Porter steered to Financial Solutions through 8(a) companies.  As the director of the National Guard Bureau’s Guard Strength Directorate, Porter had substantial influence over the awarding of National Guard Bureau contracts, and allegedly steered approximately $4.5 million worth of contracts to Sines and Financial Solutions.

The indictment against Russell alleges that, while on active duty as a lieutenant colonel in the Indiana Army National Guard, Russell demanded 15 percent of all profits that a private marketing company would receive from state Army National Guard units.  In return for his 15 percent cut of the profits, Russell allegedly promoted and encouraged state Army National Guard units to purchase the marketing company’s products.

The indictment against Rappoccio, an active-duty sergeant first class in the Army National Guard, alleges that Bebus and Hubbell paid Rappoccio a $30,000 bribe for steering a contract worth approximately $3.7 million to an 8(a) company chosen by Bebus.  In pleading guilty, Bebus and Hubbell admitted to paying this bribe.  In an effort to conceal the bribe payment, Bebus, Hubbell and others allegedly arranged for the payment of $6,000 in cash to Rappoccio, and the remaining $24,000 was allegedly routed from a business account controlled by Hubbell to an account controlled by Bebus and Hubbell’s brother-in-law, and then provided to Rappoccio in the form of a cashier’s check to Rappoccio’s wife.

An indictment is merely an allegation, and the defendants are presumed innocent unless and until proven guilty.

The case is being investigated by the FBI’s Washington Field Office, with assistance from DCIS’s Mid-Atlantic Field Office and Army-CID’s Expeditionary Fraud Resident Agency’s Major Procurement Fraud Unit.  The case is being prosecuted by Trial Attorney Alison L. Anderson of the Criminal Division’s Fraud Section, Assistant U.S. Attorney Jonathan Fahey of the Eastern District of Virginia and Assistant U.S. Attorneys Marisa Seifan and Martin Coffey of the Eastern District of New York.

Allegations of bribery or corruption within the National Guard Bureau’s retention and recruitment contracting can be reported to the FBI’s Washington Field Office at (202) 278-2000 or the FBI’s Northern Virginia Public Corruption Hotline at (703) 686-6225.

Army Sergeant Pleads Guilty for Scheme to Defraud the Military

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An Army sergeant pleaded guilty today to bribery and conspiracy to defraud the government for his role in a scheme to steal more than one million gallons of fuel from the U.S. military for resale on the black market in Afghanistan.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Thomas G. Walker of the Eastern District of North Carolina, Special Agent in Charge John F. Khin of the Defense Criminal Investigative Service (DCIS) Southeast Field Office, Special Agent in Charge John A. Strong of the FBI’s Charlotte Division, Director Frank Robey of the U.S. Army Criminal Investigation Command (CID) Major Procurement Fraud Unit (MPFU) and Special Inspector General for Afghanistan Reconstruction John F. Sopko made the announcement.

Christopher Ciampa, 32, of Lillington, North Carolina, entered his guilty plea before U.S. District Court Judge Terrence W. Boyle of the Eastern District of North Carolina.  The sentencing hearing was scheduled for the week of December 15, 2014.

“Sergeant Ciampa took bribes to help steal millions of dollars’ worth of fuel meant to support U.S. military operations in Afghanistan,” said Assistant Attorney General Caldwell.  “His greed put his fellow soldiers at greater risk, and his actions stand in stark contrast to the integrity and sacrifice demonstrated every day by the men and women of our Armed Forces.”

“The DCIS, with our investigative partners, continues to aggressively pursue those who deprive the Department of Defense of much needed resources, such as fuel, critical to accomplishing its global missions,” said DCIS Special Agent in Charge Khin.  “Corruption and theft in a combat environment, especially on such a large scale, degrade the effectiveness of the U.S. armed forces, and increases the danger to our warfighters by diverting those resources to our enemies

“Sergeant Christopher Ciampa betrayed his unit and nation for personal profit by entering into illegal relationships in order to personally profit from the sale and transport of fuel valued at millions of dollars,” said FBI Special Agent in Charge Strong.  “These actions, especially in a wartime environment, damage the reputation of all soldiers and impede the success of coalition war efforts.  Those who put the reputation and lives of their fellow servicemen and women at risk will be aggressively pursued by the FBI and our military partners dedicated to upholding justice.”

“Our highly-trained special agents are experts in fraud investigations and untangling webs of lies and deceit,” said CID MPFU Director Robey.  “Whether an individual is in or out of uniform, it makes no difference, we will do everything in our investigative power to see those who defraud the Army brought to justice.”

“The crimes alleged in this case are serious and describe actions that undermine our mission in Afghanistan,” said Special Inspector General Sopko.  “SIGAR will continue to work tirelessly to protect the American taxpayers’ hard earned money and bring the full weight of the justice system to bear on anyone who seeks to rob the U.S. government.”

According to his plea agreement, Ciampa was deployed to Afghanistan with the 3rd Special Forces Group Service Detachment and was assigned to Camp Brown at Kandahar Air Field between February 2011 and January 2012.  During the deployment, one of Ciampa’s chief responsibilities was management of the Transportation Movement Requests (TMRs) for fuel and other items in support of military units in Afghanistan paid for by the U.S. government.

Over the course of the conspiracy, Ciampa and others created and submitted false TMRs for the purchase of thousands of gallons of fuel that were neither necessary nor used by military units.  Instead, Ciampa and his co-conspirators stole the fuel and resold it on the black market in neighboring towns.  Between February 2011 and December 2011, they created false TMRs for 114 large fuel tanker trucks, which could each carry approximately 10,000 gallons of fuel.  All of the TMRs were awarded to a single Afghan trucking company, despite significantly higher rates charged by this company.

As a result of the criminal conduct, the United States suffered a total loss of $10,812,000.  The loss resulted from stolen fuel and payments on the fraudulent TMRs in the following amounts: $9,120,000 in lost fuel and $1,692,000 in fraudulent TMRs for the 114 large tanker trucks.

Ciampa admitted that he and his co-conspirators sent some of the illicit proceeds back to the United States via wire transfer and carried some of the cash in their luggage, and Ciampa hid $180,000 of stolen funds inside stereo equipment that he shipped back to North Carolina with his unit’s gear.  He used his share of the proceeds from the scheme to purchase a truck and other personal items.

The case was investigated by DCIS, FBI, CID MPFU and the Special Inspector General for Afghanistan Reconstruction (SIGAR).  The case is being prosecuted by Trial Attorney Wade Weems on detail to the Criminal Division’s Fraud Section from SIGAR and Assistant U.S. Attorney Banumathi Rangarajan of the Eastern District of North Carolina.

Virginia-Based Move Management Company Pays More Than $500,000 to Settle Overbilling Claims in Connection with Transportation of Personal Property in Relocating Federal Employees

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Virginia-Based Move Management Company Pays More Than $500,000 to Settle Overbilling Claims in Connection with Transportation of Personal Property in Relocating Federal Employees

RE/MAX Allegiance Relocation Services, a Virginia-based move management company, has agreed to pay the government $509,807 to resolve allegations that it violated the False Claims Act by overbilling for transportation services, the Department of Justice announced today.

“Today’s settlement demonstrates our continuing vigilance to ensure that those doing business with the government do so legally and honestly and that taxpayer funds are not misused,” said Assistant Attorney General for the Civil Division Stuart F. Delery.  “Government contractors who seek to profit at the expense of taxpayers will be held accountable.”

 

The settlement relates to allegations involving contracts to transport personal property of federal employees relocating duty stations within the United States and between the United States and Canada.  The government alleged that the defendant charged for move management services that were not provided and overbilled agencies on other moves by charging inapplicable tariff rates.

 

“We encourage whistleblowers to provide us with useful information to help us combat all manners of fraud on the U.S. Government,” said U.S. Attorney for the Eastern District of Virginia Dana J. Boente.

“We will continue to investigate allegations of federal contractors fraudulently maximizing their profits at the expense of American taxpayers,” said U.S. General Services Administration Acting Inspector General Robert C. Erickson.

The settlement resolves allegations filed in a lawsuit by Michael Angel, a former employee of RE/MAX Allegiance Relocation Services, in federal court in Alexandria, Virginia.  The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.  The act also allows the government to intervene and take over the action, as it did in this case.  Angel will receive $86,667.

The settlement was the result of a coordinated effort by the Civil Division of the Department of Justice, the U.S. Attorney’s Office for the Eastern District of Virginia, the General Services Administration Office of Inspector General, U.S. Department of Homeland Security Office of Inspector General, Department of Agriculture Office of Inspector General and NASA Office of Inspector General.

The case is captioned United States ex rel. Michael Angel v. Franconia Real Estate Services, Inc., d/b/a RE/MAX Allegiance Relocation Services; No. 1:12cv764 (E.D.Va.).  The claims resolved by the settlement are allegations only; there has been no determination of liability.

Two Individuals Plead Guilty to Conspiring to Launder Bribes Received in Afghanistan

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Two individuals have pleaded guilty for their roles in a scheme to launder approximately $250,000 in bribes received from Afghan contractors in Afghanistan.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, United States Attorney for the Western District of Tennessee Edward L. Stanton III and United States Attorney for the Eastern District of Tennessee William C. Killian made the announcement.
Jimmy W. Dennis, 44, formerly of Clarksville, Tennessee, and a former First Sergeant with the U.S. Army, pleaded guilty before U.S. District Court Judge Samuel H. May Jr. of the Western District of Tennessee to conspiracy to launder approximately $250,000 in bribe payments he received from Afghan contractors in Afghanistan.    Sentencing is scheduled for Sept. 4, 2014.

James C. Pittman, 45, of Rossville, Georgia, pleaded guilty last Thursday before U.S. Magistrate Judge William B. Carter of the Eastern District of Tennessee for his role in this conspiracy.    Sentencing is scheduled for Sept. 8, 2014.

According to pleadings filed at the time of the guilty pleas, from March 2008 through March 2009, Dennis was an Army Sergeant assigned as a paying agent in the Humanitarian Aid Yard (HA Yard) at Bagram Air Field, Afghanistan.    Dennis was a member of the team in the HA Yard that purchased supplies from local Afghan vendors for distribution as part of the Commander’s Emergency Response Program for urgent humanitarian relief requirements in Afghanistan.    Dennis and a partner entered into an agreement to steer contracts to certain Afghan vendors in return for approximately $250,000 in cash bribes.

Further according to court pleadings, Dennis smuggled the bribe money back to the United States hidden in packages addressed to his wife, his father and a former Army friend, Pittman.    Dennis sent $80,000 to $100,000 to his father from Afghanistan in packages that contained toy “jingle trucks,” colorfully decorated trucks or buses in Afghanistan and Pakistan.    Dennis hid the money in the rear compartment of the toy trucks.    Dennis also shipped a hope chest to his father containing approximately $100,000 in cash in a concealed compartment.

Also according to court documents, while on leave, Dennis met with Pittman, advised him that he had obtained money through kickbacks, and asked him for help laundering the funds.    Pittman, owner of a landscaping business, agreed to “run through his company” these bribery proceeds.  After returning to Afghanistan, Dennis sent approximately $60,000 to Pittman contained in toy jingle trucks.    Dennis also arranged for his father to send approximately $20,000 to Pittman, who returned it in the form of purported salary checks from Pittman’s company.

These matters are being investigated by the Special Inspector General for Afghanistan Reconstruction, the FBI, the Army Criminal Investigative Division, the Defense Criminal Investigative Service, and the Air Force Office of Special Investigation.    The prosecution is being handled by Trial Attorney Daniel Butler of the Criminal Division and Assistant U.S. Attorneys Frederick Godwin of the Western District of Tennessee and James Brooks of the Eastern District of Tennessee.

Former Army National Guard Soldier Pleads Guilty in Connection with Bribery and Fraud Scheme to Defraud the U.S. Army National Guard Bureau

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A former soldier of the U.S. Army National Guard has pleaded guilty for his role in a bribery and fraud scheme that caused approximately $70,000 in losses to the U.S. Army National Guard Bureau, announced Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas.
Former Sergeant First Class Michael Rambaran, 51, of Pearland, Texas, pleaded guilty today to one count of conspiracy, one count of bribery and one count of aggravated identity theft.   Sentencing is scheduled for June 24, 2014 before U.S. District Judge Lee H. Rosenthal in Houston.
The case arises from an investigation involving allegations that former and current military recruiters and U.S. soldiers in the San Antonio and Houston areas engaged in a wide-ranging corruption scheme to illegally obtain fraudulent recruiting bonuses.   To date, the investigation has led to charges against 25 individuals, 22 of whom have pleaded guilty.
According to court documents, in approximately September 2005, the National Guard Bureau entered into a contract with Document and Packaging Broker Inc. (Docupak) to administer the Guard Recruiting Assistance Program (G-RAP).   The G-RAP was a recruiting program that offered monetary incentives to Army National Guard soldiers who referred others to join the Army National Guard.   Through this program, a participating soldier could receive bonus payments for referring another individual to join the Army National Guard.   Based on certain milestones achieved by the referred soldier, a participating soldier would receive payment through direct deposit into the participating soldier’s designated bank account.   To participate in the program, soldiers were required to create online recruiting assistant accounts.
Rambaran admitted that between approximately February 2008 and August 2011, while he was a recruiter for the National Guard, he obtained the names and Social Security numbers of potential soldiers and provided them to recruiting assistants so that they could use the information to obtain fraudulent recruiting referral bonuses by falsely claiming that they were responsible for referring those potential soldiers to join the Army National Guard, when in fact they were not.   In exchange for the information, Rambaran admitted that he personally received a total of approximately $29,000 in payments from the recruiting assistants.
Co-conspirators  Edia Antoine, Ernest A. Millien III and Melanie Moraida pleaded guilty to conspiracy and bribery in connection to this scheme.   Antoine and Millien are each scheduled to be sentenced on Aug. 24, 2014.   Moraida is scheduled to be sentenced on Aug. 26, 2014.   All of these sentencing hearings are set before U.S. District Judge Rosenthal in Houston.
Another alleged co-conspirator, Christopher Renfro, who was indicted on Aug. 7, 2013, remains charged with two counts of wire fraud and two counts of aggravated identity theft.   Trial is currently scheduled for June 16, 2014, before U.S. District Judge Rosenthal in Houston.   An indictment is only an accusation, and a defendant is presumed innocent unless and until proven guilty.
The cases are being investigated by special agents from the San Antonio Fraud Resident Agency of Army CID’s Major Procurement Fraud Unit.   This case is being prosecuted by Trial Attorneys Sean F. Mulryne, Heidi Boutros Gesch and Mark J. Cipolletti of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney John Pearson of the Southern District of Texas.