Category Archives: EDVA

Former United States Navy Military Sealift Command Contractor and Co-Founder of Government Contracting Company Sentenced to Prison

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A former contractor for the U.S. Navy Military Sealift Command (MSC) and a co-founder of a Chesapeake, Virginia, government contracting company were sentenced today for their roles in a scheme to bribe and provide illegal gratuities to public officials to secure lucrative military 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, Special Agent in Charge Royce E. Curtin of the FBI’s Norfolk Office, Executive Assistant Director Charles T. May Jr. of the Naval Criminal Investigative Service (NCIS), and Special Agent in Charge Robert E. Craig, Jr. of the Defense Criminal Investigative Service (DCIS) Mid-Atlantic Field Office made the announcement.  United States District Judge Rebecca Beach Smith of the Eastern District of Virginia imposed the sentences.

Scott B. Miserendino Sr., 55, of Stafford, Virginia, and Timothy S. Miller, 58, of Chesapeake, Virginia, were sentenced to serve 96 months in prison and 24 months in prison, respectively.  Miserendino was also ordered to forfeit $212,000 and Miller was ordered to forfeit $167,000.  Miller was also ordered to pay a fine of $25,000.  In August 2014, Miserendino pleaded guilty to one count of conspiracy to commit bribery and one count of bribery, and Miller pleaded guilty to providing illegal gratuities to Miserendino and Kenny E. Toy, the former Afloat Programs Manager for the N6 Command, Control, Communication, and Computer Systems Directorate.

According to admissions in his plea agreement, Miserendino was a government contractor at the MSC, which is the leading provider of transportation for the U.S. Navy.  In that position, Miserendino worked closely with Toy, who exercised substantial influence over the MSC contracting process.  In November 2004, Miserendino and Toy initiated a bribery scheme that spanned five years, involved multiple co-conspirators, including two companies, and resulted in Miserendino and Toy receiving more than $265,000 in cash, among other things of value, in exchange for official acts in connection with the award of MSC contracts.

Specifically, Miserendino and Toy solicited cash from co-conspirators, including a $50,000 cash payment from Miller and his business partner, Dwayne A. Hardman, to influence the award of government contracts.  Miserendino admitted that he and Toy also accepted other things of value in exchange for official acts, including a vacation rental, laptop computers, flat screen televisions, a football helmet signed by Troy Aikman, a wine refrigerator and softball bats.

According to Miller’s admissions, during the scheme, his company received approximately $2.5 million in business from the MSC, despite its limited record of past performance in the industry.  Miserendino and Toy also directed $3 million in business from MSC to another company run by other co-conspirators.

After the cash payments were delivered, Miller admitted that he directed the creation of a false promissory note disguising the illegal gratuities as a personal loan to another individual.  Miserendino also admitted to engaging in a scheme to conceal his criminal activity by arranging for more than $85,000 to be paid to Hardman in an attempt to dissuade him from reporting the bribery scheme to law enforcement authorities.

Earlier this year, five other individuals pleaded guilty and were sentenced in connection with the bribery scheme:

  • Toy pleaded guilty to bribery and was sentenced to eight years in prison and ordered to forfeit $100,000;
  • Hardman pleaded guilty to bribery and was sentenced to eight years in prison and ordered to forfeit $144,000;
  • Michael P. McPhail pleaded guilty to conspiracy to commit bribery and was sentenced to three years in prison and ordered to forfeit $57,000;
  • Roderic J. Smith pleaded guilty to conspiracy to commit bribery and was sentenced to four years in prison and ordered to forfeit $175,000; and
  • Adam C. White pleaded guilty to conspiracy to commit bribery and was sentenced to two years in prison and ordered to forfeit $57,000.

The case was investigated by the FBI, NCIS and DCIS, and prosecuted by Trial Attorney Emily Rae Woods of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Stephen W. Haynie of the Eastern District of Virginia.

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.

Co-Founder of Government Contracting Company Pleads Guilty to Bribery

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Timothy S. Miller, 58, a co-founder of a Chesapeake, Virginia, government contracting company, pleaded guilty today to bribing two public officials working for the United States Navy Military Sealift Command.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, United States Attorney Dana J. Boente of the Eastern District of Virginia, Special Agent in Charge Robert Craig of the Defense Criminal Investigative Service (DCIS) Mid-Atlantic Field Office, Special Agent in Charge Susan Triesch of the Naval Criminal Investigative Service (NCIS) Norfolk Field Office, and Special Agent in Charge Royce E. Curtin of the FBI Norfolk Field Office made the announcement today after Miller’s guilty plea was accepted by United States Magistrate Judge Lawrence R. Leonard of the Eastern District of Virginia.

According to a statement of facts filed with the plea agreement, in February 2009, Miller, along with his business partner, Dwayne A. Hardman, co-founded a government contracting company that provided telecommunications support to the Military Sealift Command, which is the leading provider of transportation for the U.S. Navy.

At the plea hearing, Miller admitted that he bribed two officials at the Military Sealift Command for favorable official acts.    In particular, he admitted that on May 12, 2009, he gave $30,000 in cash to Kenny E. Toy, the former Afloat Programs Manager for the Military Sealift Command’s N6 Command, Control, Communication, and Computer Systems Directorate, and Scott B. Miserendino Sr., a government contractor who worked with Toy at the Military Sealift Command Headquarters.    He also admitted that just two days after giving Toy and Miserendino the $30,000, he agreed that Hardman should give Toy and Miserendino an additional $20,000.

According to Miller’s statement of facts, Toy exercised substantial influence over the Military Sealift Command contracting process by creating and executing multi-million dollar budgets, obtaining funding for projects, developing and having access to sensitive information, and requesting that subcontract work be awarded to particular companies.   As a result of the $50,000 payment, Miserendino and Toy performed various official acts to assist Miller’s company.    Indeed, in 2009, Miller’s company received approximately $2.5 million in business from the Military Sealift Command.

As a condition of his plea agreement, Miller has agreed to forfeit $167,000.    Miller is scheduled to be sentenced on November 7, 2014.

Earlier this year, five other individuals pleaded guilty in connection with the bribery scheme.    On February 12, 2014, Toy pleaded guilty to bribery, and he was sentenced on July 29, 2014, to serve 96 months in prison and ordered to forfeit $100,000.    On February 18, 2014, Hardman pleaded guilty to bribery, and he was sentenced on July 9, 2014, to serve 96 months in prison and ordered to forfeit $144,000.    On February 19, 2014, Michael P. McPhail pleaded guilty to conspiracy to commit bribery, and he was sentenced on August 5, 2014, to serve 36 months in prison and ordered to forfeit $57,000.    On March 5, 2014, Roderic J. Smith pleaded guilty to conspiracy to commit bribery, and he was sentenced on June 23, 2014, to serve 48 months in prison and ordered to forfeit $175,000.    On April 4, 2014, Adam C. White pleaded guilty to conspiracy to commit bribery, and he was sentenced on July 11, 2014, to serve 24 months in prison and ordered to forfeit $57,000.

The case was investigated by the FBI, NCIS and DCIS.    The case was prosecuted by Trial Attorney Emily Rae Woods of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Stephen W. Haynie of the Eastern District of Virginia.

Former U.S. Navy Military Sealift Command Manager Sentenced for Receiving Bribes

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Kenny E. Toy, 54, the former Afloat Programs Manager at the United States Navy Military Sealift Command, was sentenced today to serve 96 months in prison for receiving bribes.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, United States Attorney Dana J. Boente of the Eastern District of Virginia, Special Agent in Charge Robert Craig of the Defense Criminal Investigative Service (DCIS) Mid-Atlantic Field Office, Acting Executive Assistant Director Charles T. May Jr. of the Naval Criminal Investigative Service (NCIS) Atlantic Operations and Special Agent in Charge Royce E. Curtin of the FBI’s Norfolk Field Office made the announcement today after sentencing by United States Chief Judge Rebecca Beach Smith of the Eastern District of Virginia.

On Feb. 12, 2014, Toy pleaded guilty to a criminal information charging him with one count of bribery.   According to the statement of facts filed with Toy’s plea agreement, Toy was employed as the Afloat Programs Manager in the N6 Command, Control, Communication, and Computer Systems Directorate at the Military Sealift Command, which is the leading provider of transportation for the United States Navy.  In approximately November 2004, Toy joined an extensive bribery conspiracy that spanned five years, involved multiple co-conspirators, including two different companies, and resulted in the payment of more than $265,000 in cash bribes, among other things of value, to Toy and to Scott B. Miserendino Sr., a former government contractor who performed work for the Military Sealift Command.

At his plea hearing, Toy admitted that he accepted monthly cash bribes of approximately $3,000, as well as a flat screen television and a paid vacation to the Outer Banks in North Carolina, from co-conspirators Dwayne A. Hardman, Roderic J. Smith, Michael P. McPhail and Adam C. White, all of whom were employed at a government contracting company referred to as Company A in court documents.  Toy also admitted that he accepted a $50,000 cash bribe in May 2009 from Hardman and another co-conspirator, Timothy S. Miller, both of whom were employed at a government contracting company referred to as Company B in court documents.  In exchange for the bribes, Toy provided favorable treatment to Company A and Company B in connection with Military Sealift Command related business.

As part of his guilty plea, Toy also admitted to engaging in a scheme to conceal his criminal activity.  Toy admitted to causing more than $88,000 to be paid to Hardman in an attempt to prevent Hardman from reporting the bribery scheme to law enforcement authorities.

Toy was also ordered to serve a supervised release term of three years following his prison sentence, and ordered to forfeit $100,000.

Earlier this year, four other individuals pleaded guilty in connection with the bribery scheme.  On Feb. 18, 2014, Hardman, the co-founder of Company A and Company B, pleaded guilty to providing bribes to Toy and Miserendino.   On Feb. 19, 2014, McPhail, a former employee at Company A, pleaded guilty to conspiracy to commit bribery.   On April 4, 2014, White, a former vice president at Company A, pleaded guilty to conspiracy to commit bribery.   On March 5, 2014, Smith, the former president of Company A, pleaded guilty to conspiracy to bribe public officials.   On June 23, 2014, United States District Judge Henry Coke Morgan sentenced Smith to serve 48 months in prison followed by one year of supervised release and ordered him to forfeit $175,000.

On May 23, 2014, a grand jury in the Eastern District of Virginia indicted Miserendino and Timothy S. Miller, a businessman whose company sought contracting business from the Military Sealift Command.   The indictment charges Miserendino with one count of conspiracy to commit bribery, one count of bribery, one count of conspiracy to commit obstruction of criminal investigations and to commit tampering with a witness, and one count of obstruction of criminal investigations.   The indictment charges Miller with one count of conspiracy to commit bribery and two counts of bribery.   Trial is set for Sept. 30, 2014, before Chief Judge Rebecca Beach Smith.

Charges contained in an indictment are merely allegations, and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The case was investigated by the FBI, NCIS and DCIS.   The case was prosecuted by Trial Attorney Emily Rae Woods of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Stephen W. Haynie of the Eastern District of Virginia.

Two Former Chesapeake, Virginia, Subcontractors Sentenced for Bribery, Conspiracy

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Dwayne A. Hardman, 44, co-founder of two government contracting companies that sought business from the United States Navy Military Sealift Command (MSC), and Adam C. White, 40, former vice president and co-owner of one of Hardman’s government contracting companies, were sentenced for bribery and conspiracy.    On July 9, 2014, Hardman was sentenced to 96 months in prison, followed by three years of supervised release.    White was sentenced today to serve 24 months in prison, followed by three years of supervised release.    Hardman was ordered to forfeit $144,000, and White was ordered to forfeit $57,000.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, United States Attorney Dana J. Boente for the Eastern District of Virginia, Special Agent in Charge Royce E. Curtin of the FBI’s Norfolk Office, Acting Executive Assistant Director Charles T. May Jr. of the Naval Criminal Investigative Service (NCIS) and Special Agent in Charge Robert Craig of the Defense Criminal Investigative Service (DCIS) Mid-Atlantic Field Office made the announcement today after sentencing by United States Chief Judge Rebecca Beach Smith of the Eastern District of Virginia.
According to court documents, Hardman and White participated in a five-year bribery scheme in which they and several co-conspirators provided more than $265,000 in cash bribes, among other things, to two public officials working for MSC, in an illegal effort to influence those public officials to provide favorable treatment to Hardman and White’s companies in connection with United States government contracting work.
On Feb. 18, 2014, Hardman pleaded guilty to a criminal information charging him with bribery.    According to the plea documents, Hardman was the co-founder of two government contracting companies, referred to as Company A and Company B, located in Chesapeake, Virginia that sought contracting business from MSC, which is the leading provider of transportation for the United States Navy.  At his plea hearing, Hardman admitted that beginning in March 2005, he and other Company A employees, provided approximately $3,000 in cash bribes per month to two MSC public officials, Kenny E. Toy, the former Afloat Programs Manager for the MSC’s N6 Command, Control, Communication, and Computer Systems Directorate, and Scott B. Miserendino Sr., a former government contractor who performed work for the MSC.  Those Company A employees included Roderic J. Smith, the former president, co-owner and co-founder of Company A; Adam C. White, a former vice president and co-owner of Company A; and Michael P. McPhail a former project manager and co-owner of Company A.  Hardman also admitted that in May 2009, he and Timothy S. Miller, co-founder of Company B, provided $50,000 in cash bribes to Toy and Miserendino.    In addition to the cash bribes, Hardman stated that he and his co-conspirators provided Toy and Miserendino flat screen televisions, a paid vacation to Nags Head in North Carolina, a personal loan and installation of hardwood floors in Toy’s residence.
In exchange for these bribes, Toy and Miserendino provided favorable treatment in connection with MSC-related business to both Company A and Company B.  During the bribery scheme, Company A received approximately $3 million in MSC-related business, and Company B received approximately $2.4 million in MSC-related business.
As part of his guilty plea, Hardman also admitted that, in approximately November or December 2010, Hardman threatened to report the bribery activities to law enforcement authorities if his co-conspirators did not provide him money.    In total, Hardman admitted that he received approximately $85,000 from his co-conspirators, including Smith, Toy and Miserendino, in exchange for not reporting the bribery scheme to law enforcement authorities.
On April 4, 2014, White pleaded guilty to a criminal information charging him with conspiracy to commit bribery.    At his plea hearing, White admitted that from approximately April 2005 until approximately March 2006, he personally contributed approximately $26,000 in cash bribe payments for Toy and Miserendino, and White was aware that other co-conspirators, including Hardman, Smith and McPhail, were also contributing cash and other things of value to be provided to Toy and Miserendino in exchange for their official assistance in providing MSC-related business.
Earlier this year, three other individuals pleaded guilty in connection with the bribery scheme.    On Feb. 12, 2014, Toy, the former Afloat Programs Manager, pleaded guilty to accepting bribes from Hardman, White, and others.    On Feb. 19, 2014, McPhail pleaded guilty to conspiracy to commit bribery.    On March 5, 2014, Smith pleaded guilty to conspiracy to bribe public officials.
On June 23, 2014, United States District Judge Henry Coke Morgan of the Eastern District of Virginia sentenced Smith to 48 months in prison followed by 1 year of supervised release and ordered him to forfeit $175,000.
On May 23, 2014, a grand jury in the Eastern District of Virginia indicted Miserendino and Miller.    The indictment charges Miserendino with one count of conspiracy to commit bribery, one count of bribery, one count of conspiracy to commit obstruction of criminal investigations and to commit tampering with a witness, and one count of obstruction of criminal investigations.    The indictment charges Miller with one count of conspiracy to commit bribery and two counts of bribery.    Trial is set for Sept. 30, 2014, before Chief Judge Rebecca Beach Smith of the Eastern District of Virginia.
The charges in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
The case was investigated by Special Agents of the FBI, NCIS, and DCIS.    The case is being prosecuted by Trial Attorney Emily Rae Woods of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Stephen W. Haynie of the Eastern District of Virginia.

 

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.

Former Chesapeake, Virginia Subcontractor Sentenced for Conspiracy to Commit Bribery

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Roderic J. Smith, 50, the co-founder and former president of a government contracting company, was sentenced yesterday to 48 months in prison, followed by one year of supervised release, for conspiracy to bribe public officials.    Smith was ordered to forfeit $175,000.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, United States Attorney Dana J. Boente, for the Eastern District of Virginia, Special Agent in Charge Robert Craig of the Defense Criminal Investigative Service (DCIS) Mid-Atlantic Field Office, Acting Executive Assistant Director Charles T. May, Jr., of the Naval Criminal Investigative Service (NCIS) Atlantic Operations, and Special Agent in Charge Royce E. Curtin of the FBI’s Norfolk Field Office made the announcement today after sentencing by United States District Judge Henry Coke Morgan, Jr. of the Eastern District of Virginia.
On March 5, 2014, Smith pleaded guilty to a criminal information.    According to court documents, Smith was the co-founder and president of a contracting company located in Chesapeake, Virginia, that sought contracting business from the United States Navy Military Sealift Command.    In approximately November 2004, Smith joined an extensive bribery conspiracy that spanned four years, involved multiple co-conspirators, including two different companies, and resulted in the payment of more than $265,000 in cash bribes, among other things of value, to two public officials performing work for the Military Sealift Command, Kenny E. Toy and Scott B. Miserendino, Sr.    In exchange for the bribe payments, Smith’s business, referred to as Company A in court documents, received lucrative business from the Military Sealift Command that amounted to approximately $3 million in task orders during the time period of the conspiracy.
As part of his guilty plea, Smith also admitted to engaging in a scheme to conceal his criminal activity.    According to the plea agreement, Smith admitted to paying more than $85,000 to his business partner, Dwayne A. Hardman, in an attempt to prevent Hardman from reporting the bribery scheme to law enforcement authorities.
Earlier this year, four other individuals pleaded guilty in connection with the bribery scheme.    On Feb. 12, 2014, Kenny Toy, the former Afloat Programs Manager for the Military Sealift Command’s N6 Command, Control, Communication, and Computer Systems Directorate, pleaded guilty to accepting bribes from Smith and others.    On Feb. 18, 2014, Smith’s business partner, Dwayne A. Hardman, pleaded guilty to bribery.    On Feb. 19, 2014 and April 4, 2014, respectively, Smith’s associate, Michael P. McPhail, and another Smith associate, Adam C. White, pleaded guilty to conspiracy to commit bribery.
On May 23, 2014, a grand jury in the Eastern District of Virginia indicted two individuals in connection with the bribery scheme, Scott B. Miserendino, Sr., a former government contractor who performed work for the Military Sealift Command, and Timothy S. Miller, a businessman whose company sought contracting business from the Military Sealift Command.    The indictment charges Miserendino with one count of conspiracy to commit bribery, one count of bribery, one count of conspiracy to obstruct a criminal investigation and to tamper with a witness, and one count of obstruction of a criminal investigation.    The indictment charges Miller with one count of conspiracy to commit bribery and two counts of bribery.    The trial on these charges is scheduled to begin on Sept. 30, 2014, before Chief Judge Rebecca Beach Smith.    The charges in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
The case was investigated by the FBI, NCIS and DCIS.    The case was prosecuted by Trial Attorney Emily Rae Woods of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Stephen W. Haynie of the U.S. Attorney’s Office for the Eastern District of Virginia.

Navy Military Sealift Command Official and Businessman Charged with Bribery

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Scott B. Miserendino, Sr., 55, a former government contractor who performed work for the United States Navy Military Sealift Command , and Timothy S. Miller, 57, a businessman whose company sought contracting business from the Military Sealift Command, were indicted today on charges including conspiracy and bribery.
Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, Acting U.S. Attorney Dana J. Boente of the Eastern District of Virginia, Special Agent in Charge Robert Craig of the Defense Criminal Investigative Service Mid-Atlantic Field Office (DCIS), Acting Executive Assistant Director Charles T. May Jr. of the Naval Criminal Investigative Service (NCIS) Atlantic Operations and Special Agent in Charge Royce E. Curtin of the FBI’s Norfolk Field Office made the announcement.
A federal grand jury in the Eastern District of Virginia returned a six-count indictment today that charges Miserendino with one count of conspiracy to commit bribery, one count of bribery, one count of conspiracy to commit obstruction of criminal investigations and to commit tampering with a witness, and one count of obstruction of criminal investigations.    The indictment charges Miller with one count of conspiracy to commit bribery and two counts of bribery of a public official.
According to the indictment, Miserendino was a government contractor at the Military Sealift Command, the leading provider of transportation for the United States Navy.    The indictment alleges that Miserendino worked closely with another Military Sealift Command official, Kenny E. Toy, in managing telecommunications projects and in influencing the award of United States government contracts, subcontracts, and task orders.
The indictment alleges that Miserendino solicited and accepted bribes, in the form of cash, a flat screen plasma television, a wine refrigerator, and other items, in exchange for providing favorable treatment to two companies in connection with United States government contracts.
Between March 2005 and 2007, Miserendino allegedly accepted cash payments of approximately $3,000 per month from agents of Company A, a corporation that sought contracting business from the Military Sealift Command.    In total, Miserendino accepted approximately $100,000 in bribes from Company A’s agents.
In addition, the indictment alleges that, in February 2009, Miller and his business partner Dwayne A. Hardman established Company B, a government contracting corporation located in Chesapeake, Virginia, to provide support to the Military Sealift Command on various telecommunications projects.    Shortly thereafter, in May 2009, Miller and Hardman allegedly paid cash bribes totaling $50,000 to Miserendino and Toy in exchange for favorable treatment in connection with U.S. government contracts, subcontracts, and task orders.
In addition, as alleged in the indictment, Miserendino obstructed justice and tampered with a witness by causing $85,000 to be paid to Hardman in an attempt to prevent or delay him from reporting the bribery scheme to law enforcement authorities.
Prior to this indictment, five other individuals pleaded guilty in connection with the bribery scheme.    On Feb. 12, 2014, Kenny E. Toy, former Afloat Programs Manager for the Military Sealift Command N6 Command, Control, Communication and Computer Systems Directorate, pleaded guilty to bribery and admitted to receiving more than $100,000 in cash bribes in exchange for providing favorable treatment to two companies in connection with U.S. government contracts.    On Feb. 18, 2014, Dwayne A. Hardman, Miller’s business partner, pleaded guilty to bribery and admitted to providing more than $140,000 in cash bribes to Toy and Miserendino.    On Feb. 19, 2014, Michael P. McPhail pleaded guilty to conspiracy to commit bribery and agreed to forfeit $57,000.    On March 5, 2014, Roderic J. Smith pleaded guilty to conspiracy to commit bribery and agreed to forfeit $175,000.    On April 4, 2014, Adam C. White pleaded guilty to conspiracy to commit bribery and agreed to forfeit $57,000.
The case was investigated by the DCIS, NCIS and the FBI.    The case is being prosecuted by Trial Attorney Emily Rae Woods of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Stephen W. Haynie of the Eastern District of Virginia.
The charges in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

 

 

Marubeni Corporation Sentenced for FCPA Violations

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Marubeni Corporation, a Japanese trading company involved in the handling of products and provision of services in a broad range of sectors around the world, including power generation, was sentenced today for its participation in a scheme to pay bribes to high-ranking government officials in Indonesia to secure a lucrative power project.
Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, Acting U.S. Attorney Michael J. Gustafson of the District of Connecticut and Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office made the announcement.

Marubeni was sentenced by U.S. District Judge Janet B. Arterton in the District of Connecticut.  Marubeni pleaded guilty on March 19, 2014, to one count of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) and seven counts of violating the FCPA.   The company signed a plea agreement in which it admitted its criminal conduct, agreed to maintain and implement an enhanced global anti-corruption compliance program and to cooperate with the department’s ongoing investigation, and agreed to pay an $88 million fine, which the court accepted in imposing the sentence.   The plea agreement cites Marubeni’s refusal to cooperate with the department’s investigation when given the opportunity to do so, its lack of an effective compliance and ethics program at the time of the offense, and its failure to timely remediate as several of the factors considered by the department in determining the resolution.

According to the court filings, Marubeni and its employees, together with others, paid bribes to officials in Indonesia – including a high-ranking member of the Indonesian Parliament and high-ranking members of Perusahaan Listrik Negara (PLN), the state-owned and state-controlled electricity company in Indonesia – in exchange for assistance in securing a $118 million contract, known as the Tarahan project, for the company and its consortium partner to provide power-related services for the citizens of Indonesia.   To conceal the bribes, Marubeni and its consortium partner retained two consultants purportedly to provide legitimate consulting services on behalf of the power company and its subsidiaries in connection with the Tarahan project.   The primary purpose for hiring the consultants, however, was to use the consultants to pay bribes to Indonesian officials.

Also according to court filings, the first consultant retained by Marubeni and its co-conspirators received hundreds of thousands of dollars in his U.S. bank account to be used to bribe the member of Parliament.  The consultant then allegedly transferred the bribe money to a bank account in Indonesia for the benefit of the official.   E-mails between the co-conspirators discuss in detail the use of the first consultant to funnel bribes to the member of Parliament and the influence that the member of Parliament could exert over the Tarahan project.

As admitted in court documents, in the fall of 2003, Marubeni and its co-conspirators determined that the first consultant was not effectively bribing key officials at PLN.   As a result, Marubeni and its consortium partner decided to reduce the first consultant’s commission from three percent of the total contract value to one percent, and pay the remaining two percent to a second consultant who could more effectively bribe officials at PLN.   In an e-mail between two employees of Marubeni’s consortium partner, they discussed a meeting between Marubeni, an executive from the consortium partner, and the first consultant, stating that the consultant “committed to convince [the member of Parliament] that ‘one’ [percent] is enough.”   Marubeni and its co-conspirators were successful in securing the Tarahan project and subsequently made payments to the consultants for the purpose of bribing the Indonesian officials.

Frederic Pierucci, a current executive at Marubeni’s consortium partner, pleaded guilty on July 29, 2013, to one count of conspiring to violate the FCPA and one count of violating the FCPA.  David Rothschild, a former vice president of regional sales at the consortium partner, pleaded guilty on Nov. 2, 2012 to one count of conspiracy to violate the FCPA.   Lawrence Hoskins, a former senior vice president for the Asia region for the consortium partner, and William Pomponi, a former vice president of regional sales at the consortium partner, were charged in a second superseding indictment on July 30, 2013.

This case is being investigated by FBI agents who are part of the Washington Field Office’s dedicated FCPA squad, with assistance from the Meriden, Connecticut, Resident Agency of the FBI.   Significant assistance was provided by the Criminal Division’s Office of International Affairs.   In addition, the department greatly appreciates the significant cooperation provided by its law enforcement counterparts in Indonesia at the Komisi Pemberantasan Korupsi (Corruption Eradication Commission), the Office of the Attorney General in Switzerland and the Serious Fraud Office in the United Kingdom.

The case is being prosecuted by Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David E. Novick of the District of Connecticut.

Former Virginia Subcontractor Pleads Guilty to Bribery

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Dwayne Allen Hardman, 44, of Charleston, W.V., pleaded guilty today to paying bribes to public officials.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and Dana J. Boente, Acting U.S. Attorney for the Eastern District of Virginia,  Special Agent in Charge  Robert Craig of the Defense Criminal Investigative Service   Mid-Atlantic Field Office (DCIS), Acting Executive Assistant Director Charles T. May Jr. of the Naval Criminal Investigative Service (NCIS) Atlantic Operations and  Special Agent in Charge Royce E. Curtin of the FBI’s Norfolk Field Office made the announcement after the plea was accepted by U.S. Magistrate Judge Douglas E. Miller in the Eastern District of Virginia.
Hardman was charged by criminal information on Feb. 12, 2014, with paying a bribe to public officials.   Hardman faces a maximum penalty of 15 years in prison when he is sentenced on June 6, 2014.
According to a statement of facts filed with the plea agreement, in November 2004, Hardman and another businessman established a government contracting corporation in Chesapeake, Va., to provide support to the Military Sealift Command (MSC) on various telecommunications projects.   Shortly thereafter, in early 2005, Hardman and his business partner agreed to pay cash bribes to two MSC officials in exchange for official action to steer government contracts to Hardman’s corporation.   From March 2005 and until 2007, Hardman, his business partner and others paid the MSC officials approximately $3,000 each month in cash bribes.   During this time, Hardman and his business partner withdrew approximately $144,000 in cash, which was then provided to the two MSC officials in exchange for their assistance in securing MSC contracting and subcontracting business for Hardman’s company.
According to court documents, in February 2009, Hardman left his former business and formed another government contracting company in Chesapeake with another businessman.   The two MSC officials again agreed to steer contracting work to Hardman’s new company in exchange for receiving bribes from Hardman and his new business partner.   In May 2009, Hardman and his new business partner paid each of the two MSC officials $25,000 in cash bribes.
On Feb. 12, 2014, one of the MSC officials, Kenny Toy, who was the Afloat Programs Manager for MSC’s N6 Command, Control, Communication and Computer Systems Directorate, pleaded guilty to accepting bribes in conjunction with this scheme.
This case was investigated by Special Agents of the FBI, the Naval Criminal Investigative Service, and the Defense Criminal Investigative Service.   Trial Attorney Emily Rae Woods of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Stephen W. Haynie are prosecuting the case.