Civilian Navy Employee Found Guilty of Obstruction and False Statements After Jury Trial

A federal jury today returned a guilty verdict against a civilian employee of the U.S. Navy posted at the Capodichino Navy Base near Naples, Italy, for obstructing an investigation and making false statements, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Nicholas A. Klinefeldt of the Southern District of Iowa.

Steven William Ashton, 41, with a last known U.S. residence in Davenport, Iowa, was found guilty after a nine-day jury trial of creating false documents to obstruct the Naval Criminal Investigative Service (NCIS) investigation into Ashton’s private consulting business called BlackGrid Consulting LLC.  The jury also found Ashton guilty of making false statements about his tour of duty in order to obtain federal benefits and access to military bases worldwide.

The evidence at trial showed that the NCIS was investigating Ashton for conflicts of interest and using inside government information to advance his business.  When Ashton learned about the investigation, he created fraudulent documentation purporting to show that he had fully disclosed his business to Navy authorities and received approval.  At Ashton’s direction, his defense counsel unwittingly submitted those false documents to the prosecutors and gave other false explanations to the Justice Department.

According to the evidence presented at trial, from April 2004 to March 2013, Ashton was employed by the Navy as the North Atlantic Treaty Organization and Host Nation Programs Manager for the regions of Europe, Africa and Southwest Asia, responsible for managing contracts and agreements among the Navy and other countries to support the United States’ military efforts.

He was found not guilty on charges of theft of government funds for obtaining housing benefits, called Living Quarters Assistance, to which he was not entitled, and of obstructing that investigation.

This case was investigated by the NCIS and the Air Force Office of Special Investigations.  The case is being prosecuted by Director of Procurement Fraud Litigation Catherine Votaw of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Clifford Cronk of the Southern District of Iowa.

Boeing Pays $23 Million to Resolve False Claims Act Allegations

The Boeing Company paid $23 million to resolve allegations that it submitted false claims for labor charges on maintenance contracts with the U.S. Air Force for the C-17 Globemaster aircraft, the Justice Department announced today.  Boeing, an aerospace and defense industry giant, is headquartered in Chicago.

“Today’s settlement demonstrates that the Justice Department vigilantly ensures that companies meet their contractual obligations and charge the government appropriately,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division.  “Government contractors who seek illegal profit at the expense of taxpayers will face serious consequences.”

The government alleged that Boeing improperly charged labor costs under contracts with the Air Force for the maintenance and repair of C-17 Globemaster aircraft at Boeing’s Aerospace Support Center in San Antonio, Texas.  The C-17 Globemaster aircraft, which is both manufactured and maintained by Boeing, is one of the military’s major systems for transporting troops and cargo throughout the world.  The government alleged that the company knowingly and improperly billed a variety of labor costs in violation of applicable contract requirements, including for time its mechanics spent at meetings not directly related to the contracts.

“Defense contractors are required to obey strict accounting standards when submitting billing for work performed on government contracts,” said U.S. Attorney Robert Pitman for the Western District of Texas.  “The pursuit and favorable settlement of this civil litigation was the result of effective teamwork between the Justice Department and the investigative agencies.”

The settlement resolves allegations originally brought in a lawsuit by present and former Boeing employees Clinton Craddock, Fred Van Shoubrouek, Anthony Rico and Fernando de la Garza in federal court in San Antonio under the False Claims Act.  The act permits private parties to sue for false claims on behalf of the United States and to share in any recovery.  The individuals who filed the suit will receive $3,910,000 as their share of the settlement.

The settlement was the result of a coordinated effort by the Civil Division, the U.S. Attorney’s Office for the Western District of Texas, the Defense Criminal Investigative Service, the Air Force Office of Special Investigations, the Defense Contract Audit Agency and the Defense Contract Management Agency.

The case is United States ex rel. Craddock v. Boeing, Case No. SA-07-CA-0880FB (W.D. Tex.).  The claims resolved by the settlement are allegations only; there has been no determination of liability.

Department of Defense Procurement Official Sentenced for His Role in Contract Bribery Scheme

A Utah man was sentenced to serve 24 months in prison for his role in a bribery and fraud scheme involving federal procurement contracts, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney David B. Barlow of the District of Utah.

On Oct. 24, 2011, Jose Mendez, 50, of Farr West, Utah, pleaded guilty to conspiracy to commit bribery and procurement fraud, bribery, and procurement fraud.  Mendez was charged in an October 2011 indictment, along with Sylvester Zugrav, 71, and Maria Zugrav, 67, owners of Atlas International Trading Company in Sarasota, Fla.  The Zugravs were sentenced on Jan. 8, 2014.

According to court documents, while Mendez worked as a procurement program manager for the U.S. Air Force at Hill Air Force Base in Ogden, Utah, he conspired to enrich himself and others by exchanging money and other things of value for non-public information and favorable treatment in the procurement process.  Court records state that Mendez was offered approximately $1,240,500 in payments and other things of value throughout the course of the conspiracy.  Mendez admitted that from approximately 2008 to August 2011, he received more than $185,000 in payments and other things of value, with promises of additional bribe payments if Atlas were to receive future contracts from the U.S. government.

In return for the bribes offered and paid, Mendez admitted he gave Atlas and the Zugravs favorable treatment during the procurement process, including disclosing government budget and competitor bid information, which helped Atlas and the Zugravs in winning contracts.

The case was investigated by the FBI and the Air Force Office of Special Investigations. The case was prosecuted by Trial Attorneys Marquest J. Meeks and Edward P. Sullivan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Carlos A. Esqueda of the District of Utah.