Tag Archives: Criminal Division-Fraud Section

Two U.S. Contractor Employees Sentenced for Kickback Conspiracy and Tax Crimes Related to Iraq Reconstruction Efforts

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Wednesday, October 10, 2012
Two U.S. Contractor Employees Sentenced for Kickback Conspiracy and Tax Crimes Related to Iraq Reconstruction Efforts

WASHINGTON – Two former employees of The Parsons Company, an international engineering and construction firm, were sentenced in federal court in the Northern District of Alabama for their participation in a kickback conspiracy in Iraq and related tax crimes, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney for the Northern District of Alabama Joyce White Vance.

Billy Joe Hunt, 57, was sentenced today by U.S. District Judge Abdul Kallon in federal court in Huntsville, Ala., to 15 months in prison, three years of supervised release, $66,212 in restitution to the Internal Revenue Service (IRS) and forfeiture of $236,472.  Gaines R. Newell Jr., 53, was sentenced yesterday by U.S. District Judge Virginia Hopkins in federal court in Birmingham, Ala., to 27 months in prison, three years of supervised release, $1,102,115 in restitution ($861,027 to the U.S. Army Corps of Engineers and $241,088 to the IRS) and forfeiture of $861,027.

On May 8, 2012, Hunt pleaded guilty to one count of conspiracy to commit mail and wire fraud and pay kickbacks, and one count of subscribing a false tax return.  On April 10, 2012, Newell pleaded guilty to one count of conspiracy to commit mail and wire fraud and to pay kickbacks, and one count of subscribing a false tax return.

According to court documents, Newell and Hunt were employed by Parsons in Iraq as program manager and deputy program manager, respectively, under a contract that Parsons held to support the Coalition Munitions Clearance Program operated by the U.S. Army Corps of Engineers in Huntsville.  The Coalition Munitions Program sought to preclude insurgents and other unfriendly groups from getting munitions that had been stockpiled, abandoned or seized, and using them against Coalition forces or the Iraqi public.  In their plea proceedings, Newell and Hunt admitted taking over $1 million in kickbacks from subcontractors from 2005 to 2007, in return for arranging to award contracts on the munitions clearance program to subcontractors.  Newell and Hunt also admitted filing false federal income tax returns by not disclosing kickback income.

On May 21, 2012, Hunt and Newell’s co-conspirator Ahmed Sarchil Kazzaz, 45, pleaded guilty for his role in the scheme. Kazzaz and his business, Leadstay Company, were indicted in the Northern District of Alabama in September 2011 for paying over $947,000 in kickbacks to Newell and Hunt.  According to the plea agreement, between March 2006 and June 2007, Kazzaz agreed to pay kickbacks to Newell and Hunt totaling 13 percent of the amounts paid by Parsons, and thus obtained over $23 million in subcontracts providing materials and equipment to Parsons. After Kazzaz’s arrest in Los Angeles on Dec. 2, 2011, this case was transferred to the Central District of California, where Kazzaz pleaded guilty.  His sentencing is set for Oct. 29, 2012 before U.S. District Judge R. Gary Klausner in the Central District of California.

The cases are being prosecuted by Catherine Votaw, Director of Procurement Fraud for the Criminal Division’s Fraud Section, and Assistant U.S. Attorney David Estes of the Northern District of Alabama.  The investigation was handled by the Special Inspector General for Iraq Reconstruction, the Defense Criminal Investigative Service, the IRS-Criminal Investigations Division and the FBI.

Subsidiary of Tyco International Ltd. Pleads Guilty, Is Sentenced for Conspiracy to Violate Foreign Corrupt Practices Act

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Monday, September 24, 2012
Subsidiary of Tyco International Ltd. Pleads Guilty, Is Sentenced for Conspiracy to Violate Foreign Corrupt Practices Act
Tyco Entities Agree to More Than $26 Million in Penalties
WASHINGTON – Tyco International Ltd. – together with a subsidiary that pleaded guilty this morning to a criminal charge for conspiring to violate the Foreign Corrupt Practices Act (FCPA) – has agreed to pay more than $26 million to resolve the conspiracy charge with the Department of Justice and charges with the U.S. Securities and Exchange Commission (SEC), announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney for the Eastern District of Virginia Neil H. MacBride.As part of the more than $26 million, Tyco – a company based in Switzerland that manufactures and sells products related to security, fire protection and energy – has agreed to pay a $13.68 million penalty for falsifying books and records in connection with payments by its subsidiaries to government officials in various countries in order to obtain and retain business .
Tyco Valves & Controls Middle East Inc. (TVC ME) – an indirect, wholly owned subsidiary of Tyco that sold and marketed valves and other industrial equipment throughout the Middle East for the oil, gas, petrochemical, commercial construction, water treatment and desalination industries – pleaded guilty this morning before U.S. District Judge Claude M. Hilton for conspiring to violate the anti-bribery provisions of the FCPA.  According to the criminal information to which TVC ME pleaded guilty, the company paid bribes to officials employed by Saudi Aramco, an oil and gas company controlled and managed by the government of the Kingdom of Saudi Arabia, in order to obtain contracts with Saudi Aramco.
At the conclusion of the plea proceeding, the court sentenced TVC ME to pay a $2.1 million fine, which is included as part of the $13.68 million penalty.
“Today, a Tyco subsidiary pleaded guilty to bribing officials of state-owned entities in various countries to score valuable petroleum contracts and, with Tyco International, agreed to pay nearly $14 million in penalties,” said Assistant Attorney General Breuer.  “Together with the SEC, we are leading a fight against corruption around the globe.”
“For more than 10 years, various Tyco entities bribed foreign officials and cooked the books to hide the payments,” said U.S. Attorney MacBride.  “The Eastern District of Virginia has a strong partnership working with the Criminal Division’s Fraud Section on FCPA cases and is aggressively using venue provisions to hold FCPA violators accountable for their conduct.”
As part of the settlement, the department entered into a non-prosecution agreement (NPA) with Tyco.  According to the NPA, a number of Tyco’s subsidiaries made payments, both directly and indirectly, to government officials in order to obtain and retain business with private and state-owned entities, and falsely described the payments in Tyco’s corporate books, records and accounts as legitimate charges.  From 1999 to 2009, Tyco knowingly conspired to falsify its books and records in connection with these payments.
In addition to the monetary penalty, Tyco and TVC ME also agreed to cooperate with the department, to report periodically to the department concerning the companies’ compliance efforts, and to continue to implement an enhanced compliance program and internal controls designed to prevent and detect FCPA violations.
The agreement acknowledges Tyco’s timely, voluntary and complete disclosure, its cooperation – including a global internal investigation concerning bribery and related misconduct – and its extensive remediation.  That remediation includes the implementation of an enhanced compliance program, the termination of employees responsible for the improper payments and falsification of books and records, the severing of contracts with the responsible third-party agents and the closing of subsidiaries due to compliance failures.
In the parallel civil proceedings, Tyco consented with the SEC to a proposed final judgment that orders the company to pay $10,564,992 in disgorgement and $2,566,517 in prejudgment interest – which, together with the Department of Justice penalty, totals more than $26 million.
The case is being prosecuted by Trial Attorneys Kathleen M Hamann and Daniel S. Kahn of the Criminal Division’s Fraud Section, and Assistant U.S. Attorney Charles F. Connolly of the Eastern District of Virginia.  The case was investigated by the FBI.
The Justice Department acknowledges and expresses its appreciation for the significant assistance provided by the SEC’s Division of Enforcement.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.

U.S. Army Master Sergeant Pleads Guilty to Defrauding U.S. Government

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Wednesday, August 29, 2012
U.S. Army Master Sergeant Pleads Guilty to Defrauding U.S. Government

WASHINGTON – A U.S. Army master sergeant pleaded guilty today to accepting thousands of dollars in gratuities from contractors during his deployment to Iraq as a field ordering officer at a forward operating base in Iraq, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the District of South Carolina William N. Nettles.

Julio Soto Jr., 52, of Columbus, Ga., pleaded guilty today before U.S. District Chief Judge Margaret B. Seymour in the District of South Carolina to a criminal information charging him with one count of conspiracy to accept illegal gratuities.

According to court documents, Soto was a master sergeant in the U.S. Army, deployed to Forward Operating Base (FOB) Hammer in Iraq, as a field ordering officer (FOO), a public official.  FOO funds are used to purchase miscellaneous items and supplies such as paint, lumber and plywood from local vendors.  It is a violation of federal law for field ordering officers to accept gratuities from contractors dependent upon them for contracts.

In or about March 2007 through October 2008, Soto, along with an alleged U.S. Army co-conspirator, was involved with the construction of a government building at FOB Hammer by local Iraqi contractors.  Soto and his alleged co-conspirator unlawfully sought, received and accepted illegal gratuities for helping Iraqi contractors gain U.S. government contracts, and then purchased U.S. Postal money orders with the illegal proceeds and mailed them back to the United States.

At sentencing, Soto faces a maximum penalty of five years in prison, a fine of $250,000, or twice the pecuniary gain or loss, and up to three years of supervised release.  As part of his plea agreement, Soto agreed to pay $62,542 plus interest in restitution to the United States.

This case is being prosecuted by Special Trial Attorney Mark Grider of the Justice Department Criminal Division’s Fraud Section, on detail from the Special Inspector General for Iraq Reconstruction (SIGIR), and by Assistant U.S. Attorney Dean A. Eichelberger of the District of South Carolina.  The case is being investigated by SIGIR, the Defense Criminal Investigative Service and the Major Procurement Fraud Unit of the U.S. Army Criminal Investigation Command.