On November 3, 2009, a loan agreement for the WPA painting Simplicity was signed by GSA’s Fine Arts Program Office to loan the painting to the St. Louis Art Museum for public display and effectively returns the painting to US Government control after being missing for thirty-seven (37) years.   The painting, valued at approximately $40,000, is of significant historical value.

On July 21, 2009, as part of the proactive investigation into the recovery of Works Progress Administration (WPA) artwork, investigators in GSA’s Mid-Atlantic Regional Office received information regarding an upcoming auction of a WPA painting from GSA staff.  GSA authenticated the piece through the label as a WPA work of art that is subject to recovery and stated the painting was one of the paintings originally entered as lost/stolen in the FBI stolen art database.  The painting, Simplicity by WPA artist Eldzier Cortor was scheduled to be auctioned on October 15, 2009 by an auction house in Ohio.

After the painting was confirmed as being on the FBI stolen art list, GSA OIG agents contacted Cowan’s and received the name of the consignor.  The consignor was contacted and advised of the government’s ownership of the painting.  The auction house agreed to hold the painting until instructed to release it by GSA.  The Fine Arts Program worked with the auction house to find a suitable location for public display and arranged for the shipping of the painting.

On October 28, 2009, former Department of Defense (DoD) employee, Derrick Jackson, was sentenced in U.S. District Court in Scranton, PA, to 60 months imprisonment and 36 months supervised release on multiple counts of Conspiracy, Bribery, Wire Fraud, and Release of Contractor Bid/Proposals Information.  Jackson was also ordered to pay restitution of $80,000 to the U.S. Army and pay a special assessment of $900. 

Previously, on April 8, 2009, Jackson was found guilty of violating 18 U.S.C. 371 (Conspiracy), 18 U.S.C. 201 (Bribery), 18 U.S.C. 1343 (Wire Fraud) and 41 U.S.C. 423(a) & (e) (1) (Release of Contractor Bid/Proposal Information).

This case was initiated based upon information from the Defense Criminal Investigative Service (DCIS) that a former GSA contractor employee at Ft. Belvoir, VA, may have provided bid information to Derrick Jackson, U.S. Army employee, Ft. Belvoir, VA, who then forwarded the bid information to Steve Chung, former General Manager, Computer Giants, a GSA contractor.  At DCIS’s request, investigators in GSA OIG’s National Capital Regional Office provided copies of several task orders issued by GSA to Computer Giants to provide computer related equipment to the U.S. Army at Ft Belvoir, VA, and the Tobyhanna Army Depot, Tobyhanna, PA.

The investigation disclosed that Chung, Jackson, and five other DoD employees from Ft. Belvoir and Tobyhanna Army Depot participated in a scheme in which the DoD employees directed task orders to Chung/Computer Giants in return for money and other items of value. The investigation disclosed Jackson provided Chung with several bids/proposals from competitor companies in order to assist Computer Giants in being awarded government contracts.  Jackson was the last of the co-conspirators to be sentenced. 

The investigation developed no information to suggest that the former GSA contract employee at Ft. Belvoir, VA, was part of this scheme, nor that he was aware that Jackson had provided sensitive contract information to Computer Giants.  The former GSA contractor employee had performed contract support for GSA at Ft. Belvoir and had provided Jackson contract information, including bid or proposal documents, pursuant to the normal course of business because Jackson was the Project Manager and client for the contracts in question.

On July 15, 2009, Andrew S. Ralph, pled guilty to one count each of violating Title 21 Kansas Criminal Statute, Section 4204, Subsection (4)(a), Criminal Possession of a Firearm, Level 8 Felony, and Title 21, Section 3701, Subsection (a)(1), Theft, Class A Misdemeanor, for stealing a Federal surplus, Glock semiautomatic pistol, from the Marshall County Sheriff’s Department. Ralph was sentenced in Marshall County District Court to 14 months incarceration for violating Title 21, Section 4204, Subsection (4)(a), and 12 months incarceration for violating Title 21 Section 3701 Subsection (a)(1), with the sentences to run concurrently. The execution of those sentences were suspended and Ralph was placed on supervised probation for a period of eighteen 18 months for the first offense and twelve months 12 months for the second, and was ordered to pay fees and court costs.

The investigation was initiated based on information received when a Property Disposal Specialist at GSA’s Denver Federal Center, advised the Marshall County Sheriff’s Department (MCSD) in Marysville, KS, that a Kansas State Agency for Surplus Property (KS SASP) In-Use Certification form had been completed and signed, on or about October 2, 2007, and was submitted to the KS SASP certifying that all seven federal surplus Glocks, that MCSD had acquired, were being utilized. The GSA employee further advised during a subsequent compliance audit (visit) on October 4, 2007, that the KS SASP discovered that one of the surplus Glocks was missing from the MCSD.

A joint investigation was initiated by GSA OIG’s Mid-West Regional Office and the Kansas Bureau of Investigation. Our investigation revealed that upon the resignation of a MCSD deputy, the Undersheriff, John S. Ralph, picked up the deputy’s equipment from his residence, including the surplus Glock firearm. Undersheriff Ralph took the Glock to his home where he stored it in a shoulder holster in his closet. It was then stolen by his son, Andrew S. Ralph in the 2005-2006 timeframe. Andrew Ralph confessed to stealing the Glock and trading it for narcotics.

On October 16, 2009, GSA OIG’s Mid-Atlantic regional office was notified that James Cumbo, Government subcontractor, was debarred from federal contracting based on Cumbo’s guilty plea and the facts underlying the guilty plea.  The debarment was administered by the GSA Office of Acquisition Integrity.

This case was initiated by GSA OIG investigators based on the criminal conviction of James Cumbo.  On May 7, 2008, in Fairfax County, VA, Cumbo was convicted on one count of credit card fraud.  Cumbo was sentenced to 12 months probation and ordered to pay $3,945 in restitution.

On October 16, 2009, David Safavian, former GSA Chief of Staff, was sentenced in U.S District Court in Washington, DC to 12 months of incarceration and 24 months of supervised probation. 

This case was initiated based upon information sent to the GSA OIG Hotline.  The information alleged that David Safavian, then GSA Chief of Staff, attended a 2002 golf trip to Scotland sponsored by Washington D.C. lobbyist Jack Abramoff.  Also along on the golf trip was then-U.S. Congressman Robert “Bob” Ney (Ohio 18th District.) To date, the ongoing investigation into the lobbying activities of Abramoff and his associates has resulted in 13 guilty pleas by various lobbyists and public officials, including Ney and a former Deputy Secretary at the U.S. Department of the Interior.

Safavian was originally convicted on June 20, 2006, on three counts of Title 18, U.S. Criminal Code, Section 1001, False Statements, and one count of U.S. Criminal Code, Section 1505, Obstruction.  Safavian was sentenced to 18 months incarceration, but remained free upon appeal.

On June 17, 2008, the United States Court of Appeals for the District of Columbia reversed and vacated his convictions.  However, on October 8, 2008, a Federal grand jury for the District of Columbia returned a superseding Indictment of Safavian.

Safavian was subsequently found guilty on December 19, 2008, on three counts of U.S. Criminal Code, Section 1001, False Statements, and one count of Title 18, U.S. Criminal Code, Section 1505, Obstruction (of the GSA OIG investigation.)  Safavian was convicted by a jury in the U.S. District Court for the District of Columbia.

Click here for DOJ article.

On October 21, 2009, Swift’s Packing House, a painting from the Works Progress Administration (WPA) was received by GSA’s Fine Arts Program Office. The painting will be restored by GSA prior to allocation to a museum in Connecticut. The painting is valued at approximately $800.00 and maintains significant historical value.

On April 7, 2009 GSA OIG’s Mid-Atlantic Regional Office received information regarding an eBay auction of a possible WPA painting from an art collector who had previously provided information leading to recovery of WPA artwork through proactive investigation. The eBay listing contained photographs of a clearly legible WPA label.

After verifying that the painting was a WPA piece, GSA investigators obtained the possessor’s information from eBay. The possessor was advised of the Government’s ownership of the painting, and surrendered the painting to the Lyman Allyn Art Museum in New London, CT. GSA OIG coordinated with the Museum and the Fine Arts Program Office for the painting’s return to the Government.

On October 23, 2009, GSA OIG’s Central Regional Investigations Office was notified by the GSA, Office of Acquisition Integrity that Jeffrey L. Metz, Assistant Vice-President and Controller of Nicor, Inc. and Nicor Gas, was debarred based upon a final judgment reached against him in U.S. District Court, Northern District of Illinois, Eastern Division. The debarment of Metz was effective from March 20, 2009 through March 19, 2012.

Nicor, Inc. is a northern Illinois and Chicago area natural gas provider, its largest subsidiary, Nicor Gas, serves more than 2 million customers, and operates a network of 34,000 miles of pipelines. On March 29, 2007, the Securities and Exchange Commission filed a complaint against both Nicor and Metz, regarding Nicor's implementation of a Performance-Based Plan on January 1, 2000, with the purpose of improperly manipulating its reported earnings to increase revenues. Metz and others devised a method by which Nicor could profit by accessing its last-in, first-out (LIFO) layers of gas inventory.

On October 16, 2009, Daniel Pablo was sentenced in U.S. District Court in Albuquerque, NM, with violating Title 18 U.S.C. 113(a)(5) Assault.  Pablo received two years probation, a $2,000 fine, and a $10 assessment.  This was a joint investigation with the Department of Homeland Security, Federal Protective Service.

On October 15, 2008, the Southern Regional Investigative Office received information from the GSA Public Building Service that Pablo reportedly sexually harassed and assaulted a Department of Interior employee at the Gallup Federal Building in Gallup, NM.  The victim provided a written statement alleging Pablo assaulted her in the stairwell of the Federal Building.  During his interview, Pablo provided a written statement in which he admitted to assaulting the victim in the stairwell of the Federal Building.  On May 26, 2009, Pablo was charged with assault.  On the same day, Pablo entered into a Plea Agreement in which he pled guilty to the assault charge.

On October 1, 2009, Kevin Malarney, a Veterans Administration (VA) Construction and Maintenance Supervisor at the VA Medical Center (VAMC), West Haven, CT, was sentenced in U.S. District Court, District of Connecticut to two years imprisonment, followed by two years probation, and ordered to pay a special assessment of $200 for violating one count of 18 USC 201 (b)(2)(c), Bribery of a Public Official; and one count of 26 USC 7206 (1), Filing a False Tax Return.  Previously, on June 20, 2007, Malarney, pled guilty to the charges. 

Malarney admitted he steered VA construction, maintenance, and supply contracts to two companies that were controlled and managed by Attorney Sebastian Ciarcia, Escarnio Construction, LLC and Fischer Supply, LLC.  In return for having the contracts steered to his companies, Ciarcia was paying Malarney’s personal expenses on a recurring basis.

This investigation was initiated on September 23, 2005, when agents in the GSA-OIG’s Boston Resident Field Investigations Office received information that Malarney allegedly misused a GSA Purchase Credit Card issued to him for Government business.  The alleged misuse involved Malarney purchasing supplies and services through two companies in which he may have had financial interests.  Both companies perform construction contracts at the VAMC, West Haven, CT. 

The investigation confirmed that Malarney, in his official capacity: 1) steered contracts to Ciarcia’s two companies; 2) that he benefited personally by receiving things of value for himself and others from Ciarcia’s two companies; 3) made false statements to federal law enforcement officials regarding his connection with the two companies; 4) filed false U.S. individual income tax returns which failed to include income he received from the two companies; and 5) misused his GSA Purchase Credit Card by purchasing supplies and services for the VAMC through these two companies where he had a financial interest.

This case was worked jointly with the FBI, VA-OIG, VA Police Service, and the IRS/Criminal Investigations Division.

On October 1, 2009, Frederick Perres, Sergeant, California Army National Guard was sentenced in the Eastern District of California.  Perres pled guilty to one (1) Count of 18 USC 641, Theft of Government Monies for fraudulently misusing the Voyager Fleet Credit Card (Fleet Card).  Perres was sentenced to one (1) year court probation; fined in the amount of $1000; restitution in the amount of $199.14 and a special assessment fee of $25.  Probation will be terminated upon completion of restitution to GSA.

This case was the result of proactive querying of databases for suspicious transactions. Numerous suspicious transactions were identified on a particular Fleet Card.  GSA-OIG agents obtained receipts and video surveillance footage for several of the fraudulent activities, which resulted in identifying four separate individuals fraudulently misusing the Fleet Card. GSA-OIG and National Guard-CID interviewed the subjects and obtained three handwritten confessions to misusing the Fleet Card.

On July 18, 2009, David Singletary, Transportation Operation Specialist (Motor) with the General Services Administration (GSA), Federal Acquisition Service, Fort Gillem, GA., was issued a letter of decision on proposed removal by GSA’s Office of Motor Vehicle Management.  Singletary was charged with:  1) unauthorized disclosure of official information; 2) knowing and willful removal, alteration and destruction of official documents, contract files and/or records; 3) negligent or willful failure to maintain contract files in a complete and correct manner in accordance with regulations and GSA requirements; 4) falsification of documents; misconduct whether or not in violation of a criminal statute, which impairs job performance or trustworthiness of the employee or otherwise affects the ability of a part of GSA to perform its mission; and 5) knowing and willful misstatements during an official investigation.

Based on the foregoing, Singletary’s removal from Federal Service was upheld by GSA officials, Singletary was terminated on July 18, 2009.    

This investigation was initiated based on information received from a GSA official at Fort Gillem, GA., reporting that a vendor (Company A) had contacted her to lodge a complaint about the handling or a repair that had been awarded to his business. 

The investigation by GSA OIG’s Southeast Regional Office determined that Singletary improperly disclosed Company A’s estimate to a competing vendor (Company B) by disclosing the Company A’s bid to Company B. 

Singletary improperly rescinded the initial contract award to Company A, and then destroyed or removed the original bid and award documents, as well as estimates from two other vendors (Companies C and D.)  

Singletary created a new, bogus bid summary containing false information to the effect that Companies C and D had declined to submit bids when in fact Singletary admitted to having received bids and estimates from both of those companies for the contract work.  Singletary also falsely listed on the bid summary that Company B was the only vendor submitting a bid and estimate.     

On September 18, 2009, Lawanda “Gail” Boldwarrior, former secretary for Indian Child Welfare for the Ponca Tribe, pled guilty to one count of felony violation of 18 U.S.C. § 1163, Embezzlement and Theft from Indian Tribal Organizations, before Judge Timothy D. DeGiusti, United States District Court, Western District of Oklahoma.  Boldwarrior and her Attorney, Paul A. Lacy, agreed to the terms of the plea agreement dated July 20, 2009, and Boldwarrior was released on a $5,000 bond.

On April 30, 2008, GSA investigators in Fort Worth, Texas, received information from the GSA Region 7 Card Services Coordinator indicating there were several over-the-tank capacity and back-to-back purchases made with the Voyager Fleet Credit Card (VFCC) assigned to a Government vehicle.  In May 2008, investigators from the General Services Administration, Office of Inspector General, and the Bureau of Indian Affairs obtained video from two Ponca City gas stations showing Boldwarrior filing vehicles with fuel purchased using that VFCC.

On May 30, 2008, Boldwarrior admitted to taking the VFCC to purchase fuel for friends and family in exchange for money.  She indicated that her husband, Joe Boldwarrior, also used the VFCC to purchase fuel for friends and family. It is estimated that $9,533.72 worth of fraudulent charges were made with the VFCC. 

On May 26, 2009, Joe Boldwarrior, pled guilty to one misdemeanor count of violating 18 USC §1163, Embezzlement and theft from Indian tribal organizations, before Magistrate Judge Gary M. Purcell, United States District Court, Western District of Oklahoma. On August 26, 2009, he was sentenced to two years probation, six months home confinement, 120 hours of community service, and was ordered to pay $9,533.72 in restitution.

The case is being prosecuted by Assistant United States Attorney Mark Yancey, Chief Major Crimes Section, Western District of Oklahoma.

On September 25, 2009, Michael Costa, Telecommunications Employee, Social Security Administration (SSA), was sentenced in the U.S. District Court for the District of Massachusetts to one year probation and was ordered to pay a criminal fine of $2,000 and a special assessment of $25 after previously pleading guilty to one count of 18 USC 1030 (a)(3), Unauthorized Access of a Government Computer.

This investigation was initiated on October 11, 2006, when GSA Investigators in Boston received information from a GSA employee who said he received threatening telephone calls in late September and early October 2006, on his personal Nextel cellular telephone.  The GSA employee said that the threatening telephone calls came from an unknown male with a blocked telephone number who requested he pay $2,500 in return for not providing reportedly derogatory information about this GSA employee to GSA officials.  

On February 13, 2007, Costa and Christopher Lesley, another SSA Telecommunication Employee, Boston, MA, admitted their participation in this scheme to extort money from the GSA employee.  Previously, on May 12, 2009, Lesley was sentenced to two years probation and ordered to pay a special assessment of $200 for violating 18 USC 875, Interstate Communications, and 18 USC 371, Conspiracy to Defraud the Government. 

This case is being worked jointly with the Federal Bureau of Investigation and the SSA/OIG, Boston, MA.

On September 2, 2009, the Cecil County, MD Sherriff’s Department charged Jaysin D. Waddell of Elkton, MD, with one count of Theft over $500, in violation of CR 7-104 of the Annotated Code of Maryland.  Waddell is scheduled to be arraigned in the District Court of Maryland, Cecil County, on September 29, 2009.

This investigation was initiated based upon information received through a proactive Fleet investigation by GSA OIG’s Mid-Atlantic Regional Office which showed possible fraudulent purchases were made with the VFCC assigned to a vehicle that was assigned to AMTRAK.  A review of relevant data confirmed the suspected misuse of multiple AMTRAK-assigned VFCC's in the Elkton, MD, area.  From late June 2008 until September 2008, approximately eight AMTRAK-assigned VFCC's showed multiple same-day transactions for amounts of fuel which exceeded the vehicles' tank capacities.
Several video surveillances in the Elkton, MD area captured Richard Eldreth using multiple VFCC's to fill several vehicles and large containers with fuel.  On August 2008, surveillance captured Eldreth using a stolen VFCC to fuel three vehicles and multiple fuel containers owned and operated by Waddell. Records showed that Waddell received $503.69 of fuel from Eldreth. 

In January 2009, ELDRETH pled guilty to using stolen VFCC’s to make approximately $57,424.70 in unauthorized fuel purchases.

See below for additional 09/02/2009 “news” story on this matter. 

On August 25, 2009, Glen F. Hunter, appeared in U.S. District Court in Baltimore, MD, and entered a plea of guilty to one count of aiding and abetting the Theft of Government Property (18 USC 641 and 2).

Previously, on April 22, 2009, a Federal Grand Jury indicted Hunter on one count of Theft of Government Property (18 USC 641) and one count of Unauthorized Access Device Fraud (18 USC 1029); Aiding and Abetting (18 USC 2).  The indictment charged Hunter with selling stolen GSA Voyager Fleet Credit Cards (VFCC’s) to Richard B. Eldreth, who then made approximately $57,424.70 in unauthorized fuel purchases from June 2008 through September 2008. 

This investigation was initiated based upon information received through a proactive Fleet investigation by GSA OIG’s Mid-Atlantic Regional Office which showed possible fraudulent purchases were made with the VFCC assigned to a vehicle that was assigned to AMTRAK.  A review of relevant data confirmed the suspected misuse of multiple AMTRAK-assigned VFCC's in the Elkton, MD, area.  From late June 2008 until September 2008, approximately eight AMTRAK-assigned VFCC's showed multiple same-day transactions for amounts of fuel which exceeded the vehicles' tank capacities.

Several video surveillances in the Elkton, MD area captured Richard Eldreth using multiple VFCC's to fill several vehicles and large containers with fuel.  On September 9, 2008, three of the stolen VFCC’s were found during the execution of a search warrant at Eldreth’s residence and Eldreth was arrested.  The total amount of the unauthorized transactions made with the eight VFCC’s was approximately $83,000.

Hunter is a former AMTRAK employee who was arrested by GSA OIG Agents in February 2007 for his involvement in a separate theft of multiple VFCC’s and their subsequent misuse.  Hunter pled guilty, was sentenced to six months incarceration, and was fired by AMTRAK. 

This case is being prosecuted by the U.S. Attorney’s Office for the District of Maryland.

From: “Air Force Link”, August 31, 2009

Contractor, US Attorney Agree on $15 Million Fraud Suit Settlement

Electronic Systems Center Staff Judge Advocate's Office

8/28/2009 - HANSCOM AIR FORCE BASE, Mass. (AFNS) -- Earlier this month, the United States Attorney and Dynamics Research Corporation, known as DRC, corporate officials reached a settlement agreement in a False Claims Act suit filed by government officials recently.

DRC, an advisory and assistance services government contractor supporting the Air Force's Electronic Systems Center, agreed to pay $15 million, plus interest, to settle allegations that two of its former corporate officers ran a kickback scheme that resulted in false payments to themselves for computer equipment and services. The corporation that employed the officers, and which settled the suit, said it was unaware of the former officers' misconduct.

The U.S. Attorney prosecuted the two former officers of the company, Paul Arguin and Victor Garber, in a separate criminal action, resulting in guilty pleas in 2002 for conspiring to defraud the United States government. Mr. Arguin and Mr. Garber served as support contractors within the Theater Battle Management Core Systems (TBMCS) Program at Hanscom AFB, Mass.

Mr. Arguin was sentenced to five years in prison and ordered to pay $3.2 million in restitution. Mr. Garber was sentenced to one year and eight months in prison and ordered to pay $2.8 million in restitution. The $15 million recovered in the settlement agreement with the company is more than the restitution figures from the criminal cases. The United States' total recovery in these actions exceeds by approximately $10 million dollars the losses it estimated as a result of the misconduct.

In its suit against DRC, the United States officials sought damages and penalties from the DRC under the False Claims Act, the Anti-Kickback Act, and for breach of contract. The suit alleged that from 1997 to 2000, DRC, through the actions of Mr. Arguin and Mr. Garber, steered Air Force contracts for computer equipment and services to companies owned by the men, along with Mr. Arguin's wife and others, in exchange for kickbacks and deceptively inflated contract prices that produced windfall profits for Mr. Arguin and Mr. Garber.

In one of the schemes, Mr. Arguin and Mr. Garber substituted generic computer chips in memory storage devices for name-brand band chips that were called for under the contract, causing the Air Force to overpay for chips that did not meet military specifications. The suit also alleged that DRC failed to provide honest contract services by failing its contractual obligation to provide financial reporting statements for all its employees on the contract.

"The Air Force monitors contracts for fraudulent activity to ensure we deliver the required capability to the war fighter and to maintain proper stewardship of taxpayer dollars," said ESC Staff Judge Advocate Col. Douglas Murdock. "Working together with other federal agencies on the Boston Area Procurement Fraud Working Group, we will continue to actively pursue criminal and civil remedies against any contractors who try to get away with cheating the government."

Acting United States Attorney Michael Loucks said "This case demonstrates that we will continue to hold the government's contractors responsible for providing honest and unbiased services to the United States. Kickbacks of the type at issue in this case undermine the integrity of government programs, and we will continue to pursue such schemes aggressively both against individuals involved and the contractors responsible for their employees' behavior."

This case was uncovered through an anonymous tip and investigated by special agents from the Air Force Office of Special Investigations, Det.102, the Defense Criminal Investigative Service, the General Services Administration's Office of the Inspector General, and the Defense Contract Audit Agency. It was supported by members of the Hanscom AFB contracting community, as well as the Electronic Systems Center Legal Office and the United States Attorney's Office for the District of Massachusetts.

ESC attorneys describe this case as a lesson learned, saying instances of procurement personnel acting outside the scope of their normal or expected duties in awarding or administering contracts, their ownership of undisclosed business interests, or unexplained payments in excess of fair market value are clues that fraud may be occurring in the workplace. Adequate supervision of the contracting process not only helps uncover fraud, but also creates an environment that deters it, they said.

On August 18, 2009, Keith Ross and Christopher Hamilton were sentenced, in Brevard County Circuit Court, to pay $13,986.49 joint and several restitution to GSA, serve 24 months probation, pay $51.00 per month to the Florida Department of Corrections for the cost of supervision, pay $100.00 to the State Attorney’s Office for the cost of prosecution, and complete 50 hours of community service after signing a Pretrial Intervention Agreement regarding their one felony count of Organized Fraud under the Florida Communications Fraud Act.

Investigators were notified by the GSA Fleet management loss prevention team that Keith Ross Mobile had been charging GSA for performing an unusually high number of repairs to government vehicles including battery replacements, jump starts, engine code checks, oil changes, and wiper blade changes.  Just in the past year, Keith Ross Mobile had billed GSA for 1,080 oil/filter changes at a cost of $39,607. 

The investigation revealed that Ross and Hamilton invoiced GSA for services and parts that were not completed by Keith Ross Mobile or provided to government vehicles that were assigned for security at NASA Kennedy Space Center. 

On May 22, 2009, both Ross and Hamilton were arrested by Brevard County Sheriff’s Office deputies assisted by GSA OIG and NASA OIG agents without incident in Titusville, Florida. They were transported to Brevard County Jail on a $2,000.00 bond.

On August 13, 2009, Michael T. Harrington, former Supervisory Accountant, GSA, was sentenced in U.S. District Court for the Western District of Missouri, to thirty-seven (37) months incarceration for one count each of violating Title 18, United States Criminal Code, Section 641, Theft of Government Funds/Embezzlement and Title 31, United States Criminal Code, Section 1957, Money Laundering, with the sentences to run concurrently, plus $593,549.44 restitution, three (3) years supervised release and a $200 special assessment. Harrington declined a formal plea agreement with the stipulation that the government dismiss two additional counts of Money Laundering.

Investigators in GSA OIG’s Mid-West regional Office were contacted by representatives of IRS-Criminal Investigations, who found that Harrington had deposited high dollar U.S. Treasury Checks made payable to “MWR FUND” into a bank account, and subsequently made overpayments on his bank credit cards. A search of GSA records showed that from May 2006 through May 2008 thirteen payments totaling $593,549.44 had been paid to “MWR FUND” from the GSA.

The investigation revealed that in April 2006 Harrington started the fictitious company called “MWR FUND” and acquired a post office box and bank account for the same. Harrington then used his position as a GSA Supervisory Accountant to create, sign and submit thirteen fraudulent vouchers causing U.S. Treasury checks to be dispensed to his fictitious company. During his interview, Harrington admitted to taking the money in order gamble, pay off credit card debts caused by gambling, re-pay bad check debts and re-pay approximately 20 outstanding loans, all due to gambling.

On July 31, 2009, Jason Mihalick pled guilty in District Court in Houston, TX to violating Texas Penal Code 32.21 Forgery of a Government instrument. Mihalick was sentenced the same day to Deferred Adjudication with 5 years probation, 200 hours of community service, $8,040.56 restitution, $500 fine, and $203 in court costs. This case was prosecuted by the Harris County District Attorney’s Office in Houston, TX.

The investigation by GSA OIG’s Southwest Regional Office was initiated based on information provided by a GSA official in Houston, TX, who said he received an envelope in the mail that was addressed to his office; however, the person whose name was on the envelope did not work for the GSA. The envelope contained a letter from a complainant and a Department of Defense (DoD) DD Form 2558 Authorization to Start, Stop or Change an Allotment form. The allotment documentation indicated it was to be administered by an individual supposedly working at the GSA in Houston, TX. In the letter, the complainant wrote he was defrauded by Mihalick and loaned Mihalick approximately $11,000 based on the enclosed DoD allotment forms, and he had not been repaid. In an interview the complainant stated that Mihalick presented him with the DD Form 2558 Authorization to Start, Stop or Change an Allotment documentation. Mihalick told the complainant that if he loaned him some money to purchase various items then Mihalick would establish an allotment to pay him back. Mihalick was a former Army soldier; however, he was released from active duty approximately 4 years ago.

On March 11, 2009, a State arrest warrant was executed for Mihalick, and he was arrested without incident at the Federal Building in Houston, TX. The warrant was issued based on a probable cause statement that Mihalick committed Forgery of a Government instrument submitted to the Harris County District Attorney’s Office. Agents with the Federal Protective Service, Department of Homeland Security, assisted in the investigation.

On July 30, 2009, John Jarvis was sentenced to five (5) years probation and ordered to pay $4,343.57 in restitution after pleading guilty to stealing Voyager credit cards, in violation of Title 18 U.S.C. 641 (Theft of Federal Government Money).

In May 2008, GSA, Fleet Card Services Coordinator, Region 7, Loss Prevention Section, notified investigators in GSA OIG’s Denver Office that a Voyager Fleet Card assigned to the U.S. Department of Health and Human Services, Polson, MT, started to show signs of fraudulent fuel transactions.  Agents determined the fraudulent gas transactions occurred while the GSA vehicle was turned over to Mission Valley Auto, (MVA), Polson, MT, for maintenance repairs.  Information from a witness and review of gas station surveillance tapes reflected that John Jarvis, an employee of MVA, had fraudulently used several Voyager Fleet Cards from GSA vehicles to purchase gas.

Jarvis was interviewed and confessed in that he stole several Voyager Fleet Cards from GSA vehicles that were left with MVA for either repairs or service work, and later returned the cards prior to the GSA vehicle being returned to its agency.  From January 2008 to July 2008, Jarvis fraudulently used 6 Voyager Fleet Cards for 72 gas transactions which occurred in the Polson/St. Ignatius, MT areas, at numerous gas stations, stealing over $4,000.  Jarvis signed a plea agreement which was filed on February 4, 2009.

The case was prosecuted by the U.S. Attorney’s Office Missoula Division, District of Montana.

On August 6, 2009, Robert Knowles, Senior Project Manager for GSA contractor Omega Service Maintenance Corporation (Omega) of Neptune City, NJ, appeared in U.S. District Court, Eastern District of New York, and pled guilty to a one-count Information charging him with violating 18 USC 1343, Wire Fraud. The sentencing date has not been determined.

Previously, on May 5, 2009, Knowles was arrested without incident by Special Agents from the GSA OIG Northeast and Caribbean Regional Investigations Office (JI-2), the U.S. Postal Service (USPS) OIG, and Investigators with the Port Authority of New York & New Jersey OIG, pursuant to an arrest warrant.  Additionally, a search warrant was executed on May 5, 2009, for Omega’s business premises without incident.   

This joint investigation revealed a fraudulent scheme by Knowles to submit concrete test results on construction projects funded by the USPS and GSA that he knew contained false and fraudulent information. As a result, Omega received payment by GSA for work performed at the Mitchell H. Cohen Federal Building & U.S. Courthouse for the loading dock renovation project valued at approximately $360,000. Case accepted for criminal prosecution by the U.S. Attorney’s Office, Eastern District of New York.

On July 28, 2009, Tyrone A. Pollard, Jr., former GSA contractor employee, was debarred by GSA’s Office of Acquisition Integrity.

The case was initiated to recommend that GSA consider debarment proceedings against Pollard based on his conviction in U.S. District Court/Eastern District of Virginia for violating 18 USC 641, Theft of Government Property and 18 USC 1029(a)(2), Unauthorized Access Device Fraud.  The charges stem from Pollard’s unauthorized use of a Voyager Fleet Credit Card (VFCC).

On July 27, 2009, Vanessa Bahr and Justin Meineke were sentenced to federal prison and ordered to pay restitution after pleading guilty to stealing Voyager (GSA Fleet) credit cards.  Bahr and Meineke had both pled guilty to Title 18 U.S.C. 641 (Theft of Federal Government Property) and to Title 18 U.S.C. 287 (False Claims).  Bahr was sentenced to 16 months in prison and ordered to pay $22,000 in restitution.  Meineke was sentenced to 6 months in prison and ordered to pay $23,700 in restitution. 

In November 2007, officials in GSA’s Greater Southwest Region notified investigator’s in GSA OIG’s Mid-West Regional Office that a Voyager Fleet Card issued to the Department of Health and Human Services, Browning, MT, started to show signs of fraudulent fuel transactions.  Preliminary investigation identified fraudulent gas transactions at numerous gas stations in and around Browning, MT.

GSA OIG agents obtained and reviewed surveillance videos from gas stations in Browning, where Bahr and Meineke were identified using Voyager Cards to conduct fraudulent fuel purchases. 

Investigation reflected that from November 2007 to November 2008, a total of 5 Voyager Cards were used fraudulently by Bahr and Meineke.  Of the 5 Voyager Cards, 263 fraudulent gas transactions occurred in and around Browning, MT, at numerous gas stations for an estimated theft of almost $24,000.  

Meineke was interviewed by GSA OIG agents, and confessed in January 2008.  The Voyager Card he was using was confiscated.  Bahr was in prison and refused to speak with agents.  Later, Bahr and Meineke acquired additional Voyager Cards and continued to fraudulently use them.  On September 23, 2008, Bahr and Meineke were both interviewed and confessed to stealing one Voyager Card and purchasing two more Voyager Cards.  Bahr admitted to selling “use” of the Voyager Card to friends and family, in addition to using the card for her personal vehicle.

On February 4, 2009, Bahr and Meineke were indicted by a Federal Grand Jury in the District of Montana, Missoula Division.  On February 6, 2009, an arrest warrant was issued for Bahr and Meineke, and on March 3, 2009, Bahr and Meineke were arrested by GSA OIG agents, with assistance from the Federal Bureau of Investigation (FBI) and members of the FBI Drug Task Force, Blackfeet Indian Reservation, Browning, MT. 

The case was prosecuted by the U.S. Attorney’s Office, Great Falls Division,  District of Montana.

On July 28, 2009, based upon a state felony warrant, Kansas Bureau of Investigation agents assisted by GSA OIG arrested Sara Cash without incident in Wichita, KS.  Cash was transported to the Sedgwick County Jail.

The arrest warrant was issued based on an affidavit sworn by investigators from GSA OIG’s Mid-West Regional Office on July 7, 2009.  The Sedgwick County State Attorney’s Office charged Cash with three felony counts all in violation of Kansas Statutes: Theft, Fraud, and Official Misconduct.

The GSA oversees the federal firearms surplus donation program.  These firearms are only on loan and ownership never transfers from GSA to the receiving law enforcement agency. 

The Sumner County Sheriff’s Office, Kansas (SCSO) reported on October 17, 2008, during a compliance check, that one of the federal firearms was missing.  The missing firearm, a Glock Model 19, was given to Sara Cash, for official use pursuant to her duties as a SWAT paramedic.  Cash later advised the SCSO that the firearm was either lost or stolen after she had moved.

On March 10, 2009, OIG agents interviewed Cash and she admitted she pawned the Glock, assigned to her, and received $150.   On June 8, 2006, the owner of the shop where Cash pawned the gun provided GSA OIG investigators with the pawn ticket which showed Cash’s name, her signature, and a description of the Glock firearm. 

On July 23, 2009, Amandeus Watkins, former Supervisory Budget Analyst at GSA, was sentenced in U.S. District Court, District of Columbia, for violation of False Statements,18 USC 1001.  Watkins was sentenced to 3 years supervised probation, 6 months of home confinement, and 600 hours of community service. 

Investigators in GSA OIG’s Mid-Atlantic Regional Office began this investigation based on information provided by the U.S. Department of Energy (DOE), OIG, alleging that Watkins had provided GSA with false information in an effort to obtain employment with GSA’s Public Buildings Service.

In August 2007, while Watkins was employed by DOE, he submitted a fraudulent performance appraisal form to DOE management.  The forged document led to Watkins receipt of a large cash performance award.  Upon becoming aware that the DOE OIG was conducting an investigation about the activity, Watkins abruptly resigned from DOE and applied for a position with GSA.  In August 2008, Watkins was hired by GSA, but failed to disclose that he was subject to an ongoing criminal investigation.

On December 2, 2008, Watkins sent GSA an official notification of resignation in response to GSA’s proposal to remove him from his position for falsification of an official document.

This case was prosecuted by the Public Integrity Section, Department of Justice.

Also see earlier “News” coverage (May 23, 2009) of this case.

On July 16, 2009, James Bauer, Owner, JB Auto Restoration and Collision (JB Auto), Darby, PA, was sentenced in U.S. District Court/Eastern District of Pennsylvania, to 6 months incarceration and 3 years supervised release.  Bauer was also ordered to pay $68,195 in restitution and a special assessment fee.  Previously, on December 3, 2008, Bauer pled guilty to one count of violating Title 26 U.S.C. 7202, Failure to Withhold, Account for, and Pay Federal Withholding Taxes; and was subsequently found guilty on December 16, 2008, of violating one count of Title 18 U.S.C. 1001, False Statements. 

This case was initiated based on information received from the U.S. Postal Service (USPS), OIG, Norristown, PA, indicating several auto body and repair shops in the Philadelphia area were possibly overcharging the USPS for work performed on USPS owned vehicles.  The investigation disclosed the majority of auto body repairs performed on USPS vehicles was being performed by JB Auto, which had performed work for GSA in the past.  Additionally, it was disclosed that Brian Forrest, USPS employee, was the individual responsible for funneling the excessive repair work to JB Auto. Forrest utilized the GSA Voyager Fleet Credit Cards assigned to the USPS vehicles to pay for the extensive repairs. 

The joint investigation by GSA OIG’s Mid-Atlantic Regional Office, USPS OIG and the IRS, Criminal Investigations Division, disclosed that Bauer, owner of JB Auto, took Forrest, Forrest's wife and two of Forrest's friends on an all-expense paid trip to Las Vegas, NV.  The majority of the trip expenses, such as hotel rooms and meals, were “comped” to Bauer by the Mandalay Bay Casino.  However, the cost of the airline tickets and limousine service to the airport was paid for by Bauer.  Bauer lied to federal agents when he stated he was repaid by Forrest and Forrest’s friends for the cost of the airline tickets. 

This case was prosecuted by the Eastern District of Pennsylvania. 

On July 22, 2009,   James “Curtis” White pled guilty to a Criminal Information charging him with one count of violating Title 18 U.S.C. 641 (Theft of Federal Government Property).  White was released on his own recognizance and is scheduled for sentencing on November 18, 2009.  Investigators from GSA OIG’s Southwest Regional Office made this case, which is being prosecuted by the U.S. Attorney’s Office for the Northern District of Texas.

The case against White was made by tracking down Vehicle Identification Number (VIN) stamped on the engine block of a truck that he used to commit the theft.  Head of GSA’s Fleet Program, Bill Webster said, “This is very impressive and shows the importance of having accurate information in our data base.  In this case it's the 17 character VIN.”

Also see earlier “News” coverage below on the OIG website (July 6, 2009) for more details about White’s arrest and background on the case.

The link to the presentation from today's DOJ - GSA/OIG Joint Recovery Act Fraud Awareness Briefing is posted below. The briefing took place at GSA Central Office Auditorium on July 23 at 9:30AM.

On July 17, 2009, a Criminal Information was filed charging Horace Gholston with violating 18 U.S.C. Section 641 (Theft).   Gholston is a former employee of Veterans Affairs (VA) in Sacramento, CA, who resigned to avoid termination as a result of this investigation.

This case was initiated after agents in the GSA OIG Western Regional Office found fraudulent transactions on two Voyager Fleet Credit Cards assigned to GSA vehicles leased to Veterans Affairs.  Agents obtained receipts for transactions made in the convenience store of a gas station in Rancho Cordova, CA.  The receipts showed that the transactions were for food, cigarettes and drinks.  It was determined that a clerk recorded the license plate of the individual using the cards, and that video surveillance cameras had captured images of the subject, later identified as Gholston.  Gholston was interviewed by GSA OIG and VA OIG, and confessed to fraudulently using the two credit cards.

On July 16, 2009, Benjamin F. Clayton, Supervisor, ASRC Airfield & Range Services (ASARS) Federal, was suspended by GSA’s Office of Acquisition Integrity.

The GSA OIG opened this case to recommend to GSA that it consider initiating suspension proceedings against former ASRC Airfield & Range Services (ASARS) Federal employee, Benjamin F. Clayton.  The recommendation was based on Clayton’s indictment in Montgomery County, MD, and subsequent arrest for violating Maryland Criminal Law Article Sections 7-108 (Theft Scheme), 7-104 (Theft), and 8-214 (Unauthorized Use of Credit Card Number).  The charges stem from Clayton's alleged unauthorized use of a Voyager Fleet Credit Card.

On July 15, 2009, William F. Sarro was ordered by Boston Municipal Court, Criminal Division, Boston, MA, to serve one year of supervised pre-trial probation relating to a one-count charge of Criminal Harassment in violation of Massachusetts State Penal Code C265 S43A. Under the terms of the order, Sarro must stay away from GSA officials and from GSA, in general.  He is required to undergo a mental health evaluation and obtain treatment if deemed necessary.  Additionally, he was assessed a supervisory fee and a victim and witness fee.  Should Sarro violate any of the terms or conditions of the pre-trial probation, the case will revert back to court.

The state charges stem from an investigation initiated by GSA/OIG, Boston Resident Field Investigations Office, based on a complaint by a GSA official that he received numerous extorting and threatening emails from Sarro.  This was a joint investigation with the U.S. Department of Homeland Security, Immigration and Customs Enforcement, Federal Protective Service, Boston, MA.

On July 7, 2009, Hieu Tran, a former Major with the U.S. Army, was sentenced in US District Court, Middle District of Pennsylvania, Scranton, PA, to twenty-two (22) months imprisonment and thirty-six (36) months supervised release.  Additionally, Tran was ordered to pay restitution in the amount of $16,400 to the U.S. Army and a special assessment of $100.  Previously, on January 9, 2008, Tran pled guilty to one count of Conspiracy to Commit Bribery of a Public Official, Wire Fraud, Mail Fraud and Theft of Government Property.

This case was initiated based upon information from the Defense Criminal Investigative Service (DCIS) that a former GSA contractor employee at Ft. Belvoir, VA, provided bid information to Derrick Jackson, U.S. Army employee, Ft. Belvoir, VA, who forwarded the bid information to Steve Chung, former General Manager, Computer Giants. At DCIS’ request, investigators in GSA OIG’s Philadelphia Office provided copies of task orders issued by GSA to Computer Giants.  The task orders identified computer related equipment provided to the U.S. Army at Ft Belvoir, VA, and the Tobyhanna Army Depot, Tobyhanna, PA.

The investigation disclosed that Chung, Jackson, Tran, and four other Department of Defense (DOD) employees from Ft. Belvoir and Tobyhanna Army Depot participated in a scheme in which the DOD employees directed task orders to Chung/Computer Giants in return for money and other items of value.  Chung and DOD employees Mark Cooper and Leo Yezvetz have already been sentenced.  DOD employees Ludwig Manganiello and Charles Marsala are scheduled to be sentenced within the next 30 days. A sentencing date for Jackson has not yet been set.  The investigation disclosed Jackson provided Chung with several bids/proposals from competitor companies in order to assist Computer Giants in being awarded government contracts.

The investigation developed no information to suggest that the former GSA contract employee at Ft Belvoir, VA, was part of this scheme, nor that he was aware that Jackson had provided sensitive contract information to Computer Giants. Information was provided to Jackson in the normal course of business, and was given to Jackson because Jackson was the Project Manager and client for the contracts in question.

This case was prosecuted in the Middle District of Pennsylvania.

On June 29, 2009, Paul Colombos, Food Inspector, U.S. Department of Agriculture (USDA), Food Safety Inspection Service, appeared in Federal court in the Southern District of New York (USDC/SDNY), and signed a six month Deferred Prosecution agreement ordering Colombos to pay $7,575 in restitution for violating one count of 18 USC 641, Theft of Public Funds.

Previously, on February 26, 2009, Colombos was arrested, without incident, by Special Agents from the GSA OIG’s Northeast and Caribbean Regional Investigations Office, and the USDA OIG, pursuant to an arrest warrant.

The charges stem from an investigation initiated in September 2008, based upon information received from the GSA Fleet Management Division, which indicated that the GSA Fleet Voyager fuel credit card assigned to government owned vehicle G11-5836F had been used to make multiple fuel purchases on the same day and that the fuel purchases exceeded the fuel tank capacity of the vehicle.

The investigation disclosed the vehicle was assigned to Colombos, who was interviewed by GSA OIG and USDA OIG Agents and admitted to purchasing fuel for his personal vehicle with the fuel credit card.

The matter is being prosecuted by the U.S. Attorney’s Office, SDNY and is a joint investigation with the USDA OIG, Northeast Field Office.

On June 29, 2009, after a three-week jury trial, Bradley A. Garner was convicted of Wire Fraud and Theft of Honest Services, Mail Fraud, and Unlawful Monetary Transaction in US District Court for the Western District of Washington (Tacoma).  Garner, a Canadian citizen, was found guilty of helping his half-brother steal nearly $3 million in federal government property.  Garner faces up to twenty years in federal prison, and his sentencing has been set for September 28, 2009.

BACKGROUND

This investigation began after a GSA Region 10 Property Disposal Specialist notified the GSA-OIG that Steven Smith, Garner’s half-brother, had used an “activity code” that was not assigned to him to screen federal excess property.  Preliminary investigative inquiries revealed that Smith was not authorized to screen and acquire federal property.  GSA records indicated that Smith obtained access to the GSA excess property system in December 2004, and since that time, he unlawfully screened and acquired over 200 assets valued at approximately $3 million dollars.  The stolen assets range from small hand tools to a 50-foot Choy Lee Fishing Yacht valued at $500,000.  Smith, an FAA repair technician, screened these assets on behalf of various Department of Transportation agencies.  The investigation revealed that Garner and Smith worked together to steal federal excess property and that the majority of the items were acquired for their personal use.  Many of the property items were transported to Canada by Garner.  The investigation also revealed that Smith and Garner defrauded an insurance company by way of filing a $45,000 claim for damage to a stolen Cessna aircraft from the U.S. Forest Service. 

Smith is scheduled to go to trial in October 2009.

The case was investigated by the GSA-OIG, the Internal Revenue Service – Criminal Investigation Division, the Department of Transportation – OIG, the Naval Criminal Investigative Service, the Army Criminal Investigation Division, the Defense Criminal Investigative Service, and the FBI.

See previous article from 12/09/08.

On July 1, 2009, Attorney Sebastian Ciarcia of Avon, CT, was sentenced in U.S. District Court, District of Connecticut (USDC/DCT) to two years imprisonment, followed by two years probation, and ordered to pay a special assessment of $200 for violating one count of 18 USC 201B(2)(A), Bribery, and one count of 18 USC 7206(2), Aiding and Assisting in the Preparation of a False Tax Return.  Previously, on February 27, 2009, Ciarcia pled guilty to the aforementioned charges, subsequent to his indictment by a Federal grand jury on August 27, 2008.

This investigation was initiated in September 2005, when GSA OIG Special Agents in the Boston Resident Field Investigations Office received information that a Veterans Administration (VA) Construction Maintenance Supervisor was misusing a GSA purchase credit card issued to him for Government business.  Investigation disclosed that the VA supervisor steered VA construction, maintenance, and supply contracts to Escarnio Construction (Escarnio), LLC, and Fischer Supply (Fischer), LLC, which were controlled and managed by Ciarcia. In return for having the contracts steered to his corporations, Ciarcia paid the VA supervisor’s personal expenses on a recurring basis.

This case was a joint investigation with the Federal Bureau of Investigation, VA/Office of Inspector General, VA Police Service, and the Internal Revenue Service/Criminal Investigations Division.

On May 27, 2009, David Craig, division director, Enterprise Electric, LLC, (EE), was indicted in the 263rd District Court of Harris County, Houston, TX, for violating Texas Penal Code (TPC) Section 37.10 Tampering with Governmental Record.  On June 17, 2009, Craig pled  guilty to violating TPC Section 37.10 Tampering with Governmental Record and received differed adjudication with four years probation, 200 hours community service, and a $500 fine.  U.S Department of Homeland Security Federal Protective Service (DHS-FPS) assisted in this investigation.  The case was prosecuted by the Harris County District Attorney’s Office.   

GSA’s Public Buildings Service (PBS) contracting officials informed GSA OIG investigators that WWC personnel and or WWC subcontractors were creating and submitting quotes to PBS in other vendors’ names.  Craig used the fictitious quotes to direct work to his employer, EE.  During the investigation, our office identified evidence that Craig created and submitted five fictitious quotes under the company names of E&M Services (E&M) and Excel Property Service (EPS).  Craig had personal knowledge of the amount quoted on the EE quotes; so, he created higher priced E&M and EPS quotes to fulfill the three bid proposal requirements.  Craig admitted to submitting the fictitious quotes to GSA through WWC; so, that EE would be awarded subcontracts.  EE was awarded approximately $85,000 in subcontracts with WWC for GSA orders based on the fictitious quotes. 

On April 17, 2009, Craig surrendered to Harris County Jail officials pursuant to an arrest warrant issued by the 263rd District Court of Harris County. 

On June  25, 2009,   James “Curtis” White was  arrested by investigators from GSA OIG’s Southwest Regional Office on a charge  of violating Title 18 USC 641, Theft of Government Property. The case is being prosecuted by  the U.S. Attorney’s Office for the Northern District of Texas.

Almost a year earlier, on  July 29, 2008, GSA OIG  investigators received information from a Department of Defense (DoD)  investigator, regarding allegations that a Government engine was stolen at a  local auto company in Arlington, TX. 

The DoD  investigator received a phone call from a former employee at the auto  company.  The former employee claimed  that a diesel engine was taken out of a GSA F-350 Ford truck.  Our office inspected GSA vehicle G43-14886  and determined that the engine had been replaced with an engine damaged in a  flood. 

On  November 6, 2008, GSA OIG agents served a search warrant to seize into evidence  James "Curtis" White's 1999 Ford F-350.  White's truck was towed to a service center  for engine removal and analysis.  Our  office observed the removal of the engine from White's 1999 Ford F-350.  The engine identification number stamped on  the engine block was located and it matched the last eight digits of GSA  vehicle G43-14886's Vehicle Identification Number (VIN).  Ford Motors National Insurance Crime Bureau  verified the engine belonged to GOV G43-14886.

John E. Murphy, Acting United States Attorney, announced that in El Paso this morning, 63-year-old Robert Edward Jones, former CEO and President of the National Center for the Employment of the Disabled (NCED), pleaded guilty to six federal charges related to embezzling millions of dollars in government program funds and to conspiring with others to deprive the community of the right to honest services of elected officials.

Read Full Story...

Also, you can view a related article from 10/17/08.

WASHINGTON – Following an investigation of alleged false claims and contract fraud, J Squared Inc., d/b/a University Loft Company, has reached a settlement with the United States, the Justice Department announced today. Indiana-based University Loft Company has agreed to pay the United States $400,000.

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On June 16, 2009, Mark G. Cooper was sentenced in US District Court in Scranton, PA to 15 months imprisonment and 24 months supervised release.  Additionally, Cooper was ordered to pay restitution in the amount of $20,000 to the US Army and a special assessment of $100.  Previously, on December 6, 2007, Cooper pled guilty to one count of Conspiracy to Commit Bribery of a Public Official, Wire Fraud, Mail Fraud and Theft of Government Property.

Background
This case was initiated based upon information from the Defense Criminal Investigative Service (DCIS) that former GSA contractor employee at Ft. Belvoir, VA, may have provided bid information to Derrick Jackson, US Army employee, Ft. Belvoir, VA, who then forwarded the bid information to Steve Chung, former General Manager of COMPUTER GIANTS. At DCIS’ request, GSA OIG investigators provided copies of several task orders issued by GSA to COMPUTER GIANTS to provide computer related equipment to the U.S. Army at Ft. Belvoir, VA, and the Tobyhanna Army Depot, Tobyhanna, PA.

The investigation disclosed that Chung, Jackson, Cooper and four other Department of Defense (DoD) employees from Ft. Belvoir and Tobyhanna Army Depot participated in a scheme in which the DoD employees directed task orders to Chung/COMPUTER GIANTS in return for money and other items of value.  Six of the seven defendants have pled guilty in federal court and have either been sentenced or are currently awaiting sentencing.  Additionally, Jackson went to trial and was found guilty for his participation in the scheme and is currently awaiting sentencing.  The investigation disclosed Jackson provided Chung with several bids and proposals from competitor companies in order to assist COMPUTER GIANTS in being awarded government contracts. 

The investigation developed no information to suggest that the former GSA contractor employee was part of this scheme, nor that he was aware that Jackson had provided sensitive contract information to COMPUTER GIANTS. The former GSA contractor had performed contract support for GSA at Ft. Belvoir and had provided Jackson contract information, to include bid or proposal documents, pursuant to his normal course of business, and had provided this information to Jackson because Jackson was the Project Manager and client for the contracts in question. 

This case is being prosecuted by the U.S. Attorney’s Office for the Middle District of Pennsylvania. 

On June 17, 2009, GSA OIG investigators were notified by GSA’s Fine Arts Program Office (FAP) that the transfer of custody of a Works Progress Administration (WPA) painting, Duchess Apple Blossom by artist Reathal Keppen had been completed.  The painting was turned over to the Minnesota Historical Society by the possessor after he was contacted by GSA-OIG.  FAP has entered into a loan agreement with the Minnesota Historical Society, giving the Society permission to display the painting for an indefinite period of time.  The painting valued at approximately $5,000 has significant historical value.

BACKGROUND

On January 28, 2008, GSA OIG investigators received notice of an online auction of a Works Progress Administration (WPA) painting.  The notice was received from GSA’s Fine Arts Program Office (FAP) in relation to the ongoing proactive investigation to recover lost and stolen WPA artwork.  

A painting was listed on the auction web site of eBay with the title "PAINTING MINNESOTA FEDERAL ART PROJECT R KEPPEN".  The item description on eBay included the following wording:

"at the top of the paper label are the words ‘Federal Works Progress’ but some of the words are missing.   At the bottom of the label are the words ‘property of the’ but again some of the words are missing. To this end, nearly half of the paper label is no longer present."

The listing also contained photos of the label as well as photos of a brass plate on the front of the frame which read "WPA FEDERAL ART PROJECT".

GSA OIG investigators obtained the seller information from eBay and contacted the possessor of the painting.  The possessor brought the painting to the Minnesota Historical Society.  The FAP worked with the Minnesota Historical Society to document the painting and finalize its loan.

On June 11, 2009, Michael Costa, Telecommunications Employee, Social Security Administration (SSA), Boston, MA, surrendered to the U. S. Marshal’s Office, Boston, MA, based upon a previously issued summons.  Costa pled guilty at United States Magistrate Court, District of Massachusetts (DMA), pursuant to a plea agreement with the U.S. Attorney’s Office/DMA, to a one count Criminal Information charging him with violating 18 USC 1030 (a) (3), Unauthorized Access of a Government Computer.  Costa was released on his personal recognizance.  Sentencing is scheduled for September 10, 2009.  Costa faces a maximum term of imprisonment of one year, one year of supervised release, a fine of $100,000, and a special assessment of $100.

Previously, Christopher Lesley, also a SSA Telecommunication employee, was sentenced for violations of 18 USC 875, Interstate Communication, and 18 USC 371, Conspiracy to Defraud the Government.  Costa and Lesley admitted to being involved in a blackmail scheme to extort money from a GSA employee.

This investigation was initiated on October 11, 2006, when the GSA/OIG, Boston Resident Field Investigations Office, received information that a GSA employee was receiving threatening telephone calls in late September and early October 2006, on his personal Nextel cellular telephone.  The employee advised OIG Special Agents that the threatening telephone calls came from an unknown male using a blocked telephone line who demanded that the GSA employee pay $2,500 in return for this unknown individual not providing reportedly derogatory information about the employee to GSA officials.  On February 13, 2007, Lesley and Costa admitted their participation in the scheme to extort money from the GSA employee.

This matter is a joint investigation with the Federal Bureau of Investigation, Boston, MA, and the SSA/Office of Inspector General.

On May 29, 2009, Booz, Allen & Hamilton, Inc. signed a Release and Settlement Agreement with the U.S. Attorney’s Office, Eastern District of Virginia, to pay the United States $325,000. 

Booz, Allen, & Hamilton, Inc. (BAH) is a GSA-schedule provider of information services.  A NASA contract specialist, who requested anonymity, alleged that BAH was billing for employees at higher job categories than would have been justified by their experience, inflating their monthly hours and submitting excessive billing at their off-site rate.   

The case was prosecuted by the Civil Division of the U.S. Attorney’s Office, Eastern District of Virginia.

On May 11, 2009, Terry Brian King was indicted by a grand jury in the Criminal District Court Number Three of Tarrant County, Texas in Fort Worth, TX, for violating Texas Penal Code Section 37.11, Impersonating Public Servant.  On May 14, 2009, King surrendered to the Tarrant County Sheriff’s Office, and is scheduled to appear in court on May 26, 2009.  This case is being prosecuted by the Tarrant County District Attorney’s Office.  Veterans Affairs Office of Inspector General (VA OIG) and Department of Homeland Security Office of Inspector General assisted in the investigation.

BACKGROUND

On February 11, 2009, a VA OIG special agent attached to the U.S. Marshal’s Task Force forwarded a complaint to the GSA OIG regarding Terry Brian King, a security officer with the J. Diamond Group, Inc., a GSA Multiple Award Schedule contractor.  The complainant was an off-duty female Fort Worth Police Department Detective.  The Detective stated that an unknown male drove beside her and motioned for her to pull off the freeway.  She thought the unknown male was a police officer based on his clothing, and complied with him because she “thought that either this was a Police Officer I knew from work, or someone I didn’t know trying to pull me over.”

While she was stopped talking to the unknown male, the Detective obtained a license plate number, which belonged to King’s vehicle.  Based on the identification of King’s vehicle and a search of driver license records, King’s photograph was obtained.  The Detective identified King as the unknown male who pulled her over. 

Based on the Detective's identification of King, the GSA OIG investigators interviewed him regarding the allegation.  King admitted to pulling over at least ten other vehicles driven by women, while he was wearing his security officer uniform.  He claimed he never pulled anyone over in an attempt to present himself as a police officer, but did admit to having pulled over vehicles in order to engage the women who were driving them in conversations and potential sexual encounters.    

On May 12, 2009, Christopher Lesley, a Telecommunications Employee of the Social Security Administration (SSA) in Boston, MA, was sentenced in U.S. District Court, District of Massachusetts for violating one count of Title 18 USC 875, Interstate Communications, and one count of Title 18 USC 371, Conspiracy to Defraud the Government.  Lesley was sentenced to two years probation and ordered to pay a special assessment.  Lesley had previously pled guilty to these charges on June 11, 2008.

This investigation was initiated in October 2006, by the GSA OIG, Northeast and Caribbean Regional Investigations Office, based on a complaint by an employee of GSA’s Public Buildings Service in Boston, MA, that he received verbal threats on his personal wireless telephone.  As a result of the GSA OIG investigation, Lesley admitted his participation in a scheme to extort money from the employee in return for not disclosing derogatory information about him to GSA officials.

This was a joint investigation with the FBI and the SSA OIG in Boston, MA.

Robert Knowles, Senior Project Manager (SPM), Omega Service Maintenance Corporation (OMEGA), and Edwardo Alvarado, SPM, OMEGA were arrested on May 5, 2009 by Special Agents from the GSA OIG Northeast and Caribbean Regional Investigations Office, the United States Postal Service (USPS) OIG and Investigators with the Port Authority of New York & New Jersey/OIG (PA OIG), pursuant to arrest warrants issued by the U.S. District Court/Eastern District of New York (EDNY), charging each with violating 18 USC 1343 (Wire Fraud) and also charging Alvarado with violating 18 USC 1341 (Mail Fraud).  A Search Warrant was issued by the U.S. District Court/District of New Jersey and executed on May 5, 2009 without incident at OMEGA’s business premises by GSA OIG and USPS OIG Special Agents, and PA OIG Investigators. 

The complaint charges that Knowles and Alvarado have committed crimes including wire fraud and mail fraud by knowingly providing U.S. Government agencies, or the agencies’ agents, with falsified results of tests performed on concrete installed by their employer, OMEGA, on construction projects at facilities owned by the USPS and the GSA, in violation of 18 USC 1343 and 1341. Knowles was released on a $75,000 secured bond. Alvarado was released on a $75,000 unsecured bond.

The United States Attorney’s Office/EDNY is prosecuting the case.

On April 24, 2009, Arturo Martinez pled guilty in Boston, MA to one count of Assault & Battery, in violation of Massachusetts State Penal Code C265 S13A.  Under Massachusetts law, this misdemeanor offense is punishable by imprisonment for not more than 2 ½ years or by a fine of not more than $1,000; Martinez was sentenced to one year probation.

The state charges stemmed from an incident on September 20, 2007, at the Thomas P. O’Neill Federal Office Building (FOB), in which Martinez allegedly assaulted a female.  At the time, Martinez was employed on-site by GSA facilities management contractor Emcor Government Services. Martinez worked at the O’Neill FOB as a supervisory custodian.  The alleged victim was a female applicant seeking employment with Emcor. Martinez allegedly assaulted the victim when she went to Martinez’s office at the FOB to provide him with her fingerprint cards that were required for the position.

This was a joint investigation of the GSA OIG with the U.S. Department of Homeland Security, Immigration and Customs Enforcement, Federal Protective Service, Boston, MA.

On April 17, 2009, David Craig, division director, Enterprise Electric, LLC, (EE) surrendered himself to the Harris County Jail in Houston, TX,  pursuant to an arrest warrant issued by the 263rd District Court of Harris County, Houston, TX.  The arrest warrant was issued on April 8, 2009, based on a probable cause statement that Craig had violated Texas Penal Code Section 37.10 Tampering with Governmental Records.  GSA OIG is being assisted by the Department of Homeland Security’s Federal Protection Service in this investigation.  The case is being prosecuted by the Harris County District Attorney’s Office.   

GSA Public Buildings Service (PBS) contracting officials informed GSA OIG investigators that WWC personnel and or WWC subcontractors were creating and submitting quotes to PBS in other vendor’s names.  Craig used the fictitious quotes to direct work to his employer EE.  During the investigation, our office identified evidence that Craig created and submitted five fictitious quotes under the company names of E&M Services (E&M) and Excel Property Service (EPS).  Craig had personal knowledge of the amount quoted on the EE quotes; so, he created higher priced E&M and EPS quotes to fulfill the three bid proposal requirements.  Craig admitted to submitting the fictitious quotes to GSA through WWC so that EE would be awarded subcontracts.  EE was awarded approximately $85,000 in subcontracts with WWC for GSA orders based on the fictitious quotes.

The United States has obtained a judgment of $2,346,600 against Ernest Robert McFarland, Jr., 68, of Fort Myers, FL, for submitting false claims related to Federal construction contracts at the Grand Canyon National Park and the Lake Mead National Recreational Area. 

McFarland was the owner and president of Pacific General, Inc. (PGI).  Between November 2003 and January 2004, McFarland falsely certified that PGI was properly bonded to perform Federal construction work and that PGI was paying its subcontractors for work on Federal construction projects in the Grand Canyon National Park and the Lake Mead National Recreational Area.

The investigation was conducted by the Department of Interior OIG, the FBI and the GSA OIG.  The matter was handled by the U.S. Attorney’s Office in Phoenix, AZ.

On April 1, 2009 notification was received from the Mid-Atlantic Regional Property Management Division, Federal Acquisition Service that all Federal surplus property acquired by Gerry Barton, former Administrator, Berwind Volunteer Fire Department, had been recovered by the West Virginia State Agency for Surplus Property (WVSASP) on behalf of the U.S. Government.

Following Barton’s conviction and sentencing on theft of government property, a violation of 18 USC 641, and on money laundering, a violation of 18 USC 1956(a)(1)(A)(i) and (2)(b), Barton was ordered to return all federal surplus property on his property and located at other storage facilities in and around McDowell County, West Virginia. The WVSASP and GSA Property Management Division oversaw the recovery of 100 pieces of federal surplus property with an original acquisition value of $ 1,800,807.39.

Background:

This case was initiated based on information indicating Barton was illegally acquiring, using and possibly selling Federal surplus property. This was a joint investigation by GSA-OIG, Defense Criminal Investigative Service, Internal Revenue Service/Criminal Investigations Division, the Federal Bureau of Investigation, The West Virginia State Fire Marshall's Office, The West Virginia State Police, The McDowell County Sheriff's Office, the Mercer County Sheriff's Office and the West Virginia Legislature's Commission of Special Investigations.

The multi-agency investigation involved extensive review of records of Federal surplus property received by Barton and tracking numerous pieces of heavy equipment sold by Barton to individuals around the country. During the investigation, an undercover purchase of a bulldozer was made, following which search warrants were executed at Barton’s residence with simultaneous interviews of multiple individuals involved in Barton’s heavy equipment business occurring in multiple states.

Investigation disclosed that Barton used the 501(c)(3) status of the fire department and created a fictitious branch of the fire department called the Equipment Division to acquire equipment not otherwise available to the general public. He denied the Fire Department access to this equipment. He then sold this equipment on the open market and used the proceeds to purchase more equipment through the federal surplus property program. In the past ten years he acquired property with an original acquisition value of over $4,000,000 through the federal surplus property program.

Barton was charged in a twelve count-indictment for illegal activities involving his acquisition and sale of federal surplus property. Subsequently, on September 24, 2007, a criminal Information was filed against Barton in the Southern District of West Virginia. The Information charged Barton with one count of violating 18 USC 1956(a)(1)(A)(i) and (2)(b) - aiding and abetting money laundering.

On September 25, 2007, Barton appeared in the U.S. District Court for the Southern District of West Virginia, Bluefield, West Virginia, and pled guilty to one count of violating 18 USC 641, theft of government property, which was part of the aforementioned twelve count indictment. He also pled guilty to one count of violating 18 USC 1956(a)(1)(A)(i) and (2)(b) - aiding and abetting money laundering as charged in the aforementioned criminal Information.

On July 21, 2008, Barton was sentenced in the U.S. District Court for the Southern District of West Virginia, Bluefield, West Virginia on the aforementioned theft of government property and money laundering charges. Barton was sentenced to 24 months incarceration followed by 3 years of supervised probation on each charge; the periods of incarceration to run concurrently. He was also ordered to pay restitution and fines. Barton was also ordered to surrender all Federal surplus property located on and around his property. An inventory indicated a total of 100 pieces of Federal surplus property with an original acquisition value of $1,800,807.39.

On April 1, 2009, Samuel Newton, Jr. was arrested by GSA OIG and Department of Defense Criminal Investigative Service (DCIS) Special Agents in New York pursuant to an arrest warrant issued on March 18, 2009 on a charge of violating Title 18 USC 641, Theft of Government Property. Newton was remanded to the custody of the U.S. Marshals Service.

This investigation was initiated when the GSA OIG Northeast and Caribbean Regional Investigations Office was notified by DCIS that Newton had placed unauthorized orders through the GSA Advantage program by using an account number belonging to the Defense Contract Management Agency in New York. A review of orders placed by Newton through the GSA Advantage program revealed unauthorized orders in the amount of approximately $27,000. 

This case was accepted for criminal prosecution by the U.S. Attorney’s Office for the Eastern District of New York.

On March 09, 2009, Amandeus Watkins, former GSA Supervisory Budget Analyst, pled guilty to one felony count of violating 18 USC 1001, False Statements, in U.S. District Court in Washington, DC.

Watkins is scheduled to be sentenced on July 16, 2009.

GSA OIG initiated this investigation based on information provided by the U.S. Department of Energy (DOE), OIG, alleging Watkins provided GSA with false information in an effort to obtain employment with GSA’s Public Buildings Service.  In March 2008, while Watkins was employed by DOE, he submitted a false performance evaluation.  Watkins assigned himself the highest possible rating and affixed a copy of his supervisor’s signature on the evaluation.  Watkins was prosecuted on the false statement (performance evaluation) he submitted to DOE.

Watkins did not disclose he was under investigation when he was hired by GSA, and on December 2, 2008, Watkins sent GSA an official notification of resignation.

The case is being prosecuted by the Justice Department’s Public Integrity Section.

On March 11, 2009, American Systems Corporation (ASC), Chantilly, VA, agreed, by Civil Settlement Agreement, to pay the United States Government $810,000 for inaccurately billing the Government for services and products under a GSA Contract.

The civil investigation was initiated in response to a GSA OIG criminal case.  In April 2005, GSA OIG investigators received allegations that a prime contractor in Virginia, Business Plus Corporation (BPC), and its New Jersey subcontractor, L.E.A.D. Industries, Inc. (LEAD), may have prepared and submitted eight false claims to GSA between February 2003 and October 2003, totaling approximately $950,000.  The false claims were for the installation of 163 computer workstations at the Armament Research, Development & Engineering Center's (ARDEC)/Tank-Automotive and Armament Command (TACOM), Picatinny Arsenal, NJ.

GSA Region 3 Federal Technology Service awarded and administered the contract for these services.  The contract authorized Information Technology (IT)-related work, which included IT cable upgrades and the installation of computer workstations at ARDEC/TACOM.  When the contract was awarded in March 2002, the GSA Contracting Officer informed a BPC official that construction work was not authorized under the contract.

GSA OIG’s investigation disclosed that the IT cable upgrades were performed by ARDEC/TACOM employees and all computer workstations were installed by an office furniture company, not BPC or LEAD.  The investigation also revealed that LEAD only performed general construction work, and never performed any of the IT-related tasks listed under the contract.  LEAD employees stated that the BPC official directed them to create invoices which claimed LEAD installed computer workstations.  In January 2003, ASC purchased BPC, which was later dissolved in December 2006.

This case is being prosecuted by the USDOJ District of New Jersey, Civil Division, and has been worked jointly with the Defense Criminal Investigative Service (DCIS), New Jersey Field Office.

On March 6, 2009, a Works Projects Administration (WPA) painting, titled “Flowers” by William Hazelton, was surrendered to GSA OIG investigators in New York.

On May 22, 2008, a search of eBay's website disclosed a painting being offered for sale by an individual as being a WPA painting.  The eBay listing titled the painting "William Hazelton listed WPA Painting, Rockport, WPA Label."  The seller of the painting was contacted by a GSA OIG investigator on May 23, 2008, during which time the seller stated he would need extensive documentation before relinquishing the painting to the government, and added he may take it to court if the government did in fact want to recover the painting.  The seller stated he purchased the painting sometime in 2008 at the Brimfield Antique Show, Brimfield, MA, and that he did not believe the painting was a legitimate WPA painting.  GSA OIG obtained documents from the National Archives, College Park, MD, and forwarded them to GSA’s Fine Arts Specialist in the Fine Arts Program Office of the Office of The Chief Architect for review.  That review determined that the painting was an authentic WPA produced painting.  Copies of the documentation were also forwarded to the seller at his request.  The seller reluctantly agreed to surrender the painting to the GSA OIG.  GSA OIG investigators in New York and Washington, DC assisted in the recovery of the painting. 

On February 27, 2009, GSA contractor Larry J. Acoff, President/Owner, L.A. Transportation & Paving Company, Inc. (L.A. TRANS), Niagara Falls, NY, was sentenced in the Western District of New York to five years probation; restitution in the amount of $113,446.59; and a $200 special assessment pursuant to a guilty plea to a two-count Indictment charging him with violating 18 USC 287, False Claims. 

The charges stem from an investigation conducted by the GSA OIG’s Northeast and Caribbean Regional Investigations Office based on information received from the U.S. Small Business Administration, OIG alleging that Acoff submitted false claims to GSA by signing GSA Form 2419 (Certification of Progress Payments Under Fixed-Price Construction Contracts), and then failing to make payments to his subcontractors.

The investigation disclosed that between December 1, 2003 and May 31, 2005, Acoff on behalf of L.A. TRANS submitted and caused to be submitted several “Application and Certificate for Payment” forms to GSA certifying that certain work had been done, and that L.A. TRANS had paid the subcontractors who had done the work.  Acoff submitted Application and Certificate for Payment forms to GSA, was paid by GSA and failed to pay the subcontractors more than $100,000.  

On February 27, 2009, Attorney Sebastian Ciarcia, pled guilty in U.S. District Court, District of Connecticut to one count of violating 18 USC 201B(2)(A), Bribery and one count of violating 26 USC 7206 (2), Aiding and Assisting in the Preparation of a False Tax Return.  Ciarcia is scheduled to be sentenced on May 15, 2009.

On August 27, 2008, a Federal grand jury indicted Ciarcia, on four counts of violating 18 USC 1001, False Statements; one count of violating 18 USC 201B(2)(A), Bribery, and six counts of violating  26 USC 7206(2), Aiding and Assisting in the Preparation of a False Tax Return.

Previously, Kevin Malarney, a Veterans Administration (VA), Construction Maintenance Supervisor, pursuant to a plea agreement with the U.S. Attorney’s Office in Connecticut, admitted he steered VA construction, maintenance, and supply contracts to Escarnio Construction, LLC, and Fischer Supply, LLC, both of which were managed and controlled by Ciarcia.  In return for having the contracts steered to his corporations, Ciarcia was paying Malarney’s personal expenses on a recurring basis. 

This investigation was initiated on September 23, 2005, when the GSA OIG’s Boston Resident Field Investigations Office received information that Malarney allegedly misused a GSA Purchase credit card issued to him for Government business.  The alleged misuse involved Malarney purchasing supplies and services through two companies in which he may have had financial interests.  Both companies performed construction contracts at the VA Medical Center (VAMC) in West Haven, CT. 

The investigation confirmed Malarney, in his official capacity, steered contracts to the two companies in which he had a financial interest, benefited personally by receiving things of value for himself and others from the two companies, made false statements to federal law enforcement officials regarding his connection with the two companies, filed false U.S. Individual Income Tax Returns by failing to include on his tax return income he received from the two companies, and misused his GSA Purchase credit card by purchasing supplies and services for the VAMC through the two companies where he had a financial interest.

This case is being worked jointly with the Federal Bureau of Investigation, VA/Office of Inspector General, VA Police Service, and the Internal Revenue Service/Criminal Investigative Division.

On February 24, 2009, Michael T. Harrington, Supervisory Accountant, GSA, Finance Division, Heartland Region, pled guilty to one felony count of violating Title 18, United States Criminal Code, Section 641, Theft of Government Funds/Embezzlement and one felony count of violating Title 31, United States Criminal Code, Section 1957, Money Laundering.  Harrington declined a formal plea agreement with the stipulation that the government dismiss two additional counts of Money Laundering.

The GSA OIG’s Midwest Regional Investigations Office was contacted by IRS-Criminal Investigations Division, which found that Harrington had deposited high dollar U.S. Treasury Checks made payable to MWR Fund into a private bank account.  The OIG’s investigation was later joined by IRS.   A records search uncovered 13 payments from May 2006 through May 2008 totaling $593,549.44 that had been paid to the MWR Fund from GSA. 

The investigation revealed that in April 2006, Harrington had started a fictitious company called MWR Fund and acquired a post office box for it.  Harrington then used his position as a GSA Supervisory Accountant to create, sign and submit thirteen fraudulent refund vouchers to the Payable Division within GSA Finance, causing U.S. Treasury checks to be dispensed to his fictitious company.  During interviews, Harrington admitted to taking the money in order gamble and pay off debts and loans, all due to gambling.

On February 10, 2009, Christopher Lesley, Telecommunication Employee, Social Security Administration (SSA), Boston, MA, appeared before U.S. District Judge George O’Toole, U.S. District Court/District of Massachusetts (USDC/DMA) and pled guilty to a two count Indictment filed June 11, 2008, in USDC/DMA, charging him with violating 18 USC 875, Interstate Communication and 18 USC 371, Conspiracy to Defraud the Government. Lesley is scheduled to be sentenced on May 12, 2009.

On June 11, 2008, Lesley was indicted by a Federal Grand Jury, USDC/DMA,  charging HIM with violating 18 USC 875, Interstate Communication and 18 USC 371, Conspiracy to Defraud the Government, and was arrested on June 16, 2008.

The charges stem from an investigation initiated in October 2006, by the GSA/OIG, Northeast and Caribbean Regional Investigations Office. A Real Property Management Specialist in GSA’s Public Buildings Service Boston office reported to the OIG that he was receiving threatening telephone calls in late September and early October 2006, on his personal cell phone. As a result of the OIG’s investigation, Lesley admitted his participation in a scheme to extort money from the employee in return for not disclosing derogatory information about him to GSA officials. 

This matter is being worked jointly with the Federal Bureau of Investigation and the SSA/OIG, Boston, MA.

On February 17, 2009, Mitel, Inc. (formerly Inter-Tel, Inc.) signed a civil settlement agreement with the U.S. Department of Justice (DOJ), and agreed to pay $1.3 million to resolve allegations that the company violated the False Claims Act by selling office products manufactured in non-TAA compliant countries to the Government under GSA contract GS-35F-0318L. This settlement agreement was signed after lengthy negotiations.

BACKGROUND:
On June 16, 2005, a complaint was forwarded from the GSA Office of General Counsel to the OIG Office of Investigations. The complaint alleged Inter-Tel, Inc. (Inter-Tel) sold products from China under their GSA Multiple Award Schedule contract number GS-35F0318L. This constituted a violation of the Trade Agreement Act (TAA). In June 2005, a voluntary disclosure of TAA problems uncovered at Inter-Tel was made to the Counsel to the GSA IG. This disclosure listed products manufactured in China and sold to the Government under Inter-Tel's GSA/MAS contract between the years 2000 to 2005. 

This case was prosecuted by DOJ, Civil Division, Commercial Litigation Branch, Washington, DC.

On January 29, 2009, AMEC Construction Management, Inc. (AMEC), formerly known as Morse Diesel International, Inc. (MDI) signed a Settlement Agreement in the Court of Federal Claims.  AMEC agreed to pay GSA $11,710,335 and forfeit $7,329,921, for a total of $19,040,256.  The $11,710,335 consisted of $8,010,335 for fraud counterclaims and $3,700,000 for re-procurement costs. 

In 1996, GSA awarded AMEC a construction contract in which GSA withheld $7,329,921 from AMEC to off-set the re-procurement claim against the St. Louis Courthouse.  AMEC agreed to forgo its claim of this money pursuant to the Settlement Agreement.

AMEC/MDI was awarded four GSA Federal construction contracts between 1994 through 1995.  These contracts were for construction relative to Federal Courthouses in St. Louis, MO, San Francisco, CA, and Sacramento, CA. 

GSA OIG auditors at the Heartland Field Office in Kansas City audited AMEC’s construction claims, and suspected fraud regarding payment of construction bond invoices.  This matter was referred to the OIG’s Office of Investigations.

AMEC provided falsified invoices to GSA and those false documents allowed AMEC to receive payments for work that had not been accomplished both in Missouri and California.  According to the investigative report, MDI front-loaded over 2 million dollars in contract value using falsified invoices, false documents and false statements.  Pursuant to the St. Louis Courthouse, AMEC pled guilty for presenting a false bond claim and was sentenced on December 12, 2000.  AMEC later pled guilty on December 4, 2001 for false claims in California and was sentenced on March 19, 2002.

On May 5, 1999, AMEC filed a complaint with the General Services Board of Contract Appeals, claiming they were owed money, and this case was later transferred to the U.S. Court of Federal Claims.  On October 28, 1999, GSA filed its answer along with civil fraud counterclaims for the false bond claims. 

During civil proceedings it was also discovered that AMEC was getting a kickback from their bonding agent’s commissions.  On July 15, 2005, the Court issued an opinion granting summary judgment on the Government’s claim for violation of the Anti-Kickback Act, 41 U.S.C 51-58. 

On January 26, 2007, the Court issued an opinion granting summary judgment on GSA’s claim under the Special Plea in Fraud, 28 U.S.C 2514 and the False Claims Act, 31 U.S.C, 3729-33, for the false bond documents submitted for payment.  On October 31, 2007 and November 16, 2007, the Court issued a decision assessing penalties and damages against AMEC for the False Claims and Anti-Kickback Acts.

Subsequently, AMEC and the Government entered into negotiations to resolve amicably the claims of both parties relating to these matters.

Pursuant to the Settlement Agreement, moneys held by GSA in retainage owed to AMEC were forfeited in the amount of $10,560,139.88 resulting in a cost recovery.   AMEC also forfeited all pending claims against GSA for the above projects resulting in approximately $83.5 million dollars in cost avoidance.

AUGUSTA, GA: Edmund A. Booth, Jr., United States Attorney for the Southern District of Georgia, announced that Tifco Industries, Inc., based in Houston, Texas, has agreed to pay the United States over $1.6 million to settle allegations that it violated the Trade Agreements Act, 19 U.S.C. § 2501 et seq., and the False Claims Act, 31 U.S.C. § 3729 et seq...

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On February 3, 2009, June D. Bailey of Cisne, IL, in  Wayne County, IL, was indicted by a federal grand jury for Mail Fraud Involving  the Deprivation Of Right To Honest Services of the Berry Township Road Commissioner.  The offense carries a maximum statutory penalty of up to 20 years in prison, 3  years supervised release, a fine of up to $250,000 and mandatory restitution.  The Indictment contains an additional count seeking forfeiture of the proceeds  of the criminal offense.

The  Indictment alleges that Bailey,  as the Berry Township Road Commissioner in Wayne County, IL, engaged in a  scheme to defraud the GSA and the residents of Berry Township in acquiring  numerous pieces of federal surplus property, including sixteen FEMA travel  trailer/campers that were not put into use by Berry Township but were used  personally by Bailey and sold to  family members and friends.

The  charges stem from an investigation conducted by GSA OIG Central Regional investigators,  based on information received from GSA officials in Chicago, indicating that  the Illinois State Police initiated an investigation, and developed information  indicating Bailey sold FEMA travel trailers to relatives and friends.

This  investigation was conducted jointly by the Illinois State Police, Wayne County  Sheriff’s Department, and GSA OIG. 

WASHINGTON – Two Florida homeland security vendor employees were sentenced today for conspiracy to commit wire fraud and honest services fraud by depriving their employers of money and the right of honest services, the Department of Justice announced today.

On October 31, 2008, SERCO, INC. (formerly RESOURCE CONSULTANTS, INC.) [RCI/SERCO], signed a Settlement Agreement with GSA, wherein SERCO agreed to pay $207,291.63 to settle claims relating to overcharges to the government for certain labor provided under GSA Contract GS-10F-0191J.  The settlement agreement with RCI/SERCO was reached with the assistance of the U.S. Attorney’s Office for the Western District of Washington.    

BACKGROUND
This case was initiated after The GSA OIG auditors notified GSA OIG investigators that a preliminary audit of RCI/SERCO indicated that the contractor had possibly billed customers and received payment for employees in labor categories not covered by the contract, charged unauthorized fees, received payment for unauthorized overtime, and provided labor outside of the scope of the contract.  During the course of the investigation, GSA-OIG agents reviewed documents, conducted interviews and requested RCI/SERCO to complete an internal audit of specific task orders under GS-10F-0191J.  The investigation determined that RCI/SERCO had overcharged the government for certain labor provided during fiscal years 2004 and 2005 under task orders placed against GS-10F-0191J.

Washington, D.C. - infoZine - Barrday Inc. and two related companies have agreed to pay the United States more than $1 million to resolve allegations that they violated the False Claims Act in connection with their role in the weaving of Zylon fabric used in the manufacture and sale of defective Zylon bullet-proof vests, the Justice Department announced today. Barrday, headquartered in Cambridge, Ontario, Canada, is a weaver of ballistic fabrics and designs and produces specialty industrial textiles.

The United States alleged that Barrday’s woven Zylon fabric was used in the manufacture of bullet-proof vests sold by Second Chance Body Armor Inc., Point Blank Body Armor Inc. and Gator Hawk Armor Inc. These vests were purchased by the United States, and by various state, local, and/or tribal law enforcement agencies, which were partially reimbursed by a Justice Department program. The government alleged that the Zylon in these vests lost its ballistic capability quickly, especially when exposed to heat and humidity.

Barrday was reportedly aware of the defective nature of the Zylon by at least December 2001, but continued to sell Zylon for use in ballistic armor until approximately 2003, when two police officers were shot through their Second Chance Zylon vests. In 2003, Barrday was the first weaver to permanently withdraw from the Zylon market.

"When a supplier of a component part distributes its product with knowledge of latent defects, that company violates the False Claims Act" said Michael F. Hertz, the acting Assistant Attorney General for the Civil Division. "This settlement will help ensure that component suppliers are held responsible for materials that put our first-responders at risk."

This settlement is part of a larger investigation of the body armor industry’s use of Zylon in body armor. As part of today’s agreement, Barrday has pledged its cooperation in the government’s on-going investigation. The United States previously has settled with four other participants in the Zylon body armor industry for over $46 million. Additionally, the government has pending lawsuits against Toyobo Co., Honeywell Inc., Second Chance Body Armor Inc. and four former Second Chance executives.

Today’s settlement with Barrday was the result of an ongoing investigation by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Columbia, the General Services Administration Office of the Inspector General, the Department of Homeland Security Office of Inspector General, the Treasury Inspector General for Tax Administration, the Defense Criminal Investigative Service, the U.S. Army Criminal Investigative Command, the Air Force Office of Special Investigations, the Department of Energy Office of the Inspector General, the U.S. Agency for International Development Office of the Inspector General, and the Defense Contracting Audit Agency.

INFOZINE(KANSAS CITY, MO) - January 24, 2009

On January 16, 2008, Private Furman Benjamin, U.S. Marine Corp, pled guilty to Conspiracy to Theft over $500.00 and was sentenced by Judge Hennessy W. Louis, District Court of Maryland for Charles County.  Private Benjamin was sentenced to 18 months incarceration and three years probation.  He was ordered to pay restitution of $3,699.00 and $157.50 in criminal court cost.  Co-defendants Dionte Little; George John; Jimal Miller; and Mark Love agreed to testify against Private Benjamin if necessary, and each was ordered to pay $160.00 in restitution.  The case is being prosecuted by Blayne Miley, State Attorney for Charles County Maryland.  

This case was initiated from a proactive investigation by GSA OIG investigators regarding possible fraudulent usage of the Voyager Fleet Credit Card (VFCC).  It was determined that VFCC number G43-1332B, assigned to the U.S. Marine Corp, Naval Surface Warfare division, located at 101 Strauss Avenue, Bldg 901, Indian Head, MD, was being used to make multiple purchases of gasoline on the same day in Waldorf, MD.  A review of the information maintained in the Fleet Commander Database indicated that beginning in May 2007, VFCC G43-1332B was used almost daily to make multiple fuel purchases, often occurring simultaneously.  The review indicated the suspicious transactions were occurring at a Shell gas station, located at 2007 Smallwood Drive West, Waldorf, MD.  Surveillance was subsequently conducted and identified Private Furman Benjamin, U.S. Marine Corp, inserting what appeared to be a GSA Voyager Fleet credit card and keying in a series of numbers that corresponded with usage of the GSA Voyager Fleet credit card.  Immediately after, several vehicles were observed congregating around the pump and receiving fuel.  After the completion of the transaction, the receipt was obtained from the gas station attendant and the receipt confirmed that this transaction was made with the GSA Voyager Fleet credit card.  The total loss attributable to the fraud is approximately $ 8,491.

On January 14, 2009 GSA OIG investigators received notice from the Office of the Chief Architect, Fine Arts Program Office (FAP) that transfer of custody of a Works Progress Administration (WPA) sculpture by artist Leonard Jungwirth had been completed.  The sculpture, recovered from possessor Shailesh Saigal, was loaned by the FAP to Michigan State University (MSU) for permanent display.  Jungwirth was a prominent artist of the WPA era who created MSU's mascot, Sparty the Spartan.

BACKGROUND

On September 18, 2007 while conducting a proactive investigation into lost/stolen Works Progress Administration (WPA) artwork (V07-0001), GSA OIG investigators noted a sculpture on the internet auction site of eBay.  The auction for the sculpture was titled "leonard jungwirth michigan wpa fap sculpture rare", and the item description read, "leonard d. Jungwirth (1903-1963) w.p.a. plaster painted sculpture signed j.d. jungwirth w.p.a. a world famous sculpture from michigan - specifically michigan state university and creator of sparty the spartan."  Photos of the sculpture showed markings similar to those of WPA produced sculptures.  The auction listed a "buy it now" price of $5,000.

This information was forwarded to fine arts specialists in the Office of The Chief Architect, GSA/Public Buildings Service, for review, who confirmed that the Fine Arts Program Office believed the sculpture to be an authentic WPA produced sculpture.

GSA OIG investigators contacted the possessor and coordinated communication between the possessor and GSA to arrange for the return of the sculpture to the US Government.

On January 14, 2009, Thomas Fetter, former Construction Representative and James Coffin, Project Specialist, for GSA vendor Consolidated Edison (Con Ed) in New York, were arrested by Special Agents from the Department of Homeland Security/Immigration and Customs Enforcement, the Internal Revenue Service, Criminal Investigation Division and Port Authority of New York and New Jersey/Office of Inspector General, on felony charges of violating Title 18 USC 666, Theft of Bribery Concerning Programs Receiving Federal Funds. The arrests were based on a criminal complaint filed at U.S. District Court, Eastern District of New York, on September 16, 2008.  Fetter and Coffin were each released on $100,000 bond. 

Con Ed provides electric and steam service in New York City, and Westchester County, NY. Con Ed is a subsidiary of Consolidated Edison, Inc., one of the nation’s largest investor-owned energy companies. 

Investigation disclosed that since 2004, Fetter and Coffin solicited and accepted more than $700,000 in kickback payments from a contractor that performed gas line and electrical work for Con Ed on construction projects in New York City and Westchester County. Charges indicate that in exchange for those kickbacks, Fetter and Coffin agreed to direct additional work to the contractor that did not actually need to be done, in order to generate income for everyone involved in the scheme.  Fetter and Coffin also agreed to ensure that Con Ed paid the contractor’s invoices on a timely basis.

On January 20, 2009, Barry Luis Dragon, Project Manager for GSA Contractor CMC & Maintenance, Inc. (CMC), Bangor, ME, pled guilty, was convicted, and fined for willfully destroying or damaging property.

The GSA OIG’s Northeast and Caribbean Regional Investigations Office (JI-2), was notified by the U.S. Department of Homeland Security (DHS), Federal Protective Service (FPS), Albany, NY, that Dragon stole government property. Dragon’s coworkers provided DHS/FPS Special Agents with information that Dragon stole GSA property from a New York border station storage shed, removed fuel oil from government oil tanks that were being replaced by CMC at various government properties, as part of a contractual agreement. Instead of returning the fuel oil, Dragon sold the fuel oil to coworkers. Dragon was also responsible for disposing of 20 air conditioning units for the government. Instead of properly disposing of the units, Dragon sold them as scrap metal.

When most people think of forensics, they think of the TV show “CSI” where fibers can unravel a suspect’s alibi in 60 minutes flat, less commercials.

Now, federal auditors are starting to use forensic methods to root out fraud.

Inspector general criminal investigators have used forensics techniques for years to investigate fraud, embezzlement, cyber espionage and other crimes. But not IG auditors — until recently.

Forensic auditing combines advanced computer investigative work — such as data mining and analysis, combing the content of computer hard drives, and conducting in-depth Web searches — with traditional auditing and accounting techniques to investigate fraud.

The General Services Administration inspector general’s office last summer rolled out a five-person team devoted to using forensic auditing techniques to dig up evidence of fraud. Other agencies, such as Defense Department agencies, NASA and the Environmental Protection Agency, are doing the same. And still other agencies are considering starting new forensics auditing teams at the urging of the National Procurement Fraud Task Force, an interagency group that promotes the prevention, early detection and prosecution of fraud.

“Forensic auditing is the way of the future,” said Brian Miller, GSA’s inspector general and co-chair of the National Procurement Fraud Task Force.

Forensics auditing represents a new approach to auditing because it attempts to find — through forensic methods — improper activity.

Traditional audits don’t do that. They can uncover fraud, but they don’t seek it out. Instead, they look at records to check if prices charged on contracts were reasonable or if contractors have compliant accounting systems in place, said Conan Albrecht, a professor who teaches forensic auditing techniques at Brigham Young University in Provo, Utah.

As new computer-based data-mining techniques have evolved, new possibilities have emerged for auditors to be more proactive in looking for improper activity such as fraud. Now, auditors have tools that can allow them to more easily and regularly analyze and compare vast sets of data to reveal patterns of behavior that would evade traditional audit reviews.

“Forensic auditing is a new way of going about it that will find both anomalies and fraud,” Albrecht said. “It allows auditors to be more proactive about their work, rather than reactive and waiting for someone to give us a tip.”

Forensic auditors try to match symptoms of fraud and they think about how perpetrators might defraud the system and then run tests to see if the symptoms of that kind of fraud show up.

Most fraud investigation cases start with a tip called in on a hot line, said Ted Stehney, who directs the forensic auditing team at the GSA IG’s office. By being more proactive —through regular forensic audits — auditors can help keep some fraud from ballooning into multimillion-dollar cases, he said.

Connecting the dots

Forensic techniques allow auditors to compare various sets of data more easily and to connect the dots that point to a possible crime more easily, Stehney said.

For example, an auditor applying traditional auditing methods might examine a database of vendor payments and not find much. An auditor using forensic techniques, however, could view that database alongside other databases and spot anomalies of interest. For instance, examining a database of vendor payments alongside a database of employee bank accounts where paychecks are deposited might find that a vendor payment was directed to an employee’s personal account. By regularly examining and comparing various databases like that, auditors can find red flags that could indicate fraud — and not have to wait for tips to be called into a hot line, he said.

Stehney admits that drilling for fraud is a bit like drilling for oil: Auditors are likely to come up with a lot of dry wells.

“I think we’ll have the opportunity to find more fraud, but I also think one of the byproducts of it is a lot of waste will surface in the dry holes we drill,” Stehney said.

One challenge auditors face is that government databases don’t often mesh for easy data mining, said Tom Caulfield, assistant IG for investigations at the National Reconnaissance Office. In addition, privacy regulations prevent some databases from being linked for this kind of a search, said Caulfield, who lectures on using forensic techniques for the National Procurement Fraud Task Force.

Some successes

The GSA IG’s forensics auditing team has one success already: a case of employee embezzlement involving a phony company used to mask 13 illicit transfers of government funds. The GSA employee, a supervisory accountant named Michael Harrington, was indicted in October on charges he stole nearly $600,000 while working at GSA’s office in Kansas City, Mo.

Stehney declined to give details on how forensic auditing was used because the case is ongoing and it would reveal methodologies that could help criminals avoid detection.

The emergence of forensics auditing likely will impact the way auditors are trained in the future, Stehney said.

Traditional auditors are not expected to proactively seek out fraud. Instead, they try to ensure the government gets a good price, that government accounts are accurate, that internal controls are in place to ensure verifiable and accurate financial transactions and records, and that contractors’ financial systems comply with government standards.

Forensic auditors, on the other hand, are seeking out fraud. So they need training on a different set of skills and techniques: data mining, technology skills, statistics and investigation skills, Albrecht said. They also must ask different types of questions said Steve Linick, deputy chief of the Justice Department’s fraud division and director of the National Procurement Fraud Task Force.

By ELISE CASTELLI, Federal Times

An Elkton man accused of making nearly $58,000 in gasoline purchases with stolen government credit cards is facing 10 years in prison and a $250,000 fine after pleading guilty in federal court Friday, according to the U.S. Attorney’s Office.

Richard B. Eldreth, 41, pleaded guilty to stealing government property in connection with unauthorized purchases of fuel using stolen U.S. General Services Administration (GSA) credit cards.

By Carl Hamilton

On December 15, 2008, before an audience of 150 comprised of Inspectors General, Federal law enforcement officers and legal counsel, and other oversight professionals, USDOJ’s National Procurement Fraud Task Force (NPFTF) was convened by Chairman Matt Friedrich and Vice Chairman Brian Miller to discuss contractor self-reporting flowing from new changes to the Federal Acquisition Regulation (FAR) that make it mandatory for contractors and subcontractors to report knowledge of fraud.

NPFTF Vice Chair and GSA IG Brian Miller addressing the Task Force.

The new FAR amendment (73 Fed. Reg. 67064) requires, among other things, that contractors and subcontractors must notify Offices of Inspectors General (OIGs) whenever they have credible evidence that a principal, employee, agent, or subcontractor has committed a violation of the civil False Claims Act or a violation of Federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations in connection with an award, performance, or closeout of any related subcontract. NPFTF Vice Chairman Miller, who is also GSA’s Inspector General, reviewed the background to the FAR amendment, and highlighted the availability of GSA OIG’s electronic “FAR Contractor Reporting Form”(http://oig.gsa.gov/integrityreport.htm)

NPFTF Chairman Friedrich, Acting Assistant Attorney General of the Criminal Division, communicated with IG’s and NPFTF members on December 5, 2008 praising the work of GSA OIG and others in developing convenient reporting systems for contractors.

Also distributed at the December 15^th meeting was the National Procurement Fraud Task Force Progress Report, December 2008, highlighting the important work of the Task Force (http://www.usdoj.gov/criminal/npftf/resource/Dec08progress_report.pdf).

On December 16, 2008, James Bauer, Owner, JB Auto Restoration and Collision, Darby, PA, was found guilty of violating one count of Title 18 U.S.C. 1001, False Statements. Bauer and Codefendant, Brian Forrest, U.S. Postal Service Employee, Philadelphia, PA, were tried by jury in the U.S. District Court/Eastern District of Pennsylvania before U.S. District Judge Anita B. Brody. Bauer and Forrest, however, were acquitted of the charges against them for violating Title 18 U.S.C. 201 (c)(1)(B)&(c)(1)(A), Paying and Receiving Gratuities; and Title 18 U.S.C. 371, Conspiracy.

Previously, on December 3, 2008, Bauer pled guilty to one count of violating Title 26 U.S.C. 7202, Failure to Withhold, Account for, and Pay Federal Withholding Taxes.

Sentencing for Bauer is scheduled for April 7, 2009.

This case was initiated based on information received from the United States Postal Service (USPS), Office of the Inspector General (OIG), Norristown, PA, indicating several auto body and repair shops in the Philadelphia area were possibly overcharging the USPS for work performed on USPS owned vehicles. The investigation disclosed the majority of auto body repairs performed on USPS vehicles were being performed by J B Auto Restoration and Collision (JB Auto), Darby, PA, which had performed work for GSA in the past. Additionally, it was disclosed that Brian Forrest, USPS employee, was the individual responsible for funneling the excessive repair work to JB Auto. Forrest utilized the GSA Voyager Fleet Credit Cards assigned to the USPS vehicles to pay for the extensive repairs.

The joint investigation between GSA OIG, USPS OIG and the Internal Revenue Service, Criminal Investigations Division, disclosed that Bauer, Owner of JB Auto, took Forrest, Forrest's wife and two of Forrest's friends on an all-expense paid trip to Las Vegas, Nevada. The majority of the trip expenses, such as hotel rooms and meals, were "comped" to Bauer by the Mandalay Bay Casino. However, the cost of the airline tickets and limousine service to the airport was paid for by Bauer. Bauer lied to federal agents when he stated he was repaid by Forrest and Forrest’s friends for the cost of the airline tickets.

This case was prosecuted in the Eastern District of Pennsylvania.

WASHINGTON – A federal jury in Washington convicted David H. Safavian, the former chief of staff for the General Services Administration (GSA), of obstructing a GSA internal investigation and making false statements, Acting Assistant Attorney General Matthew Friedrich of the Criminal Division announced today.

The jury convicted Safavian of four charges in an October 2008 superseding indictment, following a six-day trial and three days of jury deliberation. The jury found that from 2002 until 2005, Safavian made false statements and obstructed an investigation into his relationship with former Washington lobbyist Jack Abramoff. The investigation focused on whether Safavian, the chief of staff at the GSA from May 2002 until January 2004, aided Abramoff in his attempts to acquire GSA-controlled property in and around Washington.

The jury heard evidence at trial that Abramoff took Safavian and others on a golf trip to Scotland and to London in August 2002, and that Safavian made a false statement to a GSA ethics officer claiming that Abramoff did all of his work on Capitol Hill at the time Safavian was assisting Abramoff in acquiring GSA properties, and planning to travel with the lobbyist to Scotland and London. Safavian repeated similar statements to a GSA Office of Inspector General (GSA-OIG) special agent, again concealing the fact that Abramoff had business before the GSA prior to the August 2002 trip and that he was aiding Abramoff in his attempts to do business with the GSA. The jury also found that Safavian made false statements to an FBI agent investigating the lobbying activities of Abramoff, when he said he was not able to assist Abramoff in acquiring properties because he was too new at GSA. Finally, the jury also found that Safavian filed a false statement on his 2002 financial disclosure form without including information about the August 2002 trip.

The jury found Safavian not guilty of making false statements to the Senate Committee on Indian Affairs by claiming to the committee during its investigation that Abramoff had no business before GSA at the time of the Scotland trip.

Safavian faces a maximum sentence of five years in prison on each of the four counts, a $250,000 fine and three years of supervised release. A sentencing date has not yet been set by the court.

Safavian was initially indicted in October 2005 on charges of obstruction of justice and making false statements related to his association with Abramoff. A federal jury found him guilty of four charges in June 2006 but the verdicts on two counts, concealment of material facts to a GSA ethics officer and to GSA-OIG, were later reversed on appeal. Also on appeal, the court vacated and remanded for a new trial the convictions on charges related to the obstruction of the GSA-OIG investigation and making false statements to a GSA ethics officers and a Senate Committee.

Abramoff pleaded guilty in January 2006 to charges of conspiracy, aiding and abetting honest services mail fraud and tax evasion, and was sentenced in September 2008 to four years in prison.

To date, 17 individuals, including lobbyists and public officials, have pleaded guilty or have been convicted at trial as a result of the ongoing investigation into the activities of Abramoff and his associates.

The case is being prosecuted by Trial Attorneys Nathaniel B. Edmonds and Albert Stieglitz Jr. of the Criminal Division’s Fraud Section and Trial Attorney Justin Shur of the Criminal Division’s Public Integrity Section. The case and the ongoing investigation are being led by the FBI, with assistance in this case from GSA-OIG.

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FOR IMMEDIATE RELEASE CRM

FRIDAY, DECEMBER 19, 2008 (202) 514-2007

WWW.USDOJ.GOV                                                                TDD (202) 514-1888

On December 15, 2008, Mitchell Wade, former Owner and President, MZM Inc., was sentenced before U.S. Magistrate Judge Ricardo M. Urbina, in U.S. District Court, Washington, D.C., as a result of a previous guilty plea to two counts of 18 USC 371 (Conspiracy), one count of 18 USC 1952 (a)(3) (Use of Interstate Facilities to Promote Bribery) and one count of 2 USC. 441f and 437g(d)(1)(D) (Election Fraud). Wade received a sentence of 30 months incarceration, 36 months supervised release, $250,000 criminal fine, and a $400 special assessment fee.

GSA OIG investigators initiated the case based on information received from the Department of Defense (DoD), Defense Criminal Investigative Service (DCIS) alleging fraudulent contract activity and corruption between U.S. Government officials at the DoD and MZM Inc, an authorized vendor on the GSA Multiple Award Schedule (MAS) Program.

The guilty plea was part of a criminal investigation alleging U.S. Congressional Representative (Rep.) Randal Cunningham and others may have applied undue influence to ensure MZM Inc., received congressional funding under an alleged congressional mandate.

MZM Inc. had two GSA MAS contracts for general-purpose commercial information technology equipment, software, and services; and management, organization, and business improvement services (MOBIS).

The case is being prosecuted in Washington, D.C.

On December 5, 2008, Eston Clare, Office Manager, T&S Trucking Corporation (T&S), pled guilty before U.S. District Court Judge Joanna Seybert, Eastern District of New York (USDC/EDNY), to violating one count of 18 USC 1956, Conspiracy to Launder Money. Sentencing of CLARE is scheduled for March 6, 2009.

Previously on July 19, 2007, Clare and Tonino Solomine, the Owner of T&S, were indicted by a Federal Grand Jury in USDC/EDNY, on charges of violating 18 USC 659, Embezzlement of Interstate and Foreign Shipments of Heating Oil and 18 USC 1956, Conspiracy to Launder Money. The Indictment charged Clare and Solomine with stealing tens of millions of gallons of heating oil from customers in the New York City metropolitan area, reselling the stolen oil, and laundering the proceeds from the sales.

This joint investigation by the GSA OIG with the Internal Revenue Service, Federal Bureau of Investigation and Department of Labor, involved the investigation of oil transport companies in the Long Island and Brooklyn area suspected of stealing fuel oil and charging customers for oil not received. Six oil transport company executives were subsequently arrested for diverting more than $75 million dollars in heating oil from their customers for over 15 years. Several of the oil companies are GSA contractors who delivered oil to various federal facilities and were involved in this fraudulent scheme. Additional pleas are anticipated.

Between November 17, 2008 and November 22, 2008, over 40 federal agents and local law enforcement personnel participated in a series of search warrants and arrest warrants in Southern CA. The GSA OIG was the lead agency, and other agencies included DOT-OIG, NCIS, Army-CID, DCIS, USDA-OIG, NASA-OIG, and the San Bernardino and Riverside County Sheriff Departments.

GSA OIG agents from the JI-5, JI-9 (to include Laguna Niguel), and JI-10 offices participated in this operation. Subjects Steven B. Smith and Bradley Garner were arrested and over $1 million worth of stolen property was seized.

BACKGROUND
SMITH and co-conspirators are under investigation for theft of federal excess property. SMITH obtained access to the GSA system in December 2004, and had screened and successfully transferred over 200 assets valued at approximately $2.8 Million dollars, including construction equipment, a jeep vehicle, and a 50-foot Choy Lee Fishing Yacht valued at $500,000.

SMITH, an FAA repair technician, reportedly screened these assets on behalf of various DOT agencies to include the FAA, the Office of the Secretary, and the Maritime Administration. The investigation determined that SMITH was not authorized to screen property for any of these agencies. Further, our investigation has determined that SMITH and GARNER had stolen the majority of the federal property items for their personal use. The investigation also determined that SMITH and GARNER defrauded an insurance company by way of filing a $45,000 claim for damage to a stolen Cessna aircraft that was excessed by the U.S. Forest Service. The case is being prosecuted by Assistant U.S. Attorney David R. Jennings in the Western District of WA.

Former GSA contractor employee, Anthony Charles Wehausen was convicted and sentenced in Washington, DC on October 30, 2008 for conspiracy to commit mail fraud and income tax evasion. Four other co-conspirators were also sentenced.

Read the full story here.

GSA OIG official, Karin Eller and an FBI Agent escorting JONES to the
Federal Courthouse in El Paso, TX

(picture credit: El Paso Times front page.)

Former National Center for the Employment of the Disabled executives were indicted by Federal Grand Jury.  Read about this story here. 

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FOR IMMEDIATE RELEASE TUESDAY, OCTOBER 7, 2008 (202) 514-2007 WWW.USDOJ.GOV TDD (202) 514-1888

Michael B. Holiday, 51, of Silver Spring pleaded guilty last year to bribing Dessie R. Nelson of Oakland, Calif., who worked for the General Services Administration.

Holiday won $130 million in contracts for his business to provide security at Maryland and California buildings.

He was also ordered to pay $400,000 in restitution to the IRS.

Nelson admitted to accepting a shopping bag filled with $35,000 in cash, an envelope stuffed with $10,000 in cash and a $7,000 Caribbean cruise.