FORMER DEFENSE CONTRACTOR PLEADS GUILTY TO THE ILLEGAL EXPORT OF MILITARY BLUEPRINTS TO INDIA

FROM:  U.S. JUSTICE DEPARTMENT
Wednesday, April 1, 2015
Former Owner of Defense Contracting Businesses Pleads Guilty to Illegally Exporting Military Blueprints to India Without a License

Assistant Attorney General for National Security John P. Carlin and U.S. Attorney Paul J. Fishman of the District of New Jersey announced that the former owner of two New Jersey defense contracting businesses today admitted that she conspired to send sensitive military technical data to India.

Hannah Robert, 49, of North Brunswick, New Jersey, pleaded guilty before U.S. District Judge Anne E. Thompson of the District of New Jersey to count six of a superseding indictment, which charged her with conspiracy to violate the Arms Export Control Act by exporting to India military technical drawings without prior approval from the U.S. Department of State.

“Hannah Robert circumvented the U.S. government and provided defense technical drawings in violation of the Arms Export Control Act,” said Assistant Attorney General Carlin.  “We will continue to pursue and hold accountable those who abuse their access to sensitive defense information.  I would like to thank all of the special agents, prosecutors and other personnel whose work led to the guilty plea in this case.”

“Hannah Robert conspired to send to another country thousands of technical drawings of defense hardware items and sensitive military data,” said U.S. Attorney Fishman.  “She was also charged with manufacturing substandard parts that were not up to spec, in violation of the contracts she signed with the Department of Defense.  Enforcement of the Arms Export Control Act is critical to the defense of our country.”

According to documents filed in this case and statements made in court:

In June 2010, Robert was the founder, owner and president of One Source USA LLC, a company located at her then-residence in Mount Laurel, New Jersey, that contracted with the U.S. Department of Defense (DoD) to supply defense hardware items and spare parts.  In September 2012, Robert opened another defense company, Caldwell Components Inc., based at the same address.  Along with a resident of India identified only as “P.R.,” Robert owned and operated a third company located in India that manufactured defense hardware items and spare parts.

From June 2010 to December 2012, Robert conspired to export to India defense technical drawings without obtaining the necessary licenses from the U.S. Department of State.  The exported technical drawings include parts used in the torpedo systems for nuclear submarines, military attack helicopters and F-15 fighter aircrafts.

In addition to United States’ sales, Robert and P.R. sold defense hardware items to foreign customers.  Robert transmitted export-controlled technical data to P.R. in India so that Robert and P.R. could submit bids to foreign actors, including those in the United Arab Emirates (UAE), to supply them or their foreign customers with defense hardware items and spare parts.  Neither Robert nor P.R. obtained approval from the U.S. Department of State for this conduct.

On Aug. 23, 2012, P.R. e-mailed Robert requesting the technical drawing for a particular military item.  P.R.’s e-mail forwarded Robert an e-mail from an individual purporting to be “an official contractor of the UAE Ministry of Defence,” and who listed a business address in Abu Dhabi, UAE.  The UAE e-mail requested quotations for a bid for the “blanket assembly” for the CH-47F Chinook military helicopter and listed the “End User” for the hardware item as the UAE Armed Forces.  Later that same day, Robert replied to P.R.’s e-mail, attaching, among other things, the electronic file for an export-controlled technical drawing titled “Installation and Assy Acoustic Blankets, STA 120 CH-47F,” to be used in the Chinook attack helicopter.

In October 2010, Robert transmitted the military drawings for these parts to India by posting the technical data to the password-protected website of a Camden County, New Jersey, church where she was a volunteer web administrator.  This was done without the knowledge of the church staff.  Robert e-mailed P.R. the username and password to the church website so that P.R. could download the files from India.  Through the course of the scheme, Robert uploaded thousands of technical drawings to the church website for P.R. to download in India.

On June 25, 2012, P.R. e-mailed Robert, stating: “Please send me the church web site username and password.”  The e-mail was in reference to both an invoice to and a quote for a trans-shipper known to Robert as a broker of defense hardware items for an end user in Pakistan.  This individual used a UAE address for shipping purposes.  Later that day, Robert replied to this e-mail, providing a new username and password for the church website so that P.R. could download the particular defense drawings.

On Oct. 5, 2012, Robert e-mailed P.R. with the subject line “Important.”  The e-mail referenced the Pakistan trans-shipper, a separate potential sale to individuals in Indonesia and the church website: “Please quote [the Pakistan trans-shipper] and Indonesia items today[.] [Dr]awings I cannot do now as if the size exceeds then problem, I should be watching what I upload, will do over the weekend[.]  Ask me if you need any drawing . . . . Talk to you tomorrow . . . .”

There were also quality issues with the parts that Robert provided to the DoD.  After the DoD in October 2012 disclosed that certain parts used in the wings of the F-15 fighter aircraft, supplied by one of One Source USA’s U.S. customers failed, Robert and P.R. provided the principal of their customer with false and misleading material certifications and inspection reports for the parts.  These documents, to be transmitted to the DoD, listed only One Source USA’s New Jersey address and not the address of the actual manufacturer in India, One Source India.  As a result of the failed wing pins, the DoD grounded approximately 47 F-15 fighter aircraft for inspection and repair, at a cost estimated to exceed $150,000.

Until November 2012, Robert was an employee of a separate defense contractor in Burlington County, New Jersey, where she worked as a system analyst and had access to thousands of drawings marked with export-control warnings and information on this defense contractor’s bids on DoD contracts.  Robert misrepresented to her employer the nature and extent of her involvement with One Source USA in order to conceal her criminal conduct.

Count six of the superseding indictment – conspiracy to violate the Arms Export Control Act – is punishable by a maximum potential penalty of five years in prison and a fine of $250,000.  As part of her plea agreement, Robert must pay $181,015 to the DoD, which includes the cost of repair for the grounded F-15s.  Robert also consented to a forfeiture money judgment of $77,792, which represents the dollar value of Robert’s fraudulent contracts with DoD.

The Arms Export Control Act prohibits the export of defense articles and defense services without first obtaining a license from the U.S. Department of State and is one of the principal export control laws in the United States.

The case was investigated by the special agents of the Defense Criminal Investigative Service’s Northeast Field Office and the special agents of the Department of Homeland Security’s Counter Proliferation Investigations.

The government is represented by Assistant U.S. Attorneys Fabiana Pierre-Louis and L. Judson Welle of the District of New Jersey.  The prosecution received invaluable support from attorneys of the U.S. Department of Justice’s National Security Division.

DEFENSE CONTRACTOR, CEO PLEAD GUILTY FOR ROLES IN LARGE-SCALE NAVY CORRUPTION CONSPIRACY

FROM:  U.S. JUSTICE DEPARTMENT 
Thursday, January 15, 2015
Defense Contractor and its CEO Plead Guilty to Corruption Conspiracy Involving “Scores” of Navy Officials

The owner and chief executive of Glenn Defense Marine Asia (GDMA), a company providing services to the U.S. Navy, pleaded guilty to bribery and fraud charges in federal court today, admitting that he presided over a decade-long conspiracy involving “scores” of U.S. Navy officials, tens of millions of dollars in fraud and millions of dollars in bribes and gifts.  GDMA also pleaded guilty today, as did a Navy captain who pleaded guilty for accepting bribes in exchange for using his position to benefit GDMA.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Laura E. Duffy of the Southern District of California, Deputy Inspector General for Investigations James B. Burch of the Defense Criminal Investigative Service (DCIS), Director Andrew L. Traver of the Naval Criminal Investigative Service (NCIS) and Director Anita Bales of the Defense Contract Audit Agency (DCAA) made the announcement.

“Today’s guilty pleas of Leonard Francis, his company, and a senior Navy officer are vitally important steps in our active, ongoing investigation,” said Assistant Attorney General Caldwell.  “We will continue our efforts to root out those involved in this long-running corruption scheme, both inside and outside the Navy.  The interests of justice and national security demand nothing less.”

“It is astounding that Leonard Francis was able to purchase the integrity of Navy officials by offering them meaningless material possessions and the satisfaction of selfish indulgences,” said U.S. Attorney Duffy.  “In sacrificing their honor, these officers helped Francis defraud their country out of tens of millions of dollars.  Now they will be held to account.”

“The greed of all those involved in this massive fraud and bribery case has cost American taxpayers tens of millions of dollars,” said NCIS Director Traver.  “NCIS and our law enforcement partners have pored through mountains of documents and emails, discovering and documenting the crimes so that those who participated can be held accountable.  Although today’s pleas are a significant milestone in the case, this investigation is far from over; there is much more work to be done.”

“The guilty pleas entered today send a clear message to those who, driven by greed, betray the faith and trust of the American taxpayers,” said DCIS Deputy Inspector General Burch.  “The DCIS, along with its law enforcement partners, will relentlessly pursue those who corrupt the procurement process for their own personal benefit.”

“I’m extremely gratified that the work of our investigative support team could make a significant contribution to the outcome in this egregious case of defrauding the government and, ultimately, the American taxpayer,” said DCAA Director Bales.

Leonard Glenn Francis, 50, of Singapore, the owner and CEO of GDMA, pleaded guilty to conspiracy to commit bribery, bribery and conspiracy to defraud the United States before U.S. Magistrate Judge Jan M. Adler of the Southern District of California.  GDMA likewise pleaded guilty today to conspiracy to commit bribery, bribery and conspiracy to defraud the United States.  A sentencing hearing for both Francis and GDMA is scheduled for April 3, 2015, before U.S. District Judge Janis L. Sammartino of the Southern District of California.  As part of their plea agreements, Francis and GDMA have agreed to forfeit $35 million and pay full restitution to the Navy, in an amount to be determined at sentencing.

As part of his guilty plea, Francis admitted to defrauding the Navy of tens of millions of dollars by routinely overbilling for various goods and services, including fuel, tugboat services and sewage disposal.

Francis also admitted that over the course of the conspiracy, he and GDMA gave Navy officials millions of dollars in gifts and expenses, including over $500,000 in cash; hundreds of thousands of dollars in prostitution services; travel expenses, including first class airfare, luxurious hotel stays and spa treatments; lavish meals, including Kobe beef, Spanish suckling pigs, top-shelf alcohol and wine; and luxury gifts, including Cuban cigars, designer handbags, watches, fountain pens, designer furniture, electronics, ornamental swords and hand-made ship models.  In exchange, Francis solicited and received classified and confidential U.S. Navy information, including ship schedules.  Francis also sought and received preferential treatment for GDMA in the contracting process.  Francis further admitted that he bribed a federal criminal investigator in an attempt to learn more about the federal investigation of his company.

Also today, U.S. Navy Capt. Daniel Dusek, 47, of San Diego, California, pleaded guilty to one count of conspiracy to commit bribery before U.S. Magistrate Judge William V. Gallo of the Southern District of California.  A sentencing hearing before U.S. District Judge Janis L. Sammartino of the Southern District of California is scheduled for April 3, 2015.

Dusek, the highest-ranking of five present and former Navy officials to plead guilty in the case so far, admitted that he used his influence as Deputy Director of Operations for the 7th Fleet, headquartered in Yokosuka, Japan, and later as commanding officer of the USS Bonhomme Richard and the executive officer of the USS Essex, to benefit Francis and GDMA.  Dusek admitted that he hand-delivered Navy ship schedules to the GDMA office in Japan or emailed them directly to Francis or a GDMA employee on dozens of occasions, each time taking steps to avoid detection by law enforcement or Navy personnel.  Dusek further admitted that Francis plied him with lavish meals, alcohol, entertainment, gifts, dozens of nights and incidentals at luxury hotels, including the Marriott Waikiki and the Shangri-La in Makati, Philippines, and the services of prostitutes.

Dusek admitted that, after accepting these gifts, he worked to direct Naval ships to GDMA’s port terminals.  For example, on one occasion, he steered an aircraft carrier and its strike group to Port Klang, Malaysia, a port terminal owned by Francis.

In addition to Francis, GDMA and Dusek, five other individuals have pleaded guilty for their roles in the scheme to date: U.S. Navy Commander Jose Luis Sanchez, U.S. Naval Criminal Investigative Service Special Agent John Beliveau, U.S. Navy Petty Officer First Class Dan Layug and GDMA employees Alex Wisidagama and Edmond Aruffo.

The ongoing investigation is being conducted by NCIS, DCIS and DCAA.  The case is being prosecuted by Director of Procurement Fraud Catherine Votaw and Senior Trial Attorney Brian R. Young of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Mark W. Pletcher and Robert S. Huie of the Southern District of California.

FORMER DEFENSE CONTRACTOR AND WIFE PLEAD GUILTY FOR PARTICIPATION IN PROCUREMENT FRAUD SCHEME

FROM:  U.S. JUSTICE DEPARTMENT 
Tuesday, November 12, 2013

Former Defense Contractor Employee and Wife Plead Guilty to Conspiring to Defraud Millions in Scheme Involving Supplies to Afghan National Army
Keith Johnson, 46, and his wife, Angela Johnson, 44, of Maryville, Tenn., pleaded guilty today to their roles in a $9.7 million procurement fraud scheme.

Mythili Raman, Acting Assistant Attorney General of the Justice Department’s Criminal Division; Dana J. Boente, Acting United States Attorney for the Eastern District of Virginia; Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office; Robert E. Craig, Defense Criminal Investigative Service (DCIS) Special Agent in Charge of Mid-Atlantic Field Office; John Sopko, Special Inspector General for Afghanistan Reconstruction (SIGAR); and Frank Robey, Director of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit (MPFU), made the announcement after the pleas were accepted by U.S. District Judge Leonie M. Brinkema of the Eastern District of Virginia.

The Johnsons were indicted on July 16, 2013, by a federal grand jury on conspiracy to commit wire fraud and wire fraud charges.  Keith Johnson faces a maximum penalty of 20 years in prison, and Angela Johnson faces a maximum penalty of five years in prison when they are sentenced on Feb. 14, 2014.

In a statement of facts filed with the plea agreement, Keith Johnson admitted to serving as the program manager for a Department of Defense contractor that operated a central maintenance facility (CMF) in Kabul, Afghanistan, and other facilities in that country to maintain and repair vehicles used by the Afghan National Army.  In his position during 2007 to 2008, Keith Johnson was involved in purchasing vehicle parts from vendors.  The Johnsons formed a company in Tennessee, Military Logistics Support (MLS), and listed only the names of relatives as officials in the documents filed.  Angela Johnson operated the company.  When Keith Johnson’s company solicited quotes for different vehicle parts that were needed, Angela Johnson, using her maiden name of “Angela Gregory” to conceal her relationship to Keith Johnson, responded with quotes based on parts that she was able to purchase from other vendors of vehicle parts.  Keith Johnson used his position as program manager to write letters justifying awards of purchase orders for parts to MLS without seeking competitive quotes, and in instances in which there had been competitive quotes, approving recommendations that the awards be made to MLS.

The Johnsons also conspired with John Eisner and Jerry Kieffer, two individuals who worked at the CMF as subcontractors to Keith Johnson’s company, to have Keith Johnson similarly steer purchase orders for other types of vehicle parts to Eisner’s and Kieffer’s separate company, Taurus Holdings.  Eisner submitted the quotes for Taurus using a fake name to conceal his connection to the subcontractor.  Eisner and Kieffer paid kickbacks to the Johnsons and on occasion engaged in collusive bidding with the Johnsons so that MLS could win competitions for certain purchase orders.  Eisner and Kieffer previously pleaded guilty to conspiracy and will be sentenced on Dec. 18, 2013.

As a result of the scheme, Keith Johnson’s company awarded MLS at least $9.7 million worth of purchase orders for vehicle parts by Keith Johnson’s company.

This case was investigated by DCIS, FBI, SIGAR and Army MPFU.  Trial Attorney Daniel Butler of the Criminal Division’s Fraud Section and Assistant United States Attorneys Jack Hanly and Ryan Faulconer of the Eastern District of Virginia are prosecuting the case on behalf of the United States.

32 MORE F-35 JETS WILL BE BUILT BY LOCKHEED MARTIN

Photo:  F-35.  Credit:  U.S. Air Force.

FROM: U.S. DEPARTMENT OF DEFENSE

DOD, Lockheed Martin Agree to More F-35s
By Claudette Roulo
American Forces Press Service

WASHINGTON, Nov. 30, 2012 – DOD and Lockheed Martin have reached an agreement in principle to manufacture 32 F-35 Lightning II joint strike fighter jets, Pentagon Press Secretary George E. Little said today.

The jets are part of Low-Rate Initial Production batch 5 -- the fifth production lot of the aircraft. Unit-cost data will be made available once the contracts are finalized and signed, Little said.

"Production costs are decreasing and I appreciate everyone’s commitment to this important negotiation process," said Navy Vice Adm. Dave Venlet, the F-35 program executive officer.

The agreement also covers the costs of manufacturing support equipment, flight test instrumentation and additional mission equipment, he added.

"It was a tough negotiation," Little said, "and we’re pleased that we’ve reached an agreement."

According to a news release from the F-35 program office, Lockheed Martin will produce 22 F-35A conventional take-off and landing variants for the Air Force, three F-35B short takeoff/vertical landing variants for the Marine Corps and seven F-35C carrier variants for the Navy.

Aircraft production was started in December 2011 under a previously authorized undefinitized contract action, the release said. Undefinitized contract actions authorize contractors to begin work before reaching a final agreement on contract terms.

The agreement sets the program to move forward according to improved business timelines, Little said. "It’s good for all nations that are partnered with us in this important effort for our future national security."

The United Kingdom, Italy, the Netherlands, Australia, Canada, Denmark, Norway, Turkey, Israel and Singapore are partners or participants in the aircraft’s development program, and the Japanese government announced in December 2011 it will buy 42 of the fighters.

DEFENSE CONTRACTOR TO PAY OVER $18 MILLION TO RESOLVE FALSE CLAIMS ACT LAWSUIT

FROM:  U.S. DEPARTMENT OF JUSTICE
Friday, June 1, 2012
Virginia-based Defense Contractor Calnet to Pay $18.1 Million to Resolve False Claims Act Lawsuit
Calnet Inc. has agreed to pay the United States $18.1 million to resolve allegations that the company submitted false claims to the Department of Defense, the Justice Department announced today.  Calnet Inc., an intelligence analysis, information technology and language services company, is headquartered in Reston, Virginia.

The settlement with Calnet relates to three contracts under which the company supported the United States? war effort by providing translation and linguist services at Guantanamo Bay and several other facilities beginning in 2005.  Calnet was a subcontractor on one of the contracts, and the prime contractor on the other two contracts.  The United States alleged that Calnet overstated its provisional indirect or overhead rates on each of these contracts and thus submitted inflated claims for payment to the United States.

?Contractors are expected to comply with their statutory obligations and act in good faith when dealing with the United States government,? said Stuart F. Delery, Acting Assistant Attorney General for the Department of Justice?s Civil Division.  ?We will not tolerate false statements and failure to disclose information that is important to the government?s contracting processes.?

?We?re using every tool available to assure the integrity of government contracting,? said U.S. Attorney MacBride. ?This is one of several cases we have pursued to protect against procurement fraud in the Eastern District of Virginia.?

The settlement with Calnet resolves a lawsuit filed in the U.S. District Court for the Eastern District of Virginia under the False Claims Act by former Calnet employee, Kimthy Chao.  Under the False Claims Act, private citizens can bring suit on behalf of the United States and share in any recovery obtained by the government.  Mr. Chao?s share of the Calnet settlement will be $2,669,724.

This settlement was the result of a coordinated effort by the Department of Justice, Civil Division, Commercial Litigation Branch; the U.S. Attorney?s Office for the Eastern District of Virginia; the Defense Criminal Investigative Service and the Defense Contract Audit Agency.  The claims settled by this agreement are allegations only and there has been no determination of liability.