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Sunday, June 10, 2012

When corners are cut, even for great reasons (e.g., war), the way is opened for fraud

Procurement is intended to slow down the spending of money, to make it more accountable and transparent. Integrity comes from the steady drip, drip, drip of the process.

But in times of great need, such as natural disasters, emergencies, war and the like, you need a firehose of spending, and the drip, drip, drip just won't do. That's when dishonesty strikes. It preys on such weaknesses in the system, profits from calamity.

Former Utahn at center of alleged DOD contracting scheme
Harris, a longtime Army reservist who served in Iraq with a Special Forces unit before becoming an independent contractor, allegedly conspired with others to defraud the government of at least $15 million through rigged contracts. Those contracts eventually totaled nearly $53 million for work during the transfer of security operations in Afghanistan, according to documents filed as part of a civil forfeiture complaint initiated by the government in Utah’s federal court.

The government alleges Harris used ill-gotten funds to buy and renovate homes in Lake Havasu City, Ariz., and in St. George, Utah; he also purchased a lot in St. George, prosecutors say. He bought a Ford Taurus, a 2010 Harley-Davidson motorcycle, a Dodge Ram truck, and Cessna — he later sold for $582,625 — and seafloat airplanes. Harris also loaded up on silver bars, spending about $30,000 on 37 silver bars in varying weights.

The Defense Criminal Investigative Service and Homeland Security Investigations began looking at Harris after being tipped off that he had withdrawn $238,400 from two different bank accounts between April 2009 and October 2010, all in $9,000 increments. That investigation showed Harris made about $24 million in transactions and account transfers over an approximately three-year period.

Eventually, the investigation uncovered an alleged scheme that began in 2007 with a bid on a six-month contract to manage equipment for Afghan National Army Special Forces commando teams and train them on how to do their maintenance work themselves. Key players in the alleged scheme: Harris and his long-time military buddy David Young. The two became acquainted in the 1980s while Former Utahn at center of alleged DOD contracting scheme $15M through rigged contracts.

The St. George bank teller had a simple question for Christopher Harris: Why did he consistently withdraw $9,000 at a time, over and over and over?

Harris had an equally simple answer. He told the clerk he didn’t want to go over the $10,000 mark, which would attract government attention — scrutiny he apparently wanted to avoid for good reason.

Harris, a longtime Army reservist who served in Iraq with a Special Forces unit before becoming an independent contractor, allegedly conspired with others to defraud the government of at least $15 million through rigged contracts. Those contracts eventually totaled nearly $53 million for work during the transfer of security operations in Afghanistan, according to documents filed as part of a civil forfeiture complaint initiated by the government in Utah’s federal court.

No criminal charges have been filed against Harris or other alleged co-conspirators in the scheme, although the U.S. Attorney’s Office says its investigation is ongoing. But in the forfeiture action, filed last fall under seal, the government laid claim to money and assets Harris and others held in 13 different bank accounts; retirement and college saving funds; 20 different properties, including homes in Utah, Arizona, Florida and New Hampshire; vehicles and airplanes; silver bars and gold coins; and a half dozen firearms.

"The claim in this case was not against Mr. Harris [or other individuals], but against the proceeds and the assets the complaint alleges were purchased from the proceeds of the alleged conduct," said Melodie Rydalch, spokeswoman for the U.S. Attorney’s Office in Utah.

The government alleges Harris used ill-gotten funds to buy and renovate homes in Lake Havasu City, Ariz., and in St. George, Utah; he also purchased a lot in St. George, prosecutors say. He bought a Ford Taurus, a 2010 Harley-Davidson motorcycle, a Dodge Ram truck, and Cessna — he later sold for $582,625 — and seafloat airplanes. Harris also loaded up on silver bars, spending about $30,000 on 37 silver bars in varying weights.

The contracts » The Defense Criminal Investigative Service and Homeland Security Investigations began looking at Harris after being tipped off that he had withdrawn $238,400 from two different bank accounts between April 2009 and October 2010, all in $9,000 increments. That investigation showed Harris made about $24 million in transactions and account transfers over an approximately three-year period.

Eventually, the investigation uncovered an alleged scheme that began in 2007 with a bid on a six-month contract to manage equipment for Afghan National Army Special Forces commando teams and train them on how to do their maintenance work themselves. Key players in the alleged scheme: Harris and his long-time military buddy David Young. The two became acquainted in the 1980s while serving in the U.S. Army and also served in a Special Forces Unit in Iraq between November 2002 and June 2003.

As part of the scheme, prosecutors say Young worked with Maj. Todd Cox, then deputy commander for the Combined Security Transition Command in Afghanistan, to grossly inflate the official cost estimate of providing the equipment, maintenance and training services. Cox estimated the project at $875,000 plus "a little more" for being "close to the fight" and living conditions, court documents state.

Cox listed it as an urgent, limited-bid contract, thus exempting it from an open bid process. He gave a contract supervisor eight companies capable of performing the work, including AISC. In the end, it was one of two companies that bid on the contract.

AISC bid $899,782, while the other company bid $382,590 — a variance prosecutors said in court documents was "indicative of the inflated contract price estimate provided by Young, Cox and their co-conspirators."

Prosecutors allege AISC failed to staff the project as required in the various contracts, but still billed the government for services. Tory Milos, a captain in the New York Air National Guard and one-time girlfriend of Young, was tasked with approving invoices for work performed by contractors for the Army; she verified that AISC was "fully performing" and authorized payments to the company, according to the complaint.

By Aug. 8, 2009, the original contract had been extended and modified nine times, and AISC had received payments of slightly more than $26 million. And after the initial contract expired in August 2009, AISC was awarded four new sole-source consecutive contracts through Dec. 15, 2010.

In the end, the total payments AISC received through the five Department of Defense contracts, a "portion" of which it used to cover project-related expenses, amounted to nearly $54 million. About one-third of those government payments eventually flowed to Harris. In 2010 alone, he received more than $5.7 million.

There is an awful lot more to this story, so please read the link at the article title above. Audacity has no bounds. If we can't learn from our mistakes, ....

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