U.K CITIZEN AND TWO AMERICANS CHARGED WITH CONSPIRING TO DEFRAUD THE U.S. GOVERNMENT

The following excerpt is from the U.S. Department of Justice website:
Tuesday, March 13, 2012
WASHINGTON – United Kingdom citizen Ahmed Sarchil Kazzaz and his company, Leadstay Company, were charged in an indictment unsealed today in the Northern District of Alabama for their roles in a conspiracy to defraud the United States and pay kickbacks in exchange for receiving subcontracts for a Department of Defense program in Iraq, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Joyce White Vance of the Northern District of Alabama.

Kazzaz, 45, and Leadstay were charged with one count of conspiracy to defraud and commit offenses against the United States; six counts of unlawful kickbacks; one count of wire fraud; and three counts of mail fraud.   Kazzaz was arrested on Feb. 14, 2012, in Los Angeles.   In addition, two informations filed in the Northern District of Alabama were unsealed today, charging Gaines R. Newell Jr., 52, and Billy Joe Hunt, 57, with conspiracy to commit the federal offenses of kickbacks, wire fraud and mail fraud, and with filing false tax returns.  

According to the indictment, Kazzaz paid more than $947,500 in unlawful kickbacks to two employees of a prime contractor to the United States government in order to obtain lucrative subcontracts for himself and Leadstay, in connection with the Coalition Munitions Clearance Program (CMCP).   CMCP is operated in Iraq by the U.S. Army Corps of Engineers, Huntsville Engineering and Support Center (HESC).   HESC, located in the Northern District of Alabama, operated the CMCP to clear out, store and dispose of weapons that were seized or abandoned in Iraq since the 2003 invasion.   HESC awarded a contract to perform this work to an international engineering and construction firm headquartered in Pasadena, Calif.

The indictment alleges that beginning in about March 2006, Kazzaz entered into a kickback agreement with the California prime contractor’s program manager and deputy program manager, who arranged for the award of subcontracts to Kazzaz and Leadstay to provide materials, heavy equipment and operators for equipment for the CMCP.   Kazzaz also allegedly obtained multiple funding increases to those subcontracts.   From April 2006 through August 2008, Kazzaz and Leadstay received more than $23 million in U.S. funds for services under the CMCP.

According to the two informations unsealed today, Newell was the program manager in Iraq for the California-based prime contractor to HESC, and Hunt was the deputy program manager.  Both are charged with conspiring to solicit and accept kickbacks to award subcontracts under the CMCP program and to commit mail and wire fraud by knowingly and intentionally devising a scheme to defraud the United States.   In addition, both are charged with failing to report the kickback income on their federal tax returns.

“Mr. Kazzaz allegedly paid kickbacks to two employees of a California-based contractor in order to secure subcontracts for Department of Defense programs in Iraq,” said Assistant Attorney General Breuer.   “Federal contracts must be won or lost based on the merits of the bid, and we will continue to take aggressive steps to hold accountable anyone who tries to play by their own set of rules instead.”

“Government contracts fraud is an insult to all law-abiding taxpayers,” said U.S. Attorney Vance.  “These defendants’ conduct was even worse in that they tried to illegally profit from defense contracts in Iraq, where American men and women were willing to put their lives on the line for freedom.”

“These charges clearly demonstrate that we will take firm action against those who make illegal payments while engaged in wartime contracting,” said Stuart W. Bowen, Special Inspector General for Iraq Reconstruction (SIGIR).   “SIGIR and its investigative partners will continue our vigorous pursuit of those whose illegal acts undermined the U.S. government’s management of the stabilization and reconstruction effort in Iraq.”

“Individuals and businesses that illegally enrich themselves at the expense of the U.S. taxpayer, especially as wartime profiteers, or those who diminish the combat readiness or effectiveness of the U.S. military, will be aggressively investigated by DCIS and our investigative partners,” said Defense Criminal Investigative Service (DCIS) Special Agent in Charge Chris D. Hendrickson.  “The combined investigative effort, the Department of Justice and the U.S. Attorney’s Office’s work demonstrate the combined federal commitment to combating fraud, waste and abuse.”

“IRS Criminal Investigation provides financial expertise with our law enforcement partners,” said Special Agent in Charge Leslie P. DeMarco of the Internal Revenue Service Criminal Investigations (IRS-CI) Los Angeles Field Office.  “Today’s unsealing of these charges demonstrates our collective efforts in tracing illicit funds internationally to enforce the laws and ensure public trust.”

Kazzaz, Newell and Hunt are also facing criminal forfeiture proceedings.

The cases were investigated by the DCIS, IRS-CI, SIGIR, the FBI, and the U.S. Army Criminal Investigations Division.   The cases are being prosecuted by Trial Attorney Catherine Votaw, on detail from SIGIR to the Fraud Section of the Justice Department’s Criminal Division, and Assistant U.S. Attorney David Estes of the Northern District of Alabama.

An indictment and information contain charges, and defendants are innocent until proven guilty.