Thursday, August 5, 2021

A Look Back At The Multi-Million Dollar Defense Contract Fraud and Bribery Case At The Philadelphia Quartermaster

Counterterrorism magazine published my piece on a look back at the multi-million dollar Defense Department fraud and bribery case at the Defense Personnel Support Center, known locally in South Philadelphia as the "Quartermaster."

You can read the piece via the above and below pages (click on them to enlarge) or the below text:


    

Operation Thimble: A Look Back at the Multi-Million Dollar 

Defense Contract Fraud and Bribery Case at the Philadelphia Quartermaster  

By Paul Davis

Back in the early 1980s, before I became a writer, I was a young Defense Department civilian employee doing security work at a DoD command in Philadelphia. I recall being tasked with assisting a Defense Department attorney who was working on a case of procurement fraud against a contractor who supplied the U.S. Army with substandard tires for trucks and other Army vehicles. The substandard tires might have caused accidents and injured or killed soldiers. 

The attorney and I were both employees of the Defense Contract Administration Services Region (DCASR) Philadelphia. At the time, the DoD command oversaw defense contractors in the state of Delaware, Southern New Jersey, and Southeastern Pennsylvania. These contractors supplied the armed forces with everything from clothing, medical and textile products to major electronic weapons systems. From boots to cruise missiles, DCASR provided contract administration, quality assurance, engineering and program oversight of the contractors for the Army, Navy, Marines, Air Force and NASA.

The attorney asked me to act as his investigator. I went out and conducted interviews with military people and DoD civilian employees who were involved with the tire contracts and the contractor payment process. I also gathered documentation that aided the attorney in proving the fraud.

I received an award for my efforts, but both the attorney and I were disappointed that senior Defense officials made the call to take the company to civil court rather than to a criminal trial. The company settled out of court and agreed to pay a substantial sum back to the Defense Department, as it feared being “disbarred” from receiving future DOD contracts.

During the many years that I worked at DoD, I served as an investigating officer and performed internal investigations. I also provided support to Naval Investigative Service and Defense Investigative Service special agents on a number of procurement fraud cases. Many of the fraud cases I worked on endangered the safety of military members, and as a Navy veteran who served on an aircraft carrier during the Vietnam War, I was proud of my contributions.

In the 1980s, DCASR was a tenant command collocated on the Defense Personnel Support Center (DPSC) compound, which was an 11-square block facility composed of buff-colored buildings centered by a tall clock tower in South Philadelphia. A major employer and neighborhood mainstay, DPSC was known locally as the “Quartermaster.”

DPSC was the second largest defense procurement center in the U.S., and the military colossus purchased more than a billion dollars of food, clothing, textiles, medicines and medical equipment annually at the wholesale level for the men and women of the Army, Navy, Marines, and Air Force. The procurement center contracted for more than 50,000 items, including uniforms, blankets and sleeping bags. 

I was not involved in the 1987 external FBI investigation of a multimillion-dollar fraud and bribery scandal at the Quartermaster, but like the other 7,000-plus employees at the center, I was rocked by the outcome. The investigation, code-named “Operation Thimble,” involved crooked contractors, consultants and senior Defense Department personnel, several of whom I knew and worked with. The FBI investigation led to the conviction of 26 individuals and seven corporations, and the recovery of $4.2 million in fines, civil judgments and forfeitures. The scandal made headline news across the country.

The FBI, working with the Defense Investigative Service, took down clothing manufacturers nation-wide who provided uniforms for the military worldwide and their bribery of DPSC and DCASR officials who pushed million-dollar contracts their way and greased the payment process for them.

Although the overwhelming majority of the Quartermaster’s military personnel and civilian employees were honest and hardworking, the FBI arrested Frank Coccia, the highest-ranking DOD civilian official at DPSC. Coccia was the deputy director of the Clothing and Textile Division, and he was prosecuted along with several DPSC and DCASR officials.      

I reached out to Linda Dale Hoffa, who was an assistant U.S. attorney in Philadelphia in 1987 when she prosecuted the fraud and bribery cases at the Defense Personnel Support Center and former FBI Agent Joseph L. Ford, who led the investigation.

Hoffa later served as the Criminal Division Chief at the U.S. Attorney’s Office in Philadelphia where she supervised more than 100 federal prosecutors in both violent crime and white-collar crime cases. She supervised, as well as conducted, thousands of criminal investigations, and tried many high profile and complex cases. Hoffa currently chairs the White Collar/Government Investigations Practice Group at the Philadelphia law firm Dilworth Paxson LLP.

Joseph L. Ford retired in 2016 after a 30-year career with the FBI. He served as the FBI’s Associate Deputy Director and Chief Operating Officer. He also was the FBI’s Chief Financial Officer. Ford investigated significant public corruption matters, major defense procurement program frauds, computer crimes, health care fraud and corporate fraud.  Today he is the owner and principal with the firm of Newton and Ford Associates, LLC, which provides management and consulting services to clients in both private sector and government organizations. 

I asked the two how the investigation began.

“It started very small. There had been rumors for years about a great deal of corruption at this facility,” Hoffa replied. “Initially, the two people investigating were FBI Agents Joseph Ford and Peter Smith and we were figuring out how to get an “in.” It started with an informant who was a government contractor who was tired of the corruption.”

“We had an investigation on an individual named Mario D’Antonio and he had a number of facilities that he owned and operated that were manufacturing uniforms for the military,” Ford added. “He agreed to plead to a felony and became a cooperating witness.” 

“We had him wire a recording device and meet with people. Those consensual recordings were made and that and other evidence helped build up to a wiretap application,” Hoffa recalled.

“He had documentary evidence that he provided two $6,000 loans to Frank Coccia’s children through an intermediary. Both signed a promissory note and D’Antonio was holding the notes. That allowed us to get some of the probable cause for the wiretap,” Ford said.

Hoffa noted that Coccia was at the time the highest-ranking civilian Department of Defense official at DPSC.

“He was the guy who made the ultimate decision in regard to awarding the contracts. The Defense Personnel Support Center awarded all the military clothing contracts for the entire Armed Services of the United States,” Hoffa said. “At the time it was a billion dollars in contracts a year. This was in the early 1980s and I will always remember Joe in my office describing what DPSC did and said it was a billion dollars in contracts. In the 1980s no one used the word billons. I said to Joe, oh, you mean a million. He said no, a billion.

“Coccia’s viewpoint was everyone is getting rich but me. Why not me? Once we got Mario D’Antonio’s cooperation, and we had documentary collaboration of benefits being paid to Frank Coccia’s for his children, it showed that there was a corrupt relationship there. What was significant about getting a wiretap was, in the 1980s, wiretaps were used only in drug or organized crime cases. They had never been done before in a procurement fraud case,” Hoffa explained.

Ford said the first wiretaps were on Coccia’s DPSC office and his New Jersey home.

“They also placed a wiretap on Leo Lamer, a retired Defense Department employee who became a consultant for clothing companies,” Hoffa said. “He was the “bagman”. He was the guy who negotiated the terms of the contract, got the money and gave it to Frank Coccia.”

“The wiretap on Lamer was extremely productive. On Christmas day, he made 50 criminal calls. He was “dial-a-crime” for us,” Ford said.

Hoffa noted that the “bagman” was the one talking to both parties. He explained the deal and put it together.

“Lamer used money orders to pay Coccia off using a local bank and that tied in a lot of the bribe money and other instruments of bribery,” Ford said. “Coccio would use payphones to communicate. He rarely used his home phone. Lamer would accept collect calls from pay phones from government employees and contractors. Lamer was sloppy, as he used his home phone. He would wheel and deal with contractors during the day and government employees at night.”

“One of the most interesting aspects of our case, and this was pre-Patriot Act, was we knew that Leo Lamer had promised to send a letter that would explain a certain transaction,” Hoffa said. “We got a search warrant to intercept that letter, open that letter, copy that letter, reseal that letter, and send that letter on its way. When you do a search warrant, you do an inventory. We received approval to delay notification of an inventory. These things are now codified under the Patriot Act, but not at that time. The letter spelled out the quid pro quo that for every item of clothing, so much was going to be paid.”

Ford said they also placed a wiretap on Joseph Cagno, another retired Defense Department-turned consultant and “bagman”. Cagno and Lamer worked together. Lamer helped negotiate the bribes for DPSC employees on behalf of the contractors and Cagno bribed a small number of quality assurance inspectors and other employees from the Defense Contract Administrative Services Management Area (DCASMA) Philadelphia, a DCASR field office.

“When we searched Frank Coccia’s house, we took out a half of million dollars in cash and gold Krugerrands. He had cuppy holes throughout his house. We popped open a briefcase and it was completely filled with cash,” Ford said.

Ford said that no military personnel at DPSC were involved in the scheme, as they rotated in and out every three years. He said the “good ole boy” civilian network was very strong at DPSC.

“There were no trials. There were 26 convictions of individuals, and everyone pled guilty. That was a testament to the fine work Joe and his team did,” Hoffa said.

“At Frank Coccia’s sentencing, the courtroom was packed. In my experience as a federal prosecutor, when the courtroom is packed it is always the friends and family of the defendant who think he is a great guy,” Hoffa said. “I asked someone who are these people and was told that these are the people who worked for Frank Coccia, and they want to see justice done. In my 27 years as a prosecutor, I never again saw a courtroom packed like that.”                     

Sentences ranged from probation to one to ten years in prison.      

“Defense Department corruption can permeate an entire system and put at risk the lives of military personnel,” Hoffa said. “Corruption costs taxpayers.  It costs everybody.”  

About the Author

Paul Davis is a long-time contributor to the Journal and writes the online Threatcon column.






 


You can also read my piece on the Philadelphia Quartermaster revisited via the below link:

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