The U.S. Justice Department released the information below:
SAN DIEGO – Philip Flores, the owner, president, and chief
executive of Intellipeak Solutions, Inc., a former defense contractor based out
of Fredericksburg, Virginia, was sentenced in federal court today to 48 months’
custody, after admitting that he participated in a bribery scheme with former
Naval Information Warfare Center employee James Soriano.
In announcing
the sentence, U.S. District Judge Todd W. Robinson explained that the “fraud
was pervasive” and “it is hard to understate in terms of this area of business
practice any offense conduct which would be of a more serious nature – it goes
to heart of the fairness of the contracting system.”
U.S. District
Judge Todd W. Robinson also ordered Flores to pay $80,500 in restitution to
three victims of the offense.
According to
his plea agreement, Flores gave various things of value to Soriano, including
expensive meals at restaurants in San Diego and Washington, D.C., field level
tickets and parking passes to Game 5 of the 2018 World Series in Los Angeles,
and tickets to the 2019 Super Bowl in Atlanta, Georgia. The cost of tickets to
these premier sporting events totaled over $18,000.
In return,
Soriano used his position as a contracting officer’s representative at the
Naval Information Warfare Center to ensure that Intellipeak was awarded
numerous no-bid contracts through the Small Business Administration’s 8(a)
program. Soriano secured the contracts by falsifying technical evaluations,
providing high ratings to Intellipeak to do the contracted work, and approving
Intellipeak’s invoices on the awarded contracts, despite knowing that
Intellipeak was not doing the work but instead subcontracting out all or most
of the work to non-8(a) companies in violation of the SBA 8(a) rules.
Soriano also
exploited competitive contracting through the SBA 8(a) program to benefit
Intellipeak over other contractors. For example, Soriano secretly allowed
Flores to draft contract discriminators to ensure that Intellipeak was selected
as a winning bidder on a competitive contract. Soriano also allowed Flores to
secretly draft procurement documents for an $87 million competitive contract
and then performed multiple steps to attempt to award the contract to
Intellipeak even though its bid was $7 million higher than another contractor.
According to
his plea agreement, Flores also exploited Intellipeak’s 8(a) small business
status by marketing Intellipeak to other defense contractors, who were not part
of the 8(a) program, as a way for those companies to get access to 8(a) sole
source contracts, generally in exchange for “pass through” fee that was equal
to 6 to 8 percent of the contract value. Flores charged his 6 to 8 percent fee
to the government, which Soriano approved, even though both knew that
Intellipeak was not doing the work on the contracts and the fee did not reflect
performed work.
According to
his plea agreement, as a result of the conspiracy, the government paid
Intellipeak more than $16 million to perform work on approximately 26
government contracts and task orders. The profit Intellipeak made from these
contracts and task orders was conservatively estimated to be between $550,000
and $1.5 million despite performing little to no work on them.
According to
the United States’ sentencing memorandum, this was not the first time that
Flores and Intellipeak defrauded the government. Years before the bribery
conspiracy, Flores engaged in a separate scheme to draft procurement documents
and use sham quotes to ensure Intellipeak would be awarded millions of dollars
of contracts through the SBA 8(a) program. Once obtained, Flores subcontracted
the work to other companies in exchange for a fee. In 2022, Flores was indicted
in the Northern District of Georgia with one count of conspiracy and two counts
of major fraud against the United States. Flores went to trial and was found
guilty of all charges. Flores was sentenced to four months in custody and
allowed to remain on bond pending the resolution of his appeal.
“The integrity
of the procurement process is not for sale,” said U.S. Attorney Adam Gordon.
“Those who trade bribes for government contracts undermine our warfighters and
betray the American taxpayer—and they will be held accountable.”
"The
successful prosecution of Mr. Flores underscores the serious consequences for
undermining the integrity of the Department of Defense’s procurement process.
This outcome serves as a significant deterrent to any individual who would
exploit their position for personal financial gain at the expense of U.S.
taxpayers," said John E. Helsing, Special Agent in Charge for the DoD
Office of Inspector General, Defense Criminal Investigative Service (DCIS),
Western Field Office. “DCIS remains committed to working with the United States
Attorney’s Office and our law enforcement partners to root out public
corruption within the DoD.”
"The
integrity of our defense acquisitions is built on fairness and transparency,
but Mr. Flores’ illicit bribery scheme eroded that foundation and betrayed the
public's trust,” said Special Agent in Charge Greg Gross of the NCIS Economic
Crimes Field Office. “NCIS remains steadfast in protecting the Department of
the Navy procurement process by holding wrongdoers accountable and ensuring
taxpayer dollars are spent in accordance with the law.”
“Today’s
sentence sends a clear message: Anyone who exploits a position of trust to fuel
personal greed will be found and held accountable,” said Marcus Sykes, Special
Agent in Charge of the U.S. Department of Health and Human Services,
Office of Inspector General (HHS-OIG). “Funneling money into bribery
schemes instead of delivering promised services undermines the integrity of
federal programs. HHS-OIG will continue collaborating with our law enforcement
partners to pursue justice against those who defraud the American people.”
"This
sentencing shows what happens when someone abuses the system for personal gain.
Philip Flores cheated taxpayers and hurt fair competition for government
contracts,” said Special Agent in Charge Tyler Hatcher, IRS Criminal
Investigation (IRS-CI), Los Angeles Field Office. “IRS Criminal
Investigation remains steadfast in working with our law enforcement partners to
follow the money, expose corruption, and ensure that those who exploit
positions of trust are held fully accountable."
“Fraud and
bribery have no place in SBA programs. SBA-OIG is committed to protecting the
integrity of the 8(a) program and ensuring these opportunities benefit eligible
small businesses,” said SBA Inspector General William Kirk. “We will continue
partnering with DOJ and law enforcement to pursue accountability and safeguard
taxpayer funds.”
“The 8(a)
Program is designed for legitimate small businesses in federal contracting –
not as a vehicle for DEI, bribery, or political agendas,” said SBA
Administrator Kelly Loeffler. “SBA is grateful to our law enforcement
partners for their work to stop fraud and put criminals behind bars. We will
continue to audit participants and investigate the 8(a) Program, while
implementing oversight and accountability on behalf of America’s taxpayers and
job creators.”
This case is
being prosecuted by Assistant U.S. Attorneys Patrick C. Swan and Carling
E. Donovan.
DEFENDANT
Case Number 23-cr-2282-TWR-2
Philip
Flores
Age: 53
Nashville, TN
SUMMARY OF CHARGES
Conspiracy to
Commit Bribery - Title 18, U.S.C., Section 371
Maximum
penalty: Five years in prison; a maximum $250,000 fine or twice the gross gain
or loss resulting from the offense, whichever is greatest.
INVESTIGATING AGENCIES
Defense
Criminal Investigative Service
Naval Criminal
Investigative Service
Small Business
Administration – Office of Inspector General
Internal
Revenue Service Criminal Investigation
Department of
Health and Human Services – Office of Inspector General
If you have information regarding fraud, waste, or abuse relating to Department of Defense personnel or operations, please contact the DoD Hotline at 800-424-9098
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