Man Pleads Guilty To Selling $3.5M In Counterfeit And Deficient Electronics For Use In Military Systems

The U.S. Justice Department released the below information:

A California man pleaded guilty yesterday to a scheme to defraud the Department of Defense’s (DoD) Defense Logistics Agency (DLA) by selling over $3.5 million worth of fan assemblies to the DLA that were either counterfeit or misrepresented to be new.

“The defendant sold counterfeit and deficient fan assemblies for use in military systems to increase his profit,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division. “Criminals who cheat the U.S. military by selling deficient or counterfeit goods put our national security at risk. This case demonstrates the Justice Department’s commitment to protecting the military supply chain and Americans’ security.”

“Through his company, Kim delivered counterfeit products to our armed services and tried to pass off non-conforming products with fake invoices,” said U.S. Attorney Ismail Ramsey for the Northern District of California. “Swindling our military is a sure way to find oneself in jail. This office is always on the lookout for fraudsters and will prosecute anyone caught cheating our military by providing products that endanger our service people or compromise our readiness.”

According to court documents, Steve H.S. Kim, 63, of Alameda County, controlled Company A, which sold fan assemblies to the DLA that were either counterfeit or were used or surplus fan assemblies that he claimed were new. To trick the DLA into accepting the fan assemblies, Kim created counterfeit labels — some of which used Company B’s registered trademarks — that he attached to the fan assemblies he sold to the DLA. When the DLA questioned Kim about the origin of the fan assemblies, Kim concealed his scheme by giving the DLA fake tracing documents that he created and often signed using a false identity. Some of these counterfeit fans were installed or intended to be installed with electrical components on a nuclear submarine, a laser system on an aircraft, and a surface-to-air missile system.

“The Defense Criminal Investigative Service (DCIS), the law enforcement arm of the DoD Office of Inspector General, is fully committed to protecting the integrity of the DoD supply chain,” said Special Agent in Charge Bryan D. Denny of the DCIS Western Field Office. “Supplying counterfeit products to the DoD endangers the mission and betrays the public’s trust. This investigation demonstrates DCIS’ ongoing commitment to working with its law enforcement partners to hold individuals who defraud the DoD accountable.”

“The Naval Criminal Investigative Service (NCIS) and our law enforcement partners work diligently to thwart attempts to infiltrate the DoD supply chain with potentially damaging counterfeit product,” said Special Agent in Charge Greg Gross of the NCIS Economic Crimes Field Office. “This case highlights the efforts of the investigative team to expeditiously shut down such a scheme and prevent possible grievous harm to our ability to conduct effective combat operations.”

“This case reflects Homeland Security Investigation’s (HSI) core mission set of investigating national security threats as well as protecting global trade and government supply chains,” said Special Agent in Charge Tatum King of HSI San Francisco. “In this case, the serious risks posed to mission readiness were especially alarming. HSI appreciates the joint efforts of NCIS, DCIS, and the Army Criminal Investigation Division (Army CID), together with the Justice Department, in bringing the violator to justice.”

“The result of this joint investigation underscores the importance of our federal law enforcement partnerships and shows that by working together we can identify, prosecute, and dismantle businesses that supply the U.S. military with fraudulent parts and services,” said Special Agent in Charge Keith K. Kelly of the Army CID Fraud Field Office. “Our Army communities and the public can rest assured that we are committed to pursuing anyone that would defraud the U.S. government for their own personal gain and put combat readiness at risk.”

Kim pleaded guilty to one count of wire fraud and one count of trafficking in counterfeit goods. He is scheduled to be sentenced on July 17 and faces a maximum penalty of 20 years in prison on the wire fraud count and 10 years in prison on the trafficking in counterfeit goods count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

DCIS, NCIS, HSI, and Army CID are investigating the case.

Assistant Chief Kyle C. Hankey and Trial Attorneys Louis Manzo and David D. Hamstra of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Katherine Lloyd-Lovett for the Northern District of California are prosecuting the case. Assistant Deputy Chief Adrienne Rose and Senior Counsels Jason Gull and Matthew A. Lamberti of the Criminal Division’s Computer Crime and Intellectual Property Section provided substantial assistance with the investigation. 

Army Soldier And Civilian Sentenced On Bribery Charges For Facilitating Theft Of Fuel In Afghanistan

The U.S. Justice Department released the below information today:

A former U.S. Army Sergeant and a co-conspirator have been sentenced in the District of Colorado for their roles in stealing fuel at Forward Operating Base (FOB) Fenty, Afghanistan, Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division announced. 

U.S. Army Sergeant Christopher Weaver, 30, of Fort Carson, Colo., was sentenced on Oct. 28, 2013, to serve 37 months in prison.  Weaver pleaded guilty Oct. 20, 2012, and was sentenced by U.S. District Court Judge Marcia S. Krieger.                    

Jonathan Hightower, 31, of Houston, Texas, who worked at FOB Fenty as a civilian employee of a contractor and who had conspired with Weaver, was also sentenced on Oct. 28, 2013, to serve 27 months in prison. He pleaded guilty Aug. 3, 2012, and was sentenced by U.S. District Court Judge William J. Martinez.

A third conspirator, former soldier Stephanie Charboneau, pleaded guilty on Sept. 5, 2013, before U.S. District Court Judge Philip A. Brimmer.  Her sentencing is set for Dec. 9, 2013.

Weaver and Hightower were also ordered to pay $1,225,000 in restitution, jointly with Charboneau.  Hightower was also ordered to pay $400,000 in restitution for a related fuel theft scheme that was the subject of the prosecution.

According to court documents, from in or about January 2010 through June 2010, Weaver, Hightower and Charboneau were involved in handling the uploading and transportation of fuel from FOB Fenty, near Jalalabad, Afghanistan, to nearby military bases. 

Weaver and Charboneau created false and fraudulent documents purporting to authorize the transport of fuel from FOB Fenty to other military bases, even though no legitimate fuel transportation was required.  Hightower was a civilian who worked at the base’s “fuel point” uploading fuel trucks, occasionally filling the trucks with fuel to be stolen and taking other steps to assist the conspiracy. 

At the direction of Weaver and Charboneau, fuel truck drivers used the fraudulent documents to justify the filled trucks’ departures from FOB Fenty. 

In truth, after the filled fuel truck left the base, the fuel was simply stolen, and Weaver and Charboneau would receive cash from the representative of the trucking company that supplied the fuel trucks.  The cash would be split among the three conspirators.     

All three conspirators pleaded guilty to receiving payments from a representative of the trucking company in exchange for facilitating the theft of approximately 70 5,000-gallon truckloads of fuel.  Each of the three acknowledged that the loss to the United States was in excess of $1 million.
The cases were investigated by the Special Inspector General for Afghanistan Reconstruction, the Department of the Army, Criminal Investigations Division (CID); the Defense Criminal Investigative Service; and the FBI.

These cases were handled by Special Trial Attorney Mark H. Dubester of the Criminal Division’s Fraud Section, who is on detail from the Special Inspector General for Afghanistan Reconstruction (SIGAR).

U.S. Army Adds 22 Charges Against Suspected WikiLeak Leaker

From a U.S. Army Military District of Washington News Release FORT LESLEY J. MCNAIR, D.C., March 2, 2011 - After seven months of additional investigation by the U.S. Army Criminal Investigation Command and other investigative agencies, the Army has added 22 charges in the case of a military intelligence analyst accused of leaking classified material. The new charges against Pvt. 1st Class Bradley E. Manning allege that he introduced unauthorized software onto government computers to extract classified information, unlawfully downloaded it, improperly stored it, and transmitted the classified data for public release and use by the enemy. The investigation remains ongoing, officials said. "The new charges more accurately reflect the broad scope of the crimes that Private 1st Class Manning is accused of committing," said Capt. John Haberland, a legal spokesman for U.S. Army Military District of Washington. "The new charges will not affect Private 1st Class Manning's right to a speedy trial or his pretrial confinement." U.S. military officials in Baghdad preferred two charges consisting of 12 specifications against Manning on July 5. Officials said the commander of U.S. Army Headquarters Command Battalion preferred the new charges yesterday. In addition to a charge of aiding the enemy in violation of Article 104 of the Uniform Code of Military Justice, the new charges include 16 specifications under the UCMJ's Article 134: -- One specification of wrongfully causing intelligence to be published on the Internet knowing that it is accessible to the enemy; -- Five specifications of theft of public property or records, in violation of 18 U.S. Code 641; -- Eight specifications of transmitting defense information in violation of 18 U.S.C. 793(e); -- Two specifications of fraud and related activity in connection with computers in violation of 18 U.S.C. 1030(a)(1); and -- Five specifications in violation of Article 92 of the UCMJ for violating Army Regulations 25-2, "Information Assurance," and 380-5, "Department of the Army Information Security Program." The charge of aiding the enemy under Article 104 is a capital offense, officials said. However, they added, the prosecution team has notified the defense that the prosecution will not recommend the death penalty to the convening authority, Maj. Gen. Karl R. Horst, commanding general of the U.S. Army Military District of Washington. Under the UCMJ, the convening authority ultimately decides what charges to refer to court-martial, and whether to seek the death penalty if Article 104 is referred. Therefore, if convicted of all charges, Manning would face a maximum punishment of reduction to the lowest enlisted pay grade,; total forfeiture of all pay and allowances, confinement for life, and a dishonorable discharge. At the request of Manning's defense attorneys, the trial proceedings have been delayed since July 12, pending the results of a defense-requested inquiry into Manning's mental capacity and responsibility, pursuant to Rule for Courts-Martial 706. Depending on the results of the inquiry, an Article 32 hearing may follow, officials said. An Article 32 hearing is the civilian equivalent of a grand jury, with additional rights afforded to the accused, they explained. Manning remains confined in the Marine Corps Base Quantico brig in Quantico, Va. He was notified of the additional charges in person during a command visit today, officials said. Officials emphasized that Manning is presumed innocent until proven guilty, and added that the Army is committed to ensuring his continued safety and well-being while in pretrial confinement.