Contractors Indicted for Allegedly Supplying Unauthorized Parts to the Military

Four defendants recently entered a not-guilty plea following an indictment by a federal grand jury in Knoxville, Tennessee, charging them with conspiracy to commit wire fraud. Two of the defendants were also charged with money laundering. All four defendants were released pending trial.

According to the indictment, under contracts with the Defense Logistics Agency (DLA) to supply the military with certain original equipment manufacturer (OEM) parts, such as fuel injectors, turbochargers and generators, the defendants instead provided unapproved aftermarket parts. The defendants allegedly concealed the parts’ true sources with fake labels and false documents, as well as altering documents to deceive the government into believing the parts were OEM parts. Furthermore, two of the defendants allegedly entered into an agreement whereby one of the two would receive a portion of the profits from selling aftermarket parts at OEM prices. The indictment alleges these same two defendants committed money laundering by arranging that those profits be paid to a company that one of the two created.

Per the Department of Justice (DOJ), a conviction for Conspiracy to Commit Wire Fraud carries the possibility of 20 years in prison, a fine up to $250,000 and potentially three years of supervised release. As to money laundering, if convicted, the two defendants charged could be sentenced to 20 years in prison, face a fine of $500,000 and be under supervised release for three years.

Again, these are only charges, and the defendants are presumed innocent until their guilt is proven beyond a reasonable doubt.

Cohen Seglias’ White-Collar Defense and Investigations team will be following this case closely as the federal government remains “laser-focused on investigating and prosecuting those who commit fraud against the American people,” according to the DOJ press release announcing the indictment.

If you have any questions about criminal or civil investigations related to government procurements or corporate transactions, please reach out to your Cohen Seglias contact or contact any member of the Government Contracting Group or White-Collar Defense and Internal Investigations Group.