Nova Datacom exec headed to prison for bribery
What is considered to be the largest case of bribery and bid-rigging in the history of federal contracting is slowly moving to a close.
Young "Alex" Cho, the former chief technology officer at Nova Datacom, has been sentenced to 88 months in prison for his role the scheme that involved contracts with the Army Corps of Engineers and the Department of the Army.
All told, 20 people and one corporation, Nova Datacom, pled guilty to federal charges, which covered actions between 2007 and 2011.
Only one defendant and Nova Datacom remain to be sentenced. The case involving the Army Corps of Engineers has closed, but the Department of the Army case continues, a Justice spokesman said.
According to the U.S. Attorney for the District of Columbia, the participants in the scheme steered nearly $1 billion in government contracts to preferred companies. The participants in the fraud stole over $30 million in government money through fictitious invoices.
So far, the government has been able to recover that money through forfeiture, restitution and civil settlements.
“Alex Cho was at the center of a cash-for-contracts scheme that robbed the American taxpayer of $30 million,” said acting U.S. Attorney Vincent Cohen. “Cho is just one of 20 crooked contractors, government officials and other middlemen who have pled guilty as part of this investigation. His prison sentence is proof that the temptation to cheat the system by paying off corrupt government employees is not worth it.”
Cho plead guilty in 2011, but was only sentenced this week after a series of delays, a change in attorneys and other continuances.
According to a Northern Virginia Magazine story on the case, Cho also cooperated with the investigation and was the key to unlocking the case. The investigation originally was targeting false references on government contracts but it ballooned into bribery.
Cho worked with government contracting officers to direct awards to Nova Datacom. The price of the contract would be inflated, and the contracting officer would be paid the extra amount for awarding the contract to Nova Datacom. In one example, the contract value was inflated by $93,000, and $93,000 was paid to the contracting officer.
Two Army Corps of Engineers officials – Kerry Khan and Michael Alexander – plead guilty in 2012 to participating in the scheme. Khan is serving a sentence of 19 years and seven months. Alexander was sentenced to six years in prison.
Harold F. Babb, a former director of contracts at Eyak Technology, was sentenced to seven years and three months in prison. Eyak was never implicated in any wrong doing. Babb was fired when the company learned of the investigation.
Cho admitted paying over $17 million in bribes to Khan and about $1 million to Alexander to win and keep government contracts for Nova Datacom. Cho also paid $700,000 in kickbacks to Babb to facilitate the processing of Nova Datacom’s invoices.
Others that have plead guilty and been sentenced include Min Jong Cho, Alex Cho’s sister. She was the owner of Nova Datacom, and Lee Khan, son of Kerry Kahn, also plead guilty.
While Nova Datacom pled guilty as a corporation, it no longer exists as a business.
The investigation of fraud and bribery at the Army also ensnared Harry Martin, the founder and former CEO of Intelligent Decisions. He pled guilty and was sentenced to probation and a $250,000 for paying In Seon Lim, an Army contracting official, for preferential treatment. The company also paid a $300,000 fine as part of a deferred prosecution agreement.
The investigation into the various bribery schemes involved a plethora of federal agencies including the FBI, IRS, the Small Business Administration, the Defense Criminal Investigative Service, and the Army Criminal Investigation Command’s Major Procurement Fraud Unit.
“More than six years after initiating one of the largest procurement fraud cases in history, this sentence [Alex Cho’s] demonstrates that the FBI and our law enforcement partners have a long memory when it comes to holding accountable those who engage in bribes and kickbacks,” said assistant director in charge Paul Abbate of the FBI. “The FBI will continue to diligently work to protect the integrity of our government by pursuing those who seek to violate the system through corruption.”
The Justice Department said the investigation uncovered the largest domestic bribery and bid-rigging scheme in the history of federal contracting cases.
Posted by Nick Wakeman on Oct 09, 2015 at 9:31 AM