Global Resolution of Criminal and Civil Investigations

Posted on December 23, 2021Comments Off on Global Resolution of Criminal and Civil Investigations

Justice Department announces global resolution of criminal and civil investigations with housing contractor for defrauding U.S. military

Balfour Beatty Communities to pay more than $65 million in fines, restitution for fraud scheme

SAVANNAH (STL.News) Balfour Beatty Communities LLC (BBC), one of the nation’s largest providers of privatized military housing to the U.S. Armed Forces, pled guilty to defrauding the U.S. Army, the U.S. Air Force, and the U.S. Navy, in connection with a fraudulent scheme to obtain performance bonuses by submitting false information to the U.S. military.

BBC entered the plea, pursuant to plea agreement with the United States, before U.S. District Judge Emmet G. Sullivan in the District of Columbia on Wednesday.  Under the terms of the plea agreement, BBC agreed to pay more than $33.6 million in criminal fines and over $31.8 million in restitution to the U.S. military, serve three years of probation, and engage an independent compliance monitor for a period of three years.

“Instead of promptly repairing housing for U.S. servicemembers as required, BBC lied about the repairs to pocket millions of dollars in performance bonuses,” said Deputy Attorney General Lisa O. Monaco.  “This pervasive fraud was a consequence of BBC’s broken corporate culture, which valued profit over the welfare of servicemembers.  Today’s global resolution sends a clear message to companies that if they do not maintain adequate compliance programs, voluntarily self-disclose misconduct, and fully cooperate with the government, they will pay a price that outweighs the profits they once reaped.”

Separately, BBC entered into a False Claims Act (FCA) settlement under which it is obligated to pay approximately $35.2 million in civil restitution and penalties to the United States, which the Justice Department credited against BBC’s criminal restitution and fine.  Law enforcement within the Southern District of Georgia assisted in reaching this settlement by investigating BBC’s misconduct at Fort Stewart/Hunter Army Airfield in Savannah, and Fort Gordon in Augusta.

“The men and women who live in our nation’s military housing, including those at Fort Stewart and Fort Gordon, deserve prompt and professional maintenance service from their housing providers,” said David H. Estes, U.S. Attorney for the Southern District of Georgia.  “That BBC would not only fail to deliver this service, but also falsify information to line their own pockets is despicable.  Our office will work tirelessly with our law enforcement partners, and other components of the Department of Justice, to make sure those who provide subpar service to the military and lie about it are held accountable.”

According to court documents, BBC was a diversified real estate services company, headquartered in Malvern, Pennsylvania, that operated privatized military housing communities at 21 U.S. Air Force, 16 U.S. Army, and 18 U.S. Navy bases across the United States, in which tens of thousands of service members and their families lived.  BBC earned fees for the various phases of development and management of each housing community, from design and construction to ongoing community management and maintenance, and service members paid their living allowance, known as Basic Allowance for Housing, in the form of rest to BBC to live in the communities.

BBC’s fees for the ongoing property management and maintenance of its military housing communities generally consisted of (1) a base fee, paid to BBC monthly and (2) performance incentive fees, paid to BBC quarterly or semi-annually.  Performance Incentive Fees were payable only upon the approval of the relevant service branch.  To obtain the incentive fees, BBC was required to submit to the service branches proof that it had satisfied written performance objectives related to, among other things, maintenance of the housing communities and resident satisfaction.  The service branches relied on BBC’s submissions in deciding whether to approve the payment of relevant performance incentive fees.

According to court documents, from around 2013 to around 2019, BBC employees falsified information so that BBC’s incentive fee requests falsely reflected that BBC had met performance objectives.  In reality, BBC did not legitimately meet those objectives in many of the quarters during that time, primarily the objectives related to maintenance and resident satisfaction, at various military housing projects.  Specifically, BBC employees altered or manipulated data in property management software and destroyed and falsified resident comment cards to falsely inflate these metrics and, ultimately, to fraudulently induce the service branches to pay performance incentive fees which BBC had not earned.

As a result, according to court documents, there were lengthy and unnecessary delays in the resolution of maintenance issues to the detriment of residents.  In addition, the military service branches had an inaccurate view of the state of BBC’s military housing communities and were unable to assess, and potentially correct, BBC’s performance.

A number of relevant considerations contributed to the department’s criminal resolution with BBC, including the nature and seriousness of the offense, the pervasiveness of the misconduct among BBC’s employees and at multiple military installations, and the state of BBC’s compliance program and the progress of its remediation, including the fact that BBC’s compliance program and internal controls have not been fully implemented or tested to demonstrate that they would prevent and detect similar misconduct in the future.

As part of BBC’s plea agreement, BBC agreed to cooperate fully with the United States in all matters relating to the conduct covered by the plea agreement and other conduct under investigation by the United States, to self-report violations of U.S. federal criminal law, and to continue to implement a compliance and ethics program designed to effectively detect and deter violations of U.S. anti-fraud laws throughout its operations.

“In defrauding our country’s military services, BBC took advantage of their unique position as a military housing provider and put greed and personal profit above our servicemembers,” said FBI Deputy Director Paul M. Abbate. “Today’s guilty plea reaffirms the FBI, along with our partners, are committed to preventing such disgraceful crimes and will work tirelessly to bring those who engage in this type of crime to justice.”

“The Air Force Office of Special Investigations is committed to protecting the integrity of the Department of the Air Force’s procurement process,” said Special Agent Paul Wachsmuth, Director AFOSI Office of Procurement Fraud Investigations.  “The extensive and dedicated collaborative efforts between AFOSI, the Air Force Audit Agency, Defense Criminal Investigative Service, and the Department of Justice in this investigation was paramount in ensuring the safety and well-being of our warfighters and their families.”

“The health and safety of service members and their families remains of critical importance to the DoD Office of Inspector General’s Defense Criminal Investigative Service (DCIS),” said Principal Deputy Director James R. Ives of DCIS.  “DCIS and our law enforcement partners are committed to working with the Department of Justice to hold companies accountable when they emphasize profits over the well-being of those who honorably serve our nation.”

“This judgment demonstrates the commitment CID Special Agents have to protect soldiers’ families against deceitfulness and fraud, while also ensuring the integrity of the military privatization housing initiative, which is to provide safe, quality, well-maintained housing for our military families,” said Special Agent in Charge Frank Robey of the Army Criminal Investigation Division’s (CID) Major Procurement Fraud Unit.  “Throughout this investigation, Army CID special agents worked closely with federal authorities emphasizing the importance of successful partnerships with other law enforcement agencies.”

“Balfour Beatty’s scheme to delay service request entries into their electronic tracking system for housing aboard Naval Air Station Key West to increase their performance-based award violated their contract and wasted valuable taxpayer money,” said Special Agent in Charge Thomas Cannizzo of the NCIS Southeast Field Office.  “NCIS and our partners remain committed to rooting out fraud and corruption that threatens the integrity of the Department of the Navy’s procurement process.”

“The Western District of Texas is home to some of the largest military installations in the country and our district works tirelessly to protect and serve our military families,” said U.S. Attorney Ashley C. Hoff for the Western District of Texas.  “The resolution entered with BBC concerns conduct that impacted military families in our district at Lackland Air Force Base and Fort Bliss Army Base.  This resolution is an important step in holding private military housing providers accountable to our servicemembers and their families.”

“The defendants’ greed undermined a program designed to protect servicemembers’ homes while they courageously fight to protect our homeland,” said Acting U.S. Attorney Robert J. Troester for the Western District of Oklahoma.  “Servicemembers and their families deserve better.  The U.S. Attorney’s Office is committed to working with our law enforcement partners to protect our military community from fraudulent conduct of all kinds, particularly the integrity of DoD housing programs.”

This resolution follows the prior entry of guilty pleas by two BBC managers.  In April 2021, Stacy Cabrera, a former community manager of BBC, pleaded guilty to conspiracy to commit wire fraud.  In June 2021, Rick Cunefare, a former regional manager of BBC, pleaded guilty to major fraud against the United States.

Air Force OSI, DCIS, Army-CID, NCIS, and the FBI’s Oklahoma City Field Office investigated the case.  The Air Force Audit Agency also provided assistance.

Trial Attorneys Michael P. McCarthy and Siji Moore of the Justice Department’s Fraud Section prosecuted the case.  Trials Attorneys Laura E. Hill and Elspeth England of the Civil Division’s Fraud Section, Assistant U.S. Attorneys Patrick Schwedler and Jonathan Porter of the U.S. Attorney’s Office for the Southern District of Georgia, Assistant U.S. Attorney Ron Gallegos of the U.S. Attorney’s Office for the Western District of Oklahoma, and Assistant U.S. Attorneys Mary Kruger and Jacquelyn Christilles of the U.S. Attorney’s Office for the Western District of Texas represented the government in the civil case.

SOURCE: USDOJ.Today

Source link

Comments Off on Global Resolution of Criminal and Civil Investigations