Three VA Employees, Construction Company Owner Charged with Bribery

Veterans Affairs Contracting Officer and Engineers Accepted Bribes in Exchange for Influencing the Awarding of Construction Contracts

SAN JOSE—A federal grand jury in San Jose has returned an indictment charging Tracy Marasco, of Modesto; Xerxes “Ike” Zapata, of Daly City; Russell Allgire, of San Mateo; and Jack Stringer, of Cupertino for their involvement in a bribery scheme involving the U.S. Department of Veterans Affairs (VA) contracting officials affiliated with the Veteran Affairs Palo Alto Health Care System (VAPAHCS), United States Attorney Melinda Haag announced. The indictment alleges that Mr. Stringer, the owner of a construction company known as Aero Drywall Construction, provided bribes, in the form of cash, airline tickets, and other gifts, to Ms. Marasco, Mr. Zapata, and Mr. Allgire, all public officials at the VA, in exchange for the awarding of contracts to Mr. Stringer or persons associated with Mr. Stringer. The indictment was returned on May 4, 2011 and unsealed on May 6, 2011. These charges are the result of an investigation by the Department of Veteran Affairs, Office of the Inspector General and the Federal Bureau of Investigation.

According to the indictment, Ms. Marasco, 44, Mr. Zapata, 65, and Mr. Allgire, 55, accepted bribes from Mr. Stringer, 67, in exchange for helping him receive work on contracts. The indictment alleges that Mr. Stringer provided cash and other gifts to Ms. Marasco, a VA contracting officer, from approximately April 2007 through 2010, including depositing money directly into her bank account, in exchange for getting continued work at the Veterans Affairs Palo Alto Health Care System, also known as the VAPAHCS. In exchange for the bribes, Ms. Marasco awarded a $1 million water heater contract to HUM/V Construction, a company co-owned by Mr. Stringer’s son, even though HUM/V Construction was a new and small company. Ms. Marasco also steered contracts to prime contractors that she knew would use Aero Drywall because of Mr. Stringer’s payments to her. Overall, Mr. Stringer provided Ms. Marasco with approximately $80,000 during the four year period. Ms. Marasco was also charged with lying on annual financial disclosure reports the VA required her to submit in 2009 and 2010.

The indictment further alleges that Mr. Stringer gave Mr. Zapata, a VAPAHCS engineering technician, bribes, including cash, airplane tickets, and paying his credit card bills, in exchange for Mr. Zapata’s influence in getting Mr. Stringer work through the awarding of projects to either Aero Drywall. Mr. Zapata provided Mr. Stringer with confidential pricing information on various construction projects and used his influence to promise continued work to Mr. Stringer at the VAPAHCS. According to the indictment, Mr. Zapata also solicited and received money and other gifts from another prime contractor who did work at the VAPAHCS. In or around the Fall of 2005, ZAPATA urged the prime contractor to hire Mr. Stringer. When the prime contractor did not hire Mr. Stringer, both Mr. Stringer and Mr. Zapata told the prime contractor that he would have trouble getting work at the VAPAHCS. Mr. Zapata also accepted approximately $6,000 in several payments from this prime contractor in 2009 in exchange for steering work to his company.

The indictment further alleges that Mr. Allgire, another engineering technician at the VAPAHCS, solicited, and Mr. Stringer paid, Mr. Allgire bribes of cash and gifts between 2007 and 2009, in exchange for Mr. Allgire’s influence in steering work to Mr. Stringer through HUM/V Construction and Aero Drywall. Mr. Stringer paid Mr. Allgire almost $20,000 by laundering the proceeds of the scheme through an associate of Mr. Allgire’s. Mr. Allgire received other payments from Mr. Stringer totaling at least $15,000, also in exchange for Mr. Allgire’s influence in steering work to HUM/V Construction and Aero Drywall.

The maximum statutory penalty for each count of 18 U.S.C. § 201(b)(2)(A) and 18 U.S.C. § 201(b)(1)(A) is 15 years’ imprisonment and a $250,000 fine. The maximum statutory penalty for each count of 18 U.S.C. § 1001(a)(2) is five years’ imprisonment. The maximum penalty for each count of 18 U.S.C. § 1956(h) and18 U.S.C. § 1956(a)(1)(B)(i) is 20 years’ imprisonment.

Jeff Nedrow and Amber Rosen are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Susan Kreider. The prosecution is the result of a five-year investigation by the Department of Veteran Affairs, Office of the Inspector General and the Federal Bureau of Investigation.

Please note, an indictment contains only allegations against an individual and, as with all defendants, the charged defendants must be presumed innocent unless and until proven guilty.

Further Information:

Case #: CR 11-00295-EJD

A copy of this press release may be found on the U.S. Attorney’s Office’s website at usdoj.gov/usao/can.