Virginia Businessman Pleads Guilty to Bribery and Other Charges in Contracting Scheme Involving U.S. Army

Defendant Admits Providing Money to Army Official, Paying for Trips, Luxury Vehicles, and Other Things of Value

WASHINGTON—Oh Sung Kwon, 47, a Northern Virginia businessman, pled guilty today to federal charges stemming from a bribery scheme in which he paid thousands of dollars to an Army official in return for government contracts, as well as a separate scheme involving fraudulent real estate sales and refinances.

Kwon, also known as Thomas Kwon, of Vienna, Virginia, pled guilty in the U.S. District Court for the District of Columbia to one count each of bribery, conspiracy to commit bank fraud and willful failure to file a tax return. He appeared before the Honorable Magistrate Judge John M. Facciola. He faces a statutory maximum of 21 years in prison, along with potential fines, restitution and a judgment of forfeiture. No sentencing date was set.

Kwon was the co-founder and chief executive officer of Avenciatech Inc., a government contractor based in Annandale, Virginia. He is among 12 people who have pled guilty to federal charges for their roles in the largest domestic bribery and bid-rigging scheme in the history of federal contracting. The investigation is continuing.

The plea was announced by U.S. Attorney Ronald C. Machen Jr.; James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office; Rick A. Raven, Special Agent in Charge of the Washington Field Office of the Internal Revenue Service-Criminal Investigation (IRS-CI); Peggy E. Gustafson, Inspector General for the Small Business Administration (SBA); Robert E. Craig, Special Agent in Charge of the Mid-Atlantic Field Office of the Defense Criminal Investigative Service (DCIS); and Frank Robey, Director of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit (MPFU).

According to a statement of offense, signed by the government and the defendant, Kwon learned of a contract-steering scheme from two business contacts: Alex N. Cho, who was then the chief technology officer for Nova Datacom LLC and a second Nova Datacom employee. This scheme involved contracts and subcontracts awarded through the U.S. Army Corps of Engineers in return for hundreds of thousands of dollars in payments to Kerry F. Khan. At the time, Khan was a program manager at the Army Corps of Engineers. Kwon’s role in the scheme involving the Army Corps of Engineers involved Kwon arranging for Cho and another Nova Datacom employee to exchange checks for approximately $700,000 in cash, which was paid to Khan in exchange for government contracts. Kwon later attempted to obstruct the resulting criminal investigation by destroying evidence. Kwon also disclosed to law enforcement authorities the efforts by Cho and another Nova Datacom employee to obstruct the criminal investigation, including Cho’s attempts while wearing a recording device to prevent Kwon from making incriminating statements.

Kwon learned of a second, similar scheme through another business contact: Nick Park, a former Nova Datacom employee who was then the president of Unisource Enterprise Inc. Kwon learned through Park that he had obtained a subcontract for his company by agreeing to pay bribes to a person identified in court documents as “Public Official C.” This official, based at the time in Seoul, South Korea, was an assistant project manager for the U.S. Army who had responsibilities for a major contract.

In or about February 2009, Kwon established Avenciatech for the purpose of obtaining government contracts. The following month, Kwon traveled to South Korea to meet Public Official C. In exchange for an undisclosed ownership interest in Avenciatech, Public Official C agreed to use his official position to steer subcontracts from the Army to Avenciatech. Plans later called for Public Official C to have a 40 percent ownership interest in the company.

The court documents provide details about two contracts. One, in September 2009, was in the amount of $366,844. However, army change orders later increased the value of this subcontract to $1,913,059. The second contract, obtained in February 2011, was in the amount of $551,093. Change orders later increased its value to $1,413,513.

From February 2009 until October 2011, Kwon made a series of bribe payments to Public Official C. They included cash payments; payments for hotel stays for Public Official C and family members, including a trip to the Atlantis resort in the Bahamas; payments to finance the purchase of a 2010 Lexus automobile; and payments for other things of value. Kwon also assisted Public Official C in financing the purchase of a home in Fairfax Station, Virginia, where Public Official C resided following his reassignment in 2010 to a position at Fort Belvoir.

Kwon also pled guilty to charges in a separate scheme involving bank fraud. In addition to running Avenciatech, Kwon was the operations manager for Onyx Financial Services, a mortgage broker based in Annandale. He admitted involvement in at least six fraudulent real estate sales and refinances in northern Virginia, with loan amounts of about $1.8 million.

Finally, Kwon pled guilty to the willful failure to file a tax return. This charge involved his 2010 income tax return.

Cho pled guilty in September 2011 to one count of conspiracy to commit bribery, money laundering, and wire fraud and to defraud the United States and one count of bribery. Khan pled guilty in May 2012 to one count each of bribery and conspiracy to commit money laundering. Park pled guilty in June 2012 to two counts of bribery.

The others who have pled guilty include Michael A. Alexander, a former program manager with the Army Corps of Engineers; Harold F. Babb, the former director of contracts at Eyak Technology LLC (EyakTek), an Alaska Native-owned small business; Theodoros Hallas, who also worked for Nova Datacom; Robert L. McKinney, the president of Alpha Technology Group Inc.; James Edward Miller, the owner of Big Surf Construction Management LLC; Larry G. Corbett, the owner of Core Technology LLC and Enterprise Technical Solutions Inc.; Lee A. Khan, the son of Kerry Khan; and Nazim Khan, the brother of Kerry Khan.

Alexander was sentenced earlier this month to a six-year prison term and ordered to pay $1.25 million in restitution and a $1.25 million forfeiture money judgment. The other defendants are awaiting sentencing.

In announcing the plea, U.S. Attorney Machen, Assistant Director in Charge McJunkin, Inspector General Gustafson, Special Agent in Charge Craig, Special Agent in Charge Raven, and Director Robey thanked those who investigated the case from the FBI’s Washington Field Office; the Office of the Inspector General for the Small Business Administration; the Department of Defense’s Defense Criminal Investigative Service; the Defense Contract Audit Agency; the Washington Field Office of the Internal Revenue Service-Criminal Investigation; and the Army Criminal Investigation Command. They also expressed thanks to the U.S. Marshals Service for its assistance on the forfeiture matter.

They also praised the efforts of those who worked on the case from the U.S. Attorney’s Office, including Assistant U.S. Attorneys Michael K. Atkinson and Bryan Seeley of the Fraud and Public Corruption Section and Assistant U.S. Attorney Anthony Saler of the Asset Forfeiture and Money Laundering Section. Finally, they expressed thanks for assistance provided by former Special Assistant U.S. Attorney Christopher Dana; Forensic Accountant Maria Boodoo; Paralegal Specialists Tasha Harris, Lenisse Edloe, Shanna Hays, Taryn McLaughlin, Sarah Reis, Christopher Samson, and Nicole Wattelet; and Legal Assistants Krishawn Graham and Jessica McCormick.

Florida Man Sentenced for Role in European Fraud Scheme

Defendant Funneled Millions in Earnest Money Through Bogus Escrow Account

ATLANTA—Eric Dallas, 41, of Panama City, Florida, was sentenced today by United States District Judge Steve C. Jones to serve five years in federal prison on the charge of conspiracy to commit wire fraud.

“Eric Dallas preyed on small business owners who were trying to secure financing for their businesses. Instead of providing the start-up or investment funds promised, the defendant stole millions of dollars in earnest money. Now he will spend five years in prison,” said United States Attorney Sally Quillian Yates.

Ricky Maxwell, Acting Special Agent in Charge, FBI Atlanta Field Office, stated: “While the FBI often investigates elaborate and varied schemes to defraud, the basic commonality is that of misplaced or abused trust and greed. Mr. Dallas had no regard for his victims as people and saw them as merely an opportunity to enrich his own bank account.”

Dallas was sentenced to five years in prison to be followed by three years of supervised release, and ordered to pay $3,199,050 in restitution. Dallas was convicted of these charges on July 6, 2012, upon his plea of guilty to a criminal information.

According to United States Attorney Yates, the charges, and other information presented in court: In 2010, two Americans based in Germany, Kenneth Swenson and Heather Cote, used the Internet and telephone to promise prospective small business borrowers and others in the United States that they could assist them in securing financing from wealthy Eastern European investors. Swenson and Cote represented to victims that the investors required payment up front of “100 percent refundable consideration fees,” typically 15 percent of the contractual funding amount, as a form of earnest money. After some victims balked at sending the fees, Cote recruited Dallas to assist in the scheme. Dallas subsequently established Southeastern Escrow Express in Panama City, Florida to facilitate the fraud. Dallas entered into written contracts with would-be borrowers, promising them that their “consideration fees” would be held in escrow until needed at the closing table for the project financing. The promised closings never occurred and millions of dollars in advance fees were never refunded.

Kenneth Swenson, 49, formerly of Atlanta, Georgia, and Heather Cote, 40, of Tustin, California, are charged in a separate federal indictment with conspiracy to commit wire fraud and several counts of wire fraud, among other charges. Swenson is a fugitive.

This case was investigated by the Federal Bureau of Investigation.

Assistant United States Attorney Brian Pearce prosecuted the case.

For further information please contact the U.S. Attorney’s Public Information Office at USAGAN.PressEmails@usdoj.gov or (404) 581-6016. The Internet address for the HomePage for the U.S. Attorney’s Office for the Northern District of Georgia is www.justice.gov/usao/gan.

Virginia Businessman Pleads Guilty to Federal Charges in Bribery and Kickback Scheme Involving Government Contracts

Nine People Have Now Pled Guilty, Including Two Former Managers with the U.S. Army Corps of Engineers

WASHINGTON—Nick Park, also known as Nochol Park, 47, a Northern Virginia businessman, pled guilty today to federal charges in a case involving bribery, kickbacks, and government contracts that were awarded through the U.S. Army Corps of Engineers and the Department of the Army, bringing to nine the number of defendants who have now pled guilty to charges.

Park pled guilty to two counts of bribery before the Honorable Magistrate Judge John M. Facciola in the U.S. District Court for the District of Columbia. No sentencing date was set. He faces a maximum of 15 years in prison for each of the charges, along with potential fines and restitution.

The plea was announced by U.S. Attorney Ronald C. Machen Jr.; James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office; Rick A. Raven, Special Agent in Charge of the Washington Field Office of the Internal Revenue Service-Criminal Investigation (IRS-CI); Peggy E. Gustafson, Inspector General for the Small Business Administration (SBA); Robert E. Craig, Special Agent in Charge of the Mid-Atlantic Field Office of the Defense Criminal Investigative Service (DCIS); and Frank Robey, Director of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit (MPFU).

Today’s developments come a month after the guilty plea of Kerry F. Khan, a former program manager for the Army Corps of Engineers. Khan, 54, pled guilty to charges of bribery and conspiracy to commit money laundering in a scheme in which he received or was promised more than $26 million in payments from various contractors who submitted fraudulently inflated invoices to the government.

According to a statement of offense, signed by the government as well as the defendant, Park started work in early 2007 for Nova Datacom, LLC, one of the companies that would become involved in the scheme. Nova Datacom was a provider of information assurance and security services to federal agencies and commercial companies, including the U.S. Army Corps of Engineers. While at Nova Datacom, Park worked with, among others, Alex N. Cho, who was then the company’s chief technology officer.

In 2007, Park and Cho took part in discussions with Khan about government contracts. In exchange for Khan using his official position to direct orders to Nova Datacom, Park and Cho agreed to provide him with items of value. Later that year, Park provided Khan with cash payments on two occasions, totaling at least $50,000.

In August of 2007, Khan stated that Nova Datacom would not have to provide any equipment or services in return for an anticipated contract. Park declined to go forward with the order based on, among other things, his concern that the fictitious contract would be detected. Park also left Nova Datacom at that time and urged Cho to stop doing business with Khan.

As part of his statement of offense, Park admitted paying bribes to a second public official, identified in court papers as Public Official C, who was employed by the Department of the Army. Park admitted providing Public Official C with $40,000 in cash and other benefits in exchange for Public Official C directing orders to Nova Datacom. After Park left Nova Datacom to start his own government contracting company, Unisource Enterprise Inc. (UEI), Park admitted that Public Official C agreed to direct orders to UEI in exchange for Public Official C obtaining a secret ownership interest in UEI. As part of his plea agreement, Park has agreed to cooperate with the government in its ongoing criminal investigation.

In addition to Park and Khan, the others who have pled guilty include Michael A. Alexander, a former program manager with the Army Corps of Engineers; Harold F. Babb, the former director of contracts at Eyak Technology LLC (EyakTek), an Alaska Native-owned small business; Cho, the former chief technology officer of Nova Datacom, LLC; Theodoros Hallas, who also worked for Nova Datacom; Robert L. McKinney, the president of Alpha Technology Group, Inc.; James Edward Miller, the owner of Big Surf Construction Management LLC; and Lee A. Khan, the son of Kerry Khan.

In announcing the plea, U.S. Attorney Machen, Assistant Director in Charge McJunkin, Inspector General Gustafson, Special Agent in Charge Craig, Special Agent in Charge Raven, and Director Robey thanked those who investigated the case from the FBI’s Washington Field Office; the Office of the Inspector General for the Small Business Administration; the Department of Defense’s Defense Criminal Investigative Service; the Defense Contract Audit Agency; the Washington Field Office of the Internal Revenue Service-Criminal Investigation; and the Army Criminal Investigation Command. They also expressed thanks to the U.S. Marshals Service for its assistance on the forfeiture matter.

They also praised the efforts of those who worked on the case from the U.S. Attorney’s Office, including Assistant U.S. Attorneys Michael K. Atkinson and Bryan Seeley of the Fraud and Public Corruption Section and Assistant U.S. Attorney Anthony Saler of the Asset Forfeiture and Money Laundering Section. Finally, they expressed thanks for assistance provided by former Special Assistant U.S. Attorney Christopher Dana; Forensic Accountant Maria Boodoo; Paralegal Specialists Tasha Harris, Lenisse Edloe, Shanna Hays, Taryn McLaughlin, Sarah Reis, Christopher Samson, and Nicole Wattelet; and Legal Assistants Krishawn Graham and Jessica McCormick.

Former U.S. Army Corps of Engineers Manager Pleads Guilty in Alleged $20 Million Bribery and Kickback Scheme

Scam Involved Steering of Government Contracts; Contractor Also Pleads Guilty to Charges Today

WASHINGTON—Michael A. Alexander, 55, a former program manager for the U.S. Army Corps of Engineers, pled guilty today to federal charges of bribery and conspiracy to commit money laundering in a scheme that allegedly involved more than $20 million in bribes and kickback payments and the planned steering of a $780 million government contract.

The plea was announced by U.S. Attorney Ronald C. Machen Jr.; James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office; Peggy E. Gustafson, Inspector General for the Small Business Administration (SBA); Robert E. Craig, Special Agent in Charge of the Mid-Atlantic Field Office of the Defense Criminal Investigative Service (DCIS); Eric Hylton, Acting Special Agent in Charge of the Washington Field Office of the Internal Revenue Service-Criminal Investigation (IRS-CI), and James K. Podolak, Director of the U.S. Army Criminal Investigation Command’s (CID) Major Procurement Fraud Unit (MPFU).

Alexander, of Woodbridge, Va., pled guilty before the Honorable Emmet G. Sullivan in the U.S. District Court for the District of Columbia. A sentencing date has not been set. The bribery charge carries a statutory maximum of 15 years in prison and the conspiracy charge carries up to 20 years of incarceration. The charges also carry potential fines, an order of restitution, and forfeiture of a money judgment for $1.25 million and specific property including cash, real property, bank account funds, and jewelry. As part of his plea agreement, Alexander agreed to cooperate in the government’s ongoing investigation.

At a separate and related hearing earlier today, also before Judge Sullivan, Robert L. McKinney, 51, pled guilty to bribery. McKinney was the president of Alpha Technology Group, one of the companies involved in the contracting scam. Alpha Technology Group was not one of the companies referenced in the original indictment returned against Alexander and others on September 16, 2011. A sentencing date for McKinney also has not been set.

As part of his plea agreement, McKinney agreed to forfeit about $245,000, representing the illegal proceeds he retained from the crime. He also agreed to cooperate in the government’s ongoing investigation.

***

“Today’s bribery and money laundering pleas relate to one of the largest procurement fraud scandals in our nation’s history and demonstrate this office’s steadfast commitment to holding accountable unscrupulous government officials, as well as the contractors who entice them with bribes and kickbacks,” said U.S. Attorney Machen. “Protecting the American taxpayer is one of our highest priorities and we will remain vigilant in the pursuit of those both inside and outside of the government who attempt to cheat the system and loot the public treasury.”

“Bribery and kickbacks have no place in government contracting,” said Assistant Director in Charge McJunkin. “The FBI and our partner agencies will continue to pursue those who engage in such criminal activity, as we work to protect federal funds and American taxpayers. We ask anyone with information about government fraud to contact the FBI.”

“Today’s announcement demonstrates the resolve of law enforcement to aggressively identify and prosecute individuals considering defrauding the federal government by deceit and bribery,” said SBA Inspector General Gustafson. “There are severe consequences associated with this form of criminal conduct, as this case uniquely demonstrates. The SBA OIG will relentlessly pursue fraud in government contracting programs to eliminate corruption, promote fair competition, and serve the American taxpayer.”

“Corruption of this nature recklessly deprives the hard-working men and women of the Defense Department of critical resources,” said Special Agent in Charge Craig. “Moreover, it undermines the public’s trust and confidence in Government. DCIS will continue to work tirelessly with our law enforcement partners to combat fraud and corruption within the procurement process and seek to ensure that those who engage in this type of criminal behavior are brought to justice.”

“The United States Army will not tolerate fraud or corruption or tolerate those who do,” said Director Podolak. “We will continue to diligently root out anyone involved in this type of illegal activity and our commitment to working shoulder to shoulder with other law enforcement agencies and the Department of Justice in this endeavor is stronger than ever. During the last 10 years alone, Army CID Special Agents have been instrumental in recovering and returning $2.1 billion dollars to the United States Treasury and the Army from fraudulent practices involving contractors.”

***

Alexander worked for the Army Corps of Engineers from 1979 until the time of his arrest, in October 2011. According to a statement of offense signed by Alexander, he was a program manager with the Directorate of Contingency Operations. In that position, Alexander had authority, among other things, to obtain funding for Army Corps of Engineers projects, including money for projects and programs placed through federal government contracts. He also was responsible for developing requirements for projects and programs. Alexander produced and actively managed a $54 million budget.

The scheme involved the Army Corps of Engineers and two contracts: the Technology for Infrastructure, Geospatial, and Environmental Requirements (TIGER) contract and the Contingency Operations Readiness Engineering & Support (CORES) contract.

The TIGER contract was used by authorized federal government agencies and departments to purchase products and services. It is what is known as an Indefinite Delivery/Indefinite Quantity contract. Authorized agencies and departments are not required to obtain three separate bids or to compare the TIGER contract to another contract before submitting an invoice for products and services through the TIGER contract.

The CORES contract was a planned contract, envisioned as an alternative or potential replacement to the TIGER contract. As planned, the CORES contract would be a five-year contract with an award potential for all contracts placed under it of up to $780 million. The CORES contract has not been issued for solicitation to potential prime contractors.

In his guilty plea, Alexander admitted to carrying out a bribery scheme with others. They included Kerry F. Khan, a colleague, who was then a program manager with the Army Corps of Engineers; Harold F. Babb, the former director of contracts at Eyak Technology LLC (EyakTek), an Alaska Native-owned small business; Alex N. Cho, the former chief technology officer of Nova Datacom, LLC, a provider of information assurance and security services to federal agencies and commercial companies, and McKinney, the president of Alpha Technology Group, Inc., a provider of program management services.

According to the statement of offense, in or around 2006, Alexander and Khan agreed to work together to obtain government contracts for corrupt contractors who would reward them with bribes. Khan had authority, among other things, to place orders for products and services for the Army Corps of Engineers through government contracts, including the TIGER contract, and to certify that the work on the contracts had been completed.

From May 2007 through October 2008, the Army Corps of Engineers awarded contracts and sub-contracts to Alpha Technology, totaling about $1,877,000. McKinney paid Khan a portion of the money that was received, and Khan provided Alexander with $99,100.

From May 2007 through October 2011, the Army Corps of Engineers awarded contracts and sub-contracts to Nova Datacom totaling more than $45 million.

All told, Alexander admitted receiving directly and indirectly about $1,150,000 of money and things of value from Nova Datacom and Cho. This included nearly $300,000 in checks and cash; $750,000 in wire transfers to an associate of Alexander’s in South Korea for the purchase of, among other things, a coffee shop called Seven Monkeys in Seoul; about $27,000 for the purchase of two designer watches for a member of Alexander’s family; employment of a family member at Nova Datacom, and other miscellaneous payments. Cho also promised Alexander future employment at Nova Datacom and $320,000 in additional payments. Indeed, on the morning of October 4, 2011, the date of his arrest, Alexander was expecting Cho to deliver a $20,000 payment to him.

In addition to these activities involving the TIGER contract, according to the statement of offense, Khan, Alexander, Babb and Cho agreed to steer the award of the CORES contract to Nova Datacom. This scheme was thwarted by the arrests of Alexander and others last fall.

Khan, 54, formerly of Alexandria, Va., Khan’s son, Lee Khan, 31, formerly of Fairfax, Va., and Babb, 60, formerly of Sterling, Va., were indicted along with Alexander on one count of conspiracy to commit bribery and wire fraud and aiding and abetting and causing an illegal act to be done, as well as one count of conspiracy to commit money laundering. Khan and Alexander also were indicted on one count of receipt of a bribe by a public official, and Babb was indicted on one count of unlawful kickbacks. Khan, Khan’s son, and Babb have pleaded not guilty to all charges in the case and are awaiting trial. Khan, Lee Khan, Babb, and Alexander have been in custody since their arrests in October.

Cho, 40, of Great Falls, Va., pled guilty in September 2011 to one count of conspiracy to commit bribery, money laundering, and wire fraud, and to defraud the United States, and one count of bribery. Another former Nova Datacom employee, Theodoros Hallas, 40, of Potomac, Md., the company’s former executive vice president, pled guilty to one count of conspiracy to commit wire fraud in October 2011. No sentencing date has been set for Cho or Hallas.

As part of his guilty plea today, McKinney signed a separate statement of offense that admitted that Alpha Technology had submitted fictitious and fraudulently inflated invoices that led to more than $1.8 million of payments to the firm. Some materials and services were provided, but, McKinney admitted, more than $850,000 of the expenses were fraudulent. Of this, he said, Alpha Technology kept about $245,395, and the rest allegedly was passed on to Khan directly and through a company controlled by another one of Khan’s family members.

To date, the United States has seized for forfeiture or recovered approximately $7.2 million in bank account funds, cash, and repayments, 16 real properties, five luxury cars, and multiple pieces of fine jewelry.

***

In announcing today’s developments, U.S. Attorney Machen, Assistant Director McJunkin, Inspector General Gustafson, Special Agent in Charge Craig, Acting Special Agent in Charge Hylton, and Director Podolak thanked those who investigated the case from the FBI’s Washington Field Office; the Office of the Inspector General for the Small Business Administration; the Department of Defense’s Defense Criminal Investigative Service; the Defense Contract Audit Agency; the Washington Field Office of the Internal Revenue Service-Criminal Investigation; and the Army Criminal Investigation Command. They also expressed thanks to the U.S. Marshals Service for its assistance on the forfeiture matter.

They also praised the efforts of those who worked on the case from the U.S. Attorney’s Office, including Assistant U.S. Attorneys Michael K. Atkinson and Bryan Seeley of the Fraud and Public Corruption Section and Assistant U.S. Attorney Anthony Saler of the Asset Forfeiture and Money Laundering Section. Finally, they expressed thanks for assistance provided by former Special Assistant U.S. Attorney Christopher Dana; Forensic Accountant Maria Boodoo; Paralegal Specialists Tasha Harris, Shanna Hays, Taryn McLaughlin, Sarah Reis, Christopher Samson, and Nicole Wattelet, and Legal Assistants Jared Forney and Krishawn Graham.

Government Contractor Pleads Guilty to Providing False Information to Federal Agencies to Procure Contracts

WASHINGTON—Theodoros N. Hallas, 39, of Potomac, Md., the former executive vice president of operations for Nova Datacom, LLC, has pled guilty in the U.S. District Court for the District of Columbia to one count of conspiracy to commit wire fraud.

The guilty plea was announced by U.S. Attorney Ronald C. Machen Jr.; James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office; Peggy E. Gustafson, Inspector General for the U.S. Small Business Administration (SBA), Brian D. Miller, Inspector General for the U.S. General Services Administration (GSA); and Michael S. Barcus, Special Agent in Charge for the Washington Region of the U.S. Department of Labor’s Office of Inspector General - Office of Labor Racketeering and Fraud Investigations.

The investigation involving Hallas led investigators to uncover the alleged bribery, kickback, and money laundering scheme that resulted in the arrests on October 4, 2011 of two employees of the U.S. Army Corps of Engineers, Michael A. Alexander and Kerry F. Khan.

Hallas pled guilty on October 13, 2011 before the Honorable Emmet G. Sullivan. Sentencing has not been scheduled.

In connection with the guilty plea by Hallas, and as set forth in the executed statement of offense, Hallas acknowledged that he was the executive vice president of Nova Datacom, a provider of information assurance and security services to federal agencies and commercial companies with headquarters in Chantilly, Va.

Hallas also acknowledged that he agreed to provide a former colleague, Rajesh Kumar Malik, also known as Roger Malik, with false past performance references and evaluations. At the time, Malik was executive vice president of MED Trends, Inc., a health care information technology consulting company with a virtual office in Rockville, Md.

The false references and evaluations were to burnish the qualifications of MED Trends Inc., to perform federal contracts and to grow the federal contracting business for MED Trends.

Hallas agreed to allow Malik to represent falsely to federal agencies that Hallas’s employers, including Nova Datacom, had contractual relationships with MED Trends. Hallas agreed, for example, that he knowingly provided a false reference to MED Trends to assist MED Trends in competing for a contract with the U.S. Department of Labor. According to the charges, Hallas’s actions resulted in MED Trends winning the contract awarded by the Department of Labor in April 2010, valued with all options at more than $20 million.

Upon joining Nova Datacom, Hallas agreed that he employed a similar strategy of using Malik and others to provide false past performance references to burnish the qualifications of Nova Datacom to perform federal contracts and to grow the federal contracting business for Nova Datacom. According to the charges, Malik agreed to allow Hallas to represent falsely to federal agencies that MED Trends had contractual relationships with Nova Datacom.

“This case demonstrates our steadfast commitment to root out and prosecute those who commit fraud in our federal contracting process,” said U.S. Attorney Machen. “We want to thank our law enforcement partners for their tireless efforts in combating contract fraud.”

“The guilty plea of Theodoros Hallas is another victory for taxpayers,” said Inspector General Gustafson of the SBA. ” Mr. Hallas’s actions denied federal contracts to businesses that deserved such opportunities, including small businesses owned by service-disabled veterans. With our interagency partners, SBA OIG will continue to pursue those who defraud the government by lying in order to gain access to federal set-aside contracts.”

“Contractors cannot lie about their past and size to get federal contracts and expect to get away with it,” said GSA Inspector General Miller.

The investigation was conducted by the FBI’s Washington Field Office; the Office of the Inspector General for the Small Business Administration; the Labor Department’s Office of Inspector General - Washington Regional Office of Labor Racketeering and Fraud Investigations; the Office of Inspector General for the U.S. General Services Administration; and the Office of Inspector General for the U.S. Department of Veterans Affairs.

The case is being prosecuted by Assistant U.S. Attorneys Michael Atkinson and Bryan Seeley of the Fraud and Public Corruption Section and Assistant U.S. Attorney Anthony Saler and Special Assistant U.S. Attorney Christopher Dana of the Asset Forfeiture and Money Laundering Section. Assistance also was provided by Forensic Accountant Maria Boodoo; Paralegal Specialists Tasha Harris, Shanna Hays, Taryn McLaughlin, and Sarah Reis; and Legal Assistants Jared Forney, Krishawn Graham, Jessica McCormick, and Nicole Wattelet.