U.S. Defense Contractor and Employees Sentenced for Procurement Fraud Scheme

NEWPORT NEWS, Va. – A Hampton-based U.S. defense contractor, its owner, and four of its employees were sentenced yesterday and today. The owner was sentenced to 58 months in prison, and his four employees were sentenced today to a combined 93 months years in prison, for engaging in an extensive procurement fraud scheme involving more than $7 million in government contracts targeting the U.S. Department of Defense and other federal government agencies.

“The defendants’ egregious scheme caused the U.S. government to spend over $7 million on fraudulently imported goods. These funds were intended for deserving beneficiaries, including American workers, service-disabled veterans, and authorized trading partners,” said Acting U.S. Attorney Raj Parekh for the Eastern District of Virginia. “This prosecution demonstrates our firm commitment to holding accountable those who defraud our military and brazenly disregard laws that are designed to protect the strength of our country’s infrastructure and manufacturing base.”

According to court documents, from 2011 to 2018, Iris Kim, Inc., (aka “I-Tek”) owner Beyung S. Kim, 62, of Newport News, and employees Seung Kim, 31, of Newport News; Dongjin Park, 54, of Yorktown; Chang You, 62, of Yorktown; Pyongkon Pak, 53, of Toano; and Li-Ling Tu, 58, of China, engaged in a conspiracy and scheme related to certain government contracts for which I-Tek acted as a supplier of goods, including items for the U.S. Marine Corps, U.S. Army, U.S. Coast Guard, and the National Guards of various states, among other agencies.

The defendants obtained government contracts that had certain set-aside preferences and source-of-good requirements. The conspirators acted to defraud the U.S. and commit other substantive offenses by fraudulently importing goods into the U.S. that were made in China in violation of the terms of these contracts. They then falsely relabeled these goods as if they were made in the U.S. Kim and his employees also acted through a separate nominee company to conceal the importing of goods from China and installed a nominee officer of I-Tek in order to be able to fraudulently qualify for contracts set aside for service-disabled veterans. The conspirators also submitted false documents and further falsely classified the value of the goods imported into the U.S. to avoid higher duties and taxes.

“The defendants deserve to be held fully accountable for this reprehensible scheme to knowingly and deceptively source illicit Chinese goods to fulfill Department of Defense contracts,” said Eric Maddox, Special Agent in Charge of the NCIS Economic Crimes Field Office. “This scheme threatened the readiness and safety of our nation’s warfighters, defrauded the American taxpayer, damaged the integrity of the Department of the Navy procurement process, and squandered valuable investigative resources that could have been directed elsewhere. NCIS will continue to work with our law enforcement partners to aggressively root out those who seek to defraud the Navy and Marine Corps.”

“For years, the Iris Kim, Inc., corporation defrauded the U.S. government out of millions of dollars and violated its contract by attempting to use substandard goods made in China, then relabeling them as ‘Made in the U.S.A.’ in order to make a hefty profit,” said Raymond Villanueva, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI). “Thanks to the multi-agency investigative work uncovering this procurement fraud scheme, those involved will now face the consequences of their crimes.”

“These sentencings demonstrate the resolve of the Department of Defense Office of Inspector General, Defense Criminal Investigative Service (DCIS) and its law enforcement partners in protecting the safety and readiness of our military,” said Christopher Dillard, Special Agent in Charge of the DCIS Mid-Atlantic Field Office. “DCIS and its partners will vigorously pursue those who put our warfighters at risk by introducing substandard products into the DoD supply chain.”

Raj Parekh, Acting U.S. Attorney for the Eastern District of Virginia; Raymond Villanueva, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; Chris Dillard, Special Agent in Charge for the Department of Defense Office of Inspector General, Defense Criminal Investigative Service; and Eric Maddox, Special Agent in Charge of the NCIS Economic Crimes Field Office, made the announcement after sentencing by U.S. District Judge David J. Novak.  Significant assistance was provided by the Defense Contract Audit Agency.

Assistant U.S. Attorney Brian J. Samuels and D. Mack Coleman, and Trial Attorney Matthew P. Mattis of the Justice Department’s Criminal Division prosecuted the case.

A copy of this press release is located on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information are located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 4:20-cr-47.

NICS Inquiries/Firearms Records Checks

   Send to USAVAE.NICS@usdoj.gov

Protect yourself from fraud, and report suspected cases of financial fraud to local law enforcement.

 

Victim Witness Case

Updates

 

U.S. V. KRISTOPHER LEE DALLMANN ET AL

 

U.S. V. JAVAID PERWAIZ

 

U.S. V. ALEKSEI BURKOV

 

U.S. V. CHOKSI

 

Eastern District of Virginia Seal

Megaupload – Release For Victim Notification

 

Don't Lose Yourself in a Gang

Talk to your kids about gangs and how to avoid them.

 

Project Safe Childhood

Help us combat the proliferation of sexual exploitation crimes against children.

 

Learn More

The post U.S. Defense Contractor and Employees Sentenced for Procurement Fraud Scheme appeared first on Shore News Network.