41 Months in Prison - Was it Worth It?

The President and CEO of Wellco Enterprises and Tactical Holdings was sentenced to 41 months in federal prison for his role in a contract fraud conspiracy. Two others involved in the conspiracy were previously sentenced last June to serve six months each in federal prison for the same crime. There is no parole in the federal system.

Wellco was once a proud and successful company and a leading manufacturer and supplier of military footwear to the Defense Department and to civilian customers. The company has been in business for more than 70 years. Between 2006 and 2012, the Defense Department alone paid $138 million to Wellco for combat boots.

For some reason, Wellco's executives decided to import military -style boots that were made in China into the U.S. and then deceptively market and sell those boots to DoD, government contractors, and the general public as "Made in the USA" and as compliant with the Berry Amendment and Trade Agreements Act (TAA). Wellco sold more than $8.1 million in fraudulent boots.

To conceal the fraud, Wellco required the Chinese manufacturers to include "USA" on labels of boot uppers. After two shipments of these deceptively marked boots were seized by the U.S. Department of Homeland Security's Customs and Boarder Protection, Wellco ordered the Chinese facility to stitch tear-away "Made in China" labels in Wellco boot uppers. After importation, Wellco instructed its factory workers to tear out the "Made in China" to shipping the boots to Government (and commercial) customers. That seems kind of dumb - how many witnesses to the fraud would there be if the entire factory is tearing out Made in China labels?

A Homeland Security spokesperson was quoted saying "Falsely selling our military millions of dollars of comb at boots by saying they were Made in the USA when they are actually Chinese-knockoffs not only defrauds the Government, but it also defrauds the American soldier. Our soldiers rely on their equipment from their guns to their boots to protect this country and counterfeit products could fail at a moment when they need them the most.