Monday, December 4, 2017

Government Contractor Sentenced to 5 Years in Prison

Last June, we reported a case involving a North Carolina based contractor who's owner had pleaded guilty of over-billing the Government by $15 million over a ten-year period. (See $15 Million Fraudulent Billing Scheme).

The company owner has now been sentenced to 5 years in prison for his role in the conspiracy. There will no doubt sentences for the co-conspirators coming soon. In addition to the prison sentence, there will be a separate hearing to determine forfeiture and restitution.

The conspiracy involved a couple of shell-companies set up to submit invoices to the prime contractor for work never performed. The prime contractor, in turn, passed those false invoices on to the Government and received reimbursement.

As we stated before, the fact that this conspiracy was able to go on undetected for ten years surprises us and causes us to wonder about the adequacy and sufficiency of Government oversight. There should have been contract auditors reviewing the incurred costs. There should have been oversight by contract administration. Evidently, no one looked beyond the paper trail consisting of invoices and cancelled checks to determine whether services were even rendered.

Anyone tasked with the responsibility for contract oversight (which includes contractor oversight of subcontractors) should consider this a lesson learned and apply detection procedures against claimed costs.

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