Wednesday, June 27, 2018

One Man, Many Names, Many Companies

How do you continue to contract with the Government when your company has been debarred? Easy. Take a new name and start a new company. Easy, that is, until you're caught.

One man, with four different names (Alter Stesel, Herman Stesel, Randy Stern, and Nehry Shtaisel) pleaded guilty yesterday in Federal District Court to committing Government contracting fraud.

His first company, A1 4 Electronics was placed in proposed debarment status by the Department of Homeland Security for providing counterfeit goods and for a history of failure to perform or unsatisfactory performance on Government contracts.

After learning of his proposed debarment, Mr. Stesel created a new company called A1 Tech Pal, Inc in order to continue obtaining Government contracts including contracts awarded by GSA (General Services Administration) and the State Department. He also used a fake alias to falsely certify to the Government that he was not currently proposed for debarment. That new company received 37 contracts valued at $245 thousand.

Later Stesel created another company called Pomegranate Office, Inc., and used another fake alias to falsely certify that he was not presently debarred, although by that time, his debarment was in effect. Pomegranate was awarded seven contracts valued at $60 thousand.

Stesel pleaded guilty to six counts of fraud and faces a maximum penalty of 20 years in prison. Sentencing is scheduled for September. His actual sentence will most likely be significantly less than the maximum penalty.

As usual, when the Justice Department announces a guilty plea and describes the fraud that was committed, the Department doesn't go into any details of how the fraud was uncovered. That information would be useful for contractors to consider when enhancing their policies and procedures for preventing and detecting internal fraud.

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