Monday, August 19, 2019

Prison Time for Construction Equipment 'Flipper'

Here's a type of contract fraud you don't see too often.

The Federal Surplus Property Donation Program allows qualifying non-profits, municipal agencies, and disadvantaged businesses to acquire Government surplus at special below-market rates. Sometimes surplus items are free. Recipients are required to demonstrate a legitimate need for the surplus, and they must agree not to sell, lease, or rent it.

Mark Jackson and his construction company Kingridge Enterprises, Inc. were accepted into the program by falsely claiming his disadvantaged nephew owned and operated Kingridge. However, the nephew never worked for Kentridge, drew no salary, exercised no operational control, and lived more than 100 miles from the office.

Once in the program, GSA (General Services Administration) who administers it, doesn't ask too many questions. Jackson took advantage of this lapse in oversight to acquire more than $1 million in surplus property that he in turn, sold at significant profits.

Jackson gave false justifications to acquire surplus property - mostly construction equipment. One example included a CAT 621B scraper that Jackson purchased for $12,000 and sold to an out-of-state equipment dealer for $18,500. Jackson claimed he needed the scraper for a Corps of Engineers contract he had been awarded. In a four-year period, Jackson flipped more than 100 items, netting him more than $1 million in the process.

In some cases, he had his buyers sign 'sham' joint venture agreements so conceal the fraud.

Mr. Jackson has now been sentenced to fie years in prison for his flipping scheme, ordered to forfeit his million dollar profit and pay an additional $350 thousand to settle related tax deficiencies.

The full Justice Department press release can be accessed here.

No comments:

Post a Comment