Kuwaiti Company Indicted for Massive Overcharging of United States for Soldiers' Food.Summary: Company Received over $8.5 Billion for Food Supply Contracts; Now Indicted for Conspiracy and Major Fraud
Public Warehousing Company, K.S.C., (PWC) a logistics company organized under the laws of the Nation of Kuwait has been indicted by a federal grand jury on multiple charges of conspiracy to defraud the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , committing major fraud against the United States, making false statements, submitting false claims and wire fraud. All of the charges concern multi-billion dollar contracts issued by the Department of Defense for feeding American troops in Iraq, Kuwait and Jordan. PWC is scheduled for an initial appearance and arraignment A criminal proceeding at which the defendant is officially called before a court of competent jurisdiction, informed of the offense charged in the complaint, information, indictment, or other charging document, and asked to enter a plea of guilty, not guilty, or as otherwise permitted before U.S. Magistrate Judge Janet F. King in Atlanta at 9:30 a.m. on Nov. 20, 2009. A related civil action has also been filed against PWC.
Criminal Chief F. Gentry Shelnutt, who is currently serving as the Acting U.S. Attorney on this case, said, "This indictment is the result of a multi-year probe into abuses in vendor contracts in the Middle East involving the illegal inflation of prices in contracts to feed our troops. The indictment alleges PWC submitted false information and manipulated prices to overcharge for food. Others who have engaged in similar conduct should beware. This indictment is only the first step. Our investigation of entities and persons who have defrauded the United States and our military is ongoing."
In Arlington, Va., Sharon E. Woods, Director, Defense Criminal Investigative Service The Defense Criminal Investigative Service (DCIS) is the criminal investigative arm of the Inspector General of the United States Department of Defense (DoD). Its stated mission is to protect America's warfighters by conducting investigations in support of crucial National said, "The Pentagon's Defense Criminal Investigative Service will aggressively pursue any and all allegations of fraud and abuse perpetrated on the U.S. Department of Defense. Our constant focus is on ensuring taxpayer dollars are not wasted or stolen, and on protecting America's warfighters."
FBI Atlanta Special Agent in Charge Greg Jones Greg Jones may refer to:
armed forces, armed services, military, military machine, war machine - the military forces of a nation; "their military is the largest in the region"; fraud."
Brigadier General Rodney Johnson, the commander of U.S. Army Criminal Investigation Division, said, "These indictments are the culmination of the steadfast dedication and professionalism of our Special Agents, the FBI and other law enforcement counterparts. I am proud that U.S. Army CID Cid or Cid Campeador (sĭd, Span. thēth kämpāäthōr`) [Span.,=lord conqueror], d. 1099, Spanish soldier and national hero, whose real name was Rodrigo (or Ruy) Díaz de Vivar. could play a major role in bringing this case to justice. The defendants, tempted by monetary gain, betrayed the trust invested in them by the U.S. Army and now they must face the consequences."
The indictment charges PWC in six counts. Count one charges PWC and unidentified co-conspirators with conspiracy to defraud the United States, including committing major fraud against the United States and making and submitting false statements to the United States. Count two charges PWC and unidentified coconspirators with a second conspiracy to defraud the United States, including committing major fraud against the United States, making and submitting false, fictitious or fraudulent claims to the United States, making false statements to the United States and wire fraud. Counts three and four are substantive major fraud charges brought against PWC, and counts five and six are substantive wire fraud charges.
According to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. the charges and other information presented in court: PWC offered proposals and was awarded a Prime Vendor contract on May 28, 2003 (PV-I), on Feb. 16, 2005 (Bridge), and on July 7, 2005 (PV-II). Each of these contracts was a prime vendor contract for the provision of food and other items to military customers in the Middle East, including Iraq, Kuwait and Jordan. PWC has been paid over $8.5 billion for the contracts.
All three contracts used the same pricing formula: Delivered Price + Fixed Distribution Fee = Unit Price. The "Delivered Price" (also called the product price or landed cost) was the manufacturer/supplier's actual invoice price Invoice price
The price that the buyer of a futures contract must pay the seller when a Treasury bond is delivered. . The Distribution Fee included all expenses that PWC incurred in performing the prime vendor contracts, as well as its profit, and represented the only amount that PWC contractually was allowed to add to the Delivered Price to arrive at a product's Unit Price.
The conspiracy alleged in count one is based upon PWC allegedly providing false invoices and statements to the Defense Supply Center Philadelphia (DSCP DSCP Defense Supply Center Philadelphia (US DoD)
DSCP Differentiated Services Code Point
DSCP Diffserv Code Points
DSCP Defense Satellite Communications Program
DSCP Decision Support and Custormer Platform (Sprint) ), a troop support center component of the Defense Logistics Agency Noun 1. Defense Logistics Agency - a logistics combat support agency in the Department of Defense; provides worldwide support for military missions
Defense Department, Department of Defense, DoD, United States Department of Defense, Defense - the federal department , which is a logistics combat support agency within the Department of Defense. DSCP is the center for managing the purchase and acquisition of four major commodities, including subsistence/garrison feeding, used to support the U.S. military throughout the world.
In count one, PWC, along with others, is charged with conspiring to submit false information and documents to DSCP with regard to the Delivered Prices of Market Basket market basket
1. A grocery cart.
2. A group of products or services in a specific market, especially when considered in terms of its fluctuating cost in determining a consumer price index: items as part of its proposal for the award of PV-II. It was a required part of the proposal process for the award of a PV-II that each offeror provide DSCP with a Delivered Price and proposed Distribution Fees for a specified list of Market Basket items (in this case 70 items). While Delivered Prices may change over time (the contract allows Delivered Prices to change every two weeks), evaluation of the Market Basket Delivered Prices enabled DSCP to compare and evaluate offerors on the criteria of Delivered Price at one point in time. It is alleged in count one that PWC's submission of false Market Basket Pricing information was done to impair and pervert the functioning of DSCP in its evaluation of proposals, and later to conceal the use of such false statements and documents.
The conspiracy alleged in count two is based upon PWC's allegedly fraudulent overbilling of the United States through multiple means. The multiple means alleged include the following:
-- The first means alleged in count two is that PWC allegedlyintentionally failed to purchase less expensive food items based upona vendor's failure to provide PWC with a discount.-- The second means alleged in count two relates to PWC's allegedfraudulent overbilling of the United States by having vendors use aconsolidation facility and placing the consolidation costs plus a PWCprofit into the Delivered Price paid by the United States contrary tothe prime vendor contracts.
-- The third means alleged in count two relates to PWC's knowingmanipulation and inflation of Delivered Prices. Examples of thismanipulation include PWC's knowing participation in structuringbillings from vendors so that non-product costs that were supposed tobe paid by PWC, instead were hidden in the Delivered Price of theproducts, resulting in the submission of inflated and fraudulentclaims to the United States. Count two also alleges that PWC receivedproduct rebates, allowances, and discounts that PWC did not return tothe United States as required by the prime vendor contracts.
Count two also alleges that PWC insisted that vendors provide a discount to it and label that discount something other than what it was to facilitate PWC not passing the discount on to the United States. Examples of this fraudulent conduct noted in the indictment include:
-- asking a vendor for a "prompt payment discount " in exchange formaking that vendor a "preferred customer" and then providing thatvendor with more business because of the discount.-- asking a vendor for a "prompt payment discount" and when the vendorrefused, instead securing a discount that was labeled a "damageallowance."-- asking a vendor to increase its "prompt payment discount" and when thevendor agreed to do so, providing the vendor with more business.
-- using a vendor's volume-based growth incentive program to payconsolidator costs that should have been paid by PWC and to give PWC a"prompt payment discount," rather than returning the growth incentiveto the United States or reducing the prices to the United States.
Count two also charges that PWC fraudulently inflated the Distribution Fees that it billed to the United States by asking vendors to manipulate the way products were packed, thus enabling PWC to bill the United States twice as much as it should have.
Count two alleges that as part of PWC's fraudulent conduct, its related Kuwaiti subcontractor T.S.C., with PWC's knowledge and approval, allegedly inflated or "marked-up" the prices of local market ready items and fresh fruit and vegetables to amounts that exceeded even retail prices and then after PWC paid T.S.C.'s inflated invoice in total, kicked a part of the T.S.C. mark-up back to PWC in the form of a 10 percent rebate, none of which was returned to the United States.
Counts three and four charge substantive counts of major fraud against the United States alleging schemes to defraud the United States and obtain money and property from the United States by means of false or fraudulent promises and representations with respect to "PV-I" and "PV-II," both of which are prime contracts with values of at least $1,000,000.
Specifically, Count three charges PWC with a fraudulent scheme Noun 1. fraudulent scheme - an illegal enterprise (such as extortion or fraud or drug peddling or prostitution) carried on for profit
illegitimate enterprise, racket to persuade a vendor located in Rome, Ga., to reduce the pack sizes of products that it sold to PWC, thus enabling PWC to bill the United States for twice as many packs of products and thus collect twice as much in Distribution Fees for the same amount of product.
Count four alleges a fraudulent scheme by PWC in which it encouraged a vendor with facilities in Conyers, Ga., to conceal consolidation fees that should have been paid by PWC in the prices of the products that it sold to PWC, thus resulting in inflated Delivered Prices being billed to the United States.
Counts five and six charge substantive counts of wire fraud, relating to relating to relate prep → concernant
relating to relate prep → bezüglich +gen, mit Bezug auf +acc the use of interstate wires with respect to the fraudulent scheme described in Count four involving the company with facilities in Conyers.
As a corporate defendant, PWC faces a sentence of probation and a fine of up to twice the pecuniary Monetary; relating to money; financial; consisting of money or that which can be valued in money.
pecuniary adj. relating to money, as in "pecuniary loss. gain realized by PWC, or twice the loss to the United States.
This is a continuing investigation. Anyone with information that may be useful to the investigation, including but not limited to any aspect of the provision of services and billing to the United States by PWC pursuant to the PV food contracts, should contact the Department of Defense via the Department of Defense Hotline, toll-free, at (800) 424-9098, via e-mail at email@example.com, or on the internet at http://www.dodig.mil/hotline. In addition, persons may call the FBI Atlanta Field Office at (404) 679-9000.
Members of the public are reminded that the indictment contains only allegations. A defendant is presumed innocent of the charges, and it will be the government's burden to prove a defendant's guilt beyond a reasonable doubt at trial.
This case is being investigated by a joint investigation team of Special Agents of Defense Criminal Investigative Service, FBI, Army Criminal Investigation Command Noun 1. Criminal Investigation Command - the United States Army's principal law enforcement agency responsible for the conduct of criminal investigations for all levels of the Army anywhere in the world
U.S. (Army CID), auditors from the Defense Contract Audit Agency The Defense Contract Audit Agency (DCAA), under the authority, direction, and control of the United States Under Secretary of Defense (Comptroller), is responsible for performing all contract audits for the United States Department of Defense (DoD), and providing accounting and , and the Department of Defense, Office of the Inspector General Office of the Inspector General (or OIG) is a common sub-agency within cabinet-level agencies of the United States federal government and serves as auditing and investigative arm of the agency's programs focused on identifying waste, fraud and abuse. .
Assistant U.S. Attorney Barbara E. Nelan and Special Assistant U.S. Attorney Richard E. Reed are prosecuting the case. Assistance in this case is also being provided by Counsel with the Department of Justice's National Procurement Fraud Task Force and the Office of International Affairs Noun 1. international affairs - affairs between nations; "you can't really keep up with world affairs by watching television"
affairs - transactions of professional or public interest; "news of current affairs"; "great affairs of state" .
2009 Al Bawaba (www.albawaba.com)
2009 Al Bawaba (Albawaba.com)
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