WASHINGTON, D.C. - A civilian U.S. Department of Army Director of Contracting and two other individuals have been arrested in New York and Indiana on charges of participating in a scheme to pay bribes to a public official and take kickbacks in connection with U.S. Army contracts awarded from an Army recreational facility in Germany, Assistant Attorney General Alice S. Fisher of the Criminal Division announced today.
Arrests were made Friday of Steven G. Potoski, 45, of Garmisch, Germany, a civilian employee of the U.S. Army; Alvan Vance McQueen, 56, of Shelbyville, Indiana, President and owner of Flat Rock Furniture; and Ellis Abramson, 39, of Merrick, New York, President of Bramson House, Inc.
From August 1998 through July 2005, Potoski was a civilian employee of the U.S. Army, serving as Director of Contracting for the Edelweiss Lodge and Resort, Armed Forces Recreation Center (AFRC Europe), in Garmisch, Germany. The Department of the Army serves as the executive agent for the AFRC Europe, operating the AFRC Europe on behalf of the Department of Defense. Patrons at the AFRC Europe include active duty U.S. military personnel serving in Afghanistan and Iraq.
According to a criminal complaint filed in the Eastern District of New York, Potoski admitted to investigators that while serving as Director of Contracting, he accepted bribes from contractors and subcontractors for contracts related to work at the AFRC Europe. According to the charges, Potoski and the contractors or subcontractors agreed to fraudulently inflate the amount of certain line items on contracts for the AFRC Europe, submit the inflated line items to Potoski for approval, and split between Potoski and the contractors or subcontractors the difference between the actual amount of the line items and the fraudulently inflated amount. The complaint further alleges that Potoski accepted over $350,000 in bribes from at least 15 contractors or subcontractors - two American contractors, 12 German contractors, and one British contractor.
The complaint alleges that Potoski accepted the bribes for himself, his family members and others in the form of cash, home renovations, flat screen televisions, computer laptops, automobile maintenance, airline tickets, hotel rooms, trips, cleaning services, furniture, artwork, appliances, Oktoberfest tickets, tickets to the Indianapolis 500, and ski passes. Potoski is formally charged with accepting bribes in his capacity as a public official; accepting a kickback from a government contractor or subcontractor, in violation of the Federal Anti-Kickback Act; traveling in interstate or foreign commerce in aid of a racketeering enterprise; and conspiracy. Potoski has cooperated in the government's continuing investigation of the contractors and subcontractors.
McQueen, President and Owner of Flat Rock Furniture, Incorporated, in Waldron, Indiana, is charged by criminal complaint in the Southern District of Indiana with giving cash and other benefits to Potoski and a member of Potoski's family in return for Potoski's agreement to fraudulently inflate certain line items by $80,000 in a contract between Flat Rock Furniture and the AFRC Europe to supply it with furniture. According to the criminal complaint, McQueen paid Potoski approximately $45,000 in cash and provided other things of value to Potoski, including hotel rooms, airfare, and tickets to the Indianapolis 500, in return for Potoski's agreement to approve the fraudulently inflated contract and split the fraudulently inflated amount with McQueen. According to the complaint, McQueen also passed $100,000 in cash to an undercover agent posing as Potoski's successor as part of a separate scheme to inflate certain line items by $200,000 in a purported contract between McQueen's company and the AFRC Europe. McQueen is charged with: paying bribes to a public official; paying a kickback, in violation of the Federal Anti-Kickback Act; structuring a currency transaction to evade reporting requirements; and conspiracy. In connection with McQueen's arrest, a search was conducted Friday at the offices of Flat Rock Furniture, Incorporated, in Waldron, Indiana.
Abramson, President of Bramson House, Inc., in Freeport, New York, is charged with paying $23,000 in cash to Potoski in return for Potoski's agreement to fraudulently inflate certain line items in a contract between Bramson House and the AFRC Europe to provide it with draperies and guest room bed spreads. According to a criminal complaint filed against Abramson in the Eastern District of New York, during a telephone call overheard by undercover agents, Abramson also agreed to pay Potoski an additional $20,000 to $30,000 as part of a separate scheme to inflate certain line items in a purported contract between Abramson's company and the AFRC Europe. Abramson is charged with paying bribes to a public official; paying a kickback, in violation of the Federal Anti-Kickback Act; traveling in interstate or foreign commerce in aid of a racketeering enterprise; conspiracy. In connection with Abramson's arrest, a search was conducted Friday at the offices of Bramson House, Inc., in Freeport, New York.
"Americans will not tolerate corruption of public officials, particularly those who corruptly put into their own pocket money intended for the benefit of American soldiers," said Assistant Attorney General Fisher. "Today's announcement should send an unmistakable message that we will act locally, globally and proactively to root out corruption of government officials."
If convicted, Potoski, McQueen and Abramson each face a maximum sentence of 15 years in prison on the bribery charge, 10 years in prison on the Anti-Kickback charge, and five years in prison on the conspiracy charge. Potoski and Abramson face a maximum sentence of five years in prison on the interstate or foreign travel in aid of racketeering charge. McQueen faces a maximum sentence of five years in prison on the structuring charge. The government also intends to seek the forfeiture of proceeds allegedly used and obtained during the commission of these offenses.
The case was investigated by the U.S. Army Criminal Investigation Division Command and the Internal Revenue Service-Criminal Investigations. It is being prosecuted by Deputy Chief Mark F. Mendelsohn and Trial Attorney Michael K. Atkinson of the Fraud Section of the Criminal Division at the U.S. Department of Justice, Washington, D.C., with assistance from Steve DeBrota, Assistant United States Attorney, Southern District of Indiana, and Cynthia Monaco, Assistant U.S. Attorney, Eastern District of New York. The investigation is continuing with the assistance of foreign law enforcement agencies.
The charges against the defendants are allegations only and the defendants are presumed innocent until and unless convicted at trial.