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FOR IMMEDIATE RELEASE
Tuesday, November 10, 2009
Korean Businessman Sentenced to Five Years in Prison for Role in $206 Million Contract Fraud Scheme

A South Korean businessman was sentenced today in U.S. District Court for the Northern District of Texas to five years in prison for his role in a bribery conspiracy involving a $206 million telecommunications contract and employees of the Army and Air Force Exchange Service (AAFES).

In addition to the prison term, U.S. District Judge Ed Kinkeade also ordered Gi-Hwan Jeong to pay a $50,000 fine. Jeong pleaded guilty on June 11, 2009, to a five-count indictment, charging him with one count of conspiracy, two counts of honest services wire fraud and two counts of bribery.

AAFES is a federal entity that provides billions of dollars worth of goods and services annually to U.S. Armed Forces service members and their families around the world. According to court documents, Jeong conspired between 2001 and 2006 with two AAFES officials, Henry Lee Holloway and Clifton Choy, and others, to commit bribery and honest services wire fraud when he agreed to make payments to the officials in the form of cash, travel, entertainment expenses and other things of value in exchange for their aid in securing and maintaining a $206 million telecommunications contract for his company, Samsung Rental Ltd. (SSRT).

In prior plea proceedings, Jeong admitted to providing approximately $80,000 in cash, entertainment and other things of value from October 2001 to August 2005 as bribes to Choy, an AAFES services program manager for the Pacific region, in exchange for Choy’s use of official action to benefit SSRT. Specifically, according to court documents, prior to AAFES’ award of the telecommunications contract to SSRT in 2001, Choy used his official position to gain access to confidential bid proposal information that competing bidders had submitted to AAFES and passed the information to Jeong, who used it to ensure that SSRT submitted the winning bid. Shortly after AAFES awarded the contract to SSRT, Jeong admitted paying $20,000 in cash to Choy, who passed away in 2008.

Jeong also admitted in prior plea proceedings to providing approximately $70,000 in cash, entertainment, travel expenses, stock options and other things of value as bribes to Holloway from May 2003 to April 2005, in exchange for Holloway’s use of official action to benefit SSRT. Jeong admitted making payments to curry favor with Holloway, who, as an AAFES general store manager for several U.S. military bases in Korea, was in a position to seek termination of AAFES’ contract with SSRT following allegations of performance-related problems relating to SSRT’s contractual obligations. After Jeong began paying Holloway, according to court documents, Holloway used official acts and influence to support the contractual relationship between SSRT and AAFES.

On April 21, 2009, Holloway, 42, of Hamilton, Ga., pleaded guilty before Judge Clay D. Land in the Middle District of Georgia for his role in the conspiracy and for not reporting the bribes he admitted he accepted on his income tax returns. Holloway’s sentencing is scheduled for Dec. 16, 2009.

The case is being prosecuted by Senior Trial Attorney Richard C. Pilger and Trial Attorney Eric G. Olshan of the Criminal Division’s Public Integrity Section. The Criminal Division’s Office of International Affairs provided assistance in this matter. The case was investigated by the Air Force Office of Special Investigations, the FBI’s Dallas Field Office and the Internal Revenue Service Criminal Investigation.

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