FOR IMMEDIATE RELEASE
Thursday, January 31, 2013
For Information Contact:
Virginia Man Sentenced to 37 Months in Prison for Role
Who Threatened to Expose the Scheme-
In Bribery and Kickback Scheme Involving Government Contracts
-Defendant and His Father Laundered $401,000 in Payments to Relative
WASHINGTON – Lee A. Khan, 32, of Fairfax, Va., was sentenced today to 37 months in prison for his role in a money laundering scheme meant to keep law enforcement from learning about a larger conspiracy involving bribery, kickbacks and federal government contracts.
Khan pled guilty in May 2012 in the U.S. District Court for the District of Columbia to a charge of conspiracy to commit money laundering. Among other things, he admitted scheming to channel more than $400,000 to a relative who threatened to expose wrongdoing involving millions of dollars in government contacts issued through the U.S. Army Corps of Engineers.
The sentencing was announced by U.S. Attorney Ronald C. Machen Jr.; Debra Evans Smith, Acting Assistant Director in Charge of the FBI’s Washington Field Office; Sheila Olander, Acting Special Agent in Charge of the Washington Field Office of the Internal Revenue Service-Criminal Investigation (IRS-CI); Peggy E. Gustafson, Inspector General for the Small Business Administration (SBA); Robert E. Craig, Special Agent in Charge of the Mid-Atlantic Field Office of the Defense Criminal Investigative Service (DCIS), and Frank Robey, Director of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit (MPFU).
Khan was sentenced by the Honorable Emmet G. Sullivan. As part of his plea agreement, Khan agreed to forfeit his interest in more than $1 million in bank account funds, 13 properties in Virginia, Florida, and West Virginia, and a Rolex watch. In addition, Judge Sullivan ordered him to join other conspirators in paying $401,000 in restitution to the federal government. Following completion of his prison term, Khan will be placed on three years of supervised release.
A total of 12 people have pled guilty to charges in the largest domestic bribery and bid-rigging scheme in the history of federal contracting cases, and Khan was the eighth defendant to be sentenced. All of those sentenced so far have received prison terms. All told, corrupt public officials agreed to steer government contracts from the U.S. Army Corps of Engineers and the U.S. Department of the Army in exchange for more than $30 million in bribe and kickback payments. The investigation is continuing.
Khan is one of three family members charged in the case. His father, Kerry F. Khan, 55, a former program manager for the U.S. Army Corps of Engineers, pled guilty in May 2012 to charges of bribery and conspiracy to commit money laundering in a scheme in which he received or was promised more than $26 million in payments from various contractors who submitted fraudulently inflated invoices to the government. The contracts were awarded through the U.S. Army Corps of Engineers and the Department of the Army. His uncle, Nazim Khan, 50, pled guilty to a charge of conspiracy to commit interstate transportation of stolen property.
According to the government’s evidence, Lee Khan helped his father launder $401,000 to pay one of their close family members, identified in court documents as “Khan Family Member A.” The primary purpose of the payment was to prevent the family member from disclosing information concerning bribe payments made to Kerry Khan by a former government contractor.
At the time of the money transfers, “Khan Family Member A” was incarcerated at the Alexandria Detention Center in Alexandria, Va., where he was jailed following his conviction of a federal felony drug trafficking crime. The family member wrote a letter to the former government contractor – copying Lee Khan – threatening to go to the authorities unless he received a deposit covering “the entire cost of my house and 4 cars.”
Although Lee Khan did not know the full extent of his father’s illegal conduct, he did know that the source of Kerry Khan’s funds came from unlawful activities. He orchestrated the payments to the relative through multiple accounts in August 2011 in an effort to disguise that he and his father were the source of the funds.
Lee Khan told his father that if “Khan Family Member A” cooperated with law enforcement, even after getting paid, that he would kill him or have him killed.
Lee Khan and his father were among four people arrested on Oct. 4, 2011. He has been in custody ever since. “Khan Family Member A,” meanwhile, never got control of the $401,000, which was seized by law enforcement.
In addition to Lee Khan, those who have been sentenced include:
-Nazim Khan, owner of KC Builders Custom Homes LLC, a company that helped channel money to Kerry Khan in the bribery and kickback scheme. He was sentenced in December 2012 to two years in prison and ordered to pay, along with two other defendants, a total of $611,904 in restitution. He also agreed to an order of forfeiture in the amount of $83,403.
-Harold F. Babb, the former director of contracts at Eyak Technology LLC (EyakTek), an Alaska Native-owned small business. He was sentenced in October 2012 to seven years and three months in prison and ordered to pay $9,405,230 in restitution and to forfeit a money judgment of $689,342.
-Michael A. Alexander, a former program manager with the Army Corps of Engineers. He was sentenced in September 2012 to a six-year prison term and ordered to pay $1.25 million in restitution and a $1.25 million forfeiture money judgment.
-James Edward Miller, the owner of Big Surf Construction Management LLC. He was sentenced in October 2012 to five years and 10 months in prison. Miller also was ordered to pay $9,405,230 in restitution and to forfeit a money judgment of $4,055,063 and specific property, including bank account funds, a property in Virginia Beach, three vehicles, and diamond rings and other jewelry.
-Robert L. McKinney, the president of Alpha Technology Group. He was sentenced in October 2012 to two years and nine months in prison. McKinney also was ordered to forfeit $246,000, representing the illegal proceeds he retained from the crime. In addition, he must pay $984,664 in restitution to the federal government.
-Larry G. Corbett, owner of Core Technology LLC and Enterprise Technical Solutions, Inc. He was sentenced in November 2012 to two years and three months in prison, ordered to perform 500 hours community service, and ordered to forfeit $290,000.
-Theodoros Hallas, the former Executive Vice President of Operations for Nova Datacom, LLC. He was sentenced in November 2012 to one year and three months in prison and ordered to perform 500 hours community service.
Those awaiting sentencing include Kerry Khan; Alex Cho, the former chief technology officer of Nova Datacom, LLC; Nick Park, a former employee of Nova Datacom who later opened his own business, Unisource Enterprise Inc. (UEI), and Oh Sung Kwon, also known as Thomas Kwon, the co-founder and chief executive officer of Avenciatech, Inc.,
In announcing the sentences, U.S. Attorney Machen, Acting Assistant Director in Charge Smith, Acting Special Agent in Charge Olander, Inspector General Gustafson, Special Agent in Charge Craig, and Director Robey thanked those who investigated the case from the FBI’s Washington Field Office; the Office of the Inspector General for the Small Business Administration; the Department of Defense’s Defense Criminal Investigative Service; the Defense Contract Audit Agency; the Washington Field Office of the Internal Revenue Service-Criminal Investigation, and the Army Criminal Investigation Command. They also expressed thanks to the U.S. Marshals Service for its assistance on the forfeiture matter.
They also praised the efforts of those who worked on the case from the U.S. Attorney’s Office, including Assistant U.S. Attorneys Michael K. Atkinson, Bryan Seeley, and James Smith of the Fraud and Public Corruption Section and Assistant U.S. Attorney Anthony Saler of the Asset Forfeiture and Money Laundering Section. Finally, they expressed thanks for assistance provided by former Special Assistant U.S. Attorney Christopher Dana; Forensic Accountant Maria Boodoo; Paralegal Specialists Tasha Harris, Lenisse Edloe, Shanna Hays, Taryn McLaughlin, Christopher Samson, and Nicole Wattelet, and Legal Assistants Krishawn Graham and Jessica McCormick.