Georgia woman pleads guilty to conspiracy to commit wire fraud related to transportation scheme at local military base
WASHINGTON – A former employee of an Albany, Georgia transportation company has pleaded guilty to conspiracy to commit wire fraud related to a scheme to overcharge the Department of Defense (DOD) for transportation services rendered through the Defense Logistics Agency (DLA), resulting in the loss of millions of dollars to the United States government, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Michael J. Moore for the Middle District of Georgia.
Kelli Durham, 33, of Leesburg, GA, pleaded guilty today before U.S. District Judge W. Louis Sands in the Middle District of Georgia to one count of conspiracy to commit wire fraud.
During her guilty plea, Durham, a former employee of Company A, an Albany-based trucking company and freight transportation broker owned by Person A, admitted to participating in a scheme led by Person A to defraud the government by overbilling it for freight transportation services Company A falsely claimed to have provided to DLA at the Marine Corps Logistics Base (MCLB) in Albany, Georgia. Durham admitted that, at Person A’s direction, she took several steps intended to defraud the government and other trucking companies with which she brokered government freight, including altering shipping and equipment specifications stated on government bills of lading (GBL). DURHAM then used these falsified bills of lading to broker loads using shipping and equipment specifications inferior to those contracted for by DLA, while still billing DLA for the more expensive specifications it had requested. This led to massive over-billing of the government and losses in excess of $7 million.
According to court documents, Company A handled thousands of freight shipments for DLA from July 2008 to December 2012. Most of these shipments were designated as “exclusive-use,” a premium service requiring that the shipment be transported on a single truck, even if that prevented the truck from being filled to capacity. Each of these exclusive-use shipments was listed on a single GBL. Court documents also reflect that many of these shipments also required that a removable gooseneck (RGN) trailer be used to transport the freight. RGN trailers are not widely available and therefore are more expensive than other trailer types, such as a flatbed.
Durham admitted that Person A instructed her to use Photoshop to alter GBLs so that they listed freight from multiple shipments, rather than the single shipment as requisitioned by DLA. Person A also instructed Durham to use Photoshop to alter the equipment codes on the GBLs so that rather than require a RGN trailer, for instance, it appeared that DLA had requested a flatbed trailer. Durham admitted that she then brokered the shipments as reflected on the fraudulent GBLs to other trucking companies. At Person A’s direction, Durham then certified that the shipments were serviced as specified by DLA and billed the government according to the more expensive specifications on the authentic GBLs. In effect, Company A repeatedly billed the government for multiple expensive trucks, when in fact those multiple shipments were transported on only one less-expensive truck.
According to court documents, Company A was paid $37,944,823.88 for transportation services during the course of the scheme, of which between $7 million and $20 million represents a loss to the government in the form of services it paid for but did not receive. Durham admitted that she received approximately $905,685 as a result of the fraud scheme.
At sentencing, Durham faces a maximum penalty of 5 years in prison and a fine of not more than twice the pecuniary loss to the government. As part of her plea agreement with the United States, Durham has agreed to forfeit the $905,685 that she received as a result of the scheme, as well as to pay full restitution to the Department of Defense. She is also cooperating with the government’s investigation. Sentencing normally takes place in approximately sixty days following a plea of guilty.
This is the seventh guilty plea arising from a corruption probe centered at the MCLB in Albany. On May 8, 2013, Mitchell Potts, the former Traffic Office Supervisor for DLA, and Jeffrey Philpot, Potts’s former Lead Transportation Assistant, pleaded guilty to collectively accepting more than $700,000 in bribes from Person A in exchange for taking a variety of steps intended to direct DLA shipments to Company A. Among other things, Potts and Philpot admitted to “short loading” DLA shipments so that it would it appear that more trucks were necessary to service the shipments. They also admitted to requiring that the shipments be transported using RGN trailers regardless of whether that was actually necessary. As part of their plea agreements, Potts and Philpot are cooperating with the government’s investigation.
In June 2013, former base employee Michelle Rodriguez and local businessmen Thomas Cole and Fred Simon were sentenced to periods of imprisonment for their roles in a bribery scheme resulting in nearly $1 million in fraudulent overcharges to the government for military machine product orders. In February 2013, former base employee Shelby Janes pleaded guilty to accepting bribes from Person A in exchange for aiding him in the theft of more than $1 million worth of heavy equipment from the base.
The case is being investigated by the Naval Criminal Investigative Service, with assistance from the Dougherty County District Attorney’s Office Economic Crime Unit, Defense Criminal Investigative Service, DLA Office of the Inspector General, and the Department of Labor Office of the Inspector General. The case is being prosecuted by Trial Attorneys Richard B. Evans and J.P. Cooney of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney K. Alan Dasher of the Middle District of Georgia.
Inquiries regarding the case should be directed to Pamela Lightsey, United States Attorney's Office, at (478) 621-2603.