News

Conspirator Sentenced To Prison In $2.3 Million Government Contract Fraud Scheme

Ordered to Pay Over $400,000 in Restitution

FOR IMMEDIATE RELEASE
July 21, 2014

 

Greenbelt, Maryland – U.S. District Judge Paul W. Grimm sentenced Christopher Johnson, age 36, of Clinton, Maryland today to 18 months in prison followed by three years of supervised release for conspiring to commit wire fraud in connection with a scheme to defraud businesses which supplied goods under government contracts. Judge Grimm also entered an order that Johnson pay restitution of $426,376.99.

The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation.

According to his plea agreement, from December 2007 to May 2013, Johnson and his co-conspirators used at least seven businesses in Maryland, Delaware, Georgia, Nevada, North Carolina and Tennessee which they incorporated to bid on contracts to provide goods – such as books, snowmobiles, plants and paint – to federal, state and local government agencies. The conspirators’ businesses included: The Encompass Group, The Crescant Group Inc., Taylor Hailey Group, United Partners Consulting Group, Worldwide Industries, Global Synergy Group and Parktech Group.

Most of the contracts were awarded using an online marketplace. The conspirators’ businesses often submitted extremely low bids to secure the contracts. Once awarded the contracts, Johnson enticed victim businesses to act as subcontractors and supply the goods required by contract by providing fake references and by falsely promising that the subcontractors would be paid after the government paid Johnson. After the subcontractors delivered the goods required by the contracts, government agencies paid Johnson, typically by electronic transfers to bank accounts set up in the business names but controlled by Johnson and his conspirators. Johnson and his conspirators fraudulently retained these proceeds for their own personal benefit and did not pay the subcontractors.

The conspirators typically operated under a particular business name for six to 12 months until the business was either disqualified from the online marketplace or burdened with lawsuits or liens. The conspirators then continued the scheme under a newly-registered business name. The conspirators initially used their true names and addresses to register their businesses, but later attempted to conceal their true identities by using aliases.

From December 2007 to March 2013, Johnson and co-conspirator Larayne Whitehead received at least 144 bank deposits from governmental agencies totaling approximately $2,321,058.95 of which $426,376.99 was reasonably foreseeable to Johnson. The scheme involved between 10 and 50 business victims.

Larayne Whitehead, age 35, also of Clinton, Maryland, previously pleaded guilty to her participation in the conspiracy and has agreed to forfeit $2,393,579 and a car. Whitehead is scheduled to be sentenced on August 18, 2014.

The National Procurement Fraud Task Force was formed in October 2006 to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs. The Procurement Fraud Task Force includes the United States Attorneys’ Offices, the FBI, the U.S. Inspectors General community and a number of other federal law enforcement agencies. This case, as well as other cases brought by members of the Task Force, demonstrate the Department of Justice’s commitment to helping ensure the integrity of the government procurement process.

United States Attorney Rod J. Rosenstein praised the FBI for its work in the investigation and thanked Assistant U.S. Attorney Bryan E. Foreman, who prosecuted the case.

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