News and Press Releases

State Department Contract Employee And Husband Indicted For Steering More Than $60 Million In Government Contracts To Their Own Company

FOR IMMEDIATE RELEASE
April 25, 2013

ALEXANDRIA, Va. - Kathleen D. McGrade, age 64, and Brian C. Collinsworth, age 46, both of Fredericksburg, Va., were indicted by a federal grand jury today on charges stemming from an alleged secret scheme to steer more than $60 million in State Department contracts to a company they controlled. 

            Neil H. MacBride, United States Attorney for the Eastern District of Virginia, Harold W. Geisel, Deputy Inspector General for the Department of State, and Thomas J. Kelly, Special Agent In Charge for IRS Criminal Investigation made the announcement after the indictment was returned. 

McGrade and Collinsworth face a maximum penalty of 20 years imprisonment, if convicted. 

            According to the indictment, from at least December 2007 through August 2011, McGrade was a private contract employee assigned to work as a contract specialist at the U.S. Department of State, in its Office of Acquisition Management located in Arlington, Virginia.  In that position, McGrade assisted in and oversaw the process for awarding and implementing contracts to companies performing work at various U.S. foreign service posts, including U.S. embassies located around the world.  During this same period, McGrade and Collinsworth controlled a Virginia company called the Sterling Royale Group, LLC (SRG), for which McGrade, acting through her position at the State Department, caused to be issued an Indefinite Duration, Indefinite Quantity (IDIQ) contract with the State Department.  During the course of the scheme, Collinsworth acted as SRG’s vice president.  According to the indictment, McGrade and Collinsworth, who were married, actively concealed their marriage and McGrade’s involvement in SRG from officials at the Department of State.  Further, McGrade allegedly misled other State Department officials to believe she was a Contracting Officer while approving payments to SRG.  All told, McGrade’s role in the scheme allegedly resulted in SRG being awarded approximately 17 task orders.  Prior to the scheme being discovered, SRG had submitted invoices resulting in $39 million in payments.  Finally, the indictment alleges that McGrade and Collinsworth used the proceeds of their scheme to purchase a 41 foot boat, a home, a penthouse condominium, and a Lexus automobile, among other things. 

            This case is being investigated by the Office of the Inspector General for the Department of State and the Criminal Investigation Section of the Internal Revenue Service.  Assistant United States Attorneys Jack Hanly and Mark D. Lytle are prosecuting the case on behalf of the United States.

            Criminal indictments are only charges and not evidence of guilt.  A defendant is presumed to be innocent until and unless proven guilty.

A copy of this press release may be found on the website of the United States Attorney's Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae.  Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on https://pcl.uscourts.gov.

 

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