Government Contractor Pleads Guilty to Acting as a Pass-Through Minority Business Enterprise
Defendant Also Pleads Guilty to Money Laundering and Tax Fraud
WASHINGTON – Keith D. Forney, 60, formerly of Clinton, Maryland, pled guilty today to mail fraud and money laundering in one federal court case, and tax fraud in another announced U.S. Attorney Jessie K. Liu.
The Honorable Rosemary M. Collyer scheduled sentencing for both cases on November 12, 2019. In the first case, Forney faces a maximum sentence of 20 years for mail fraud and 10 years for money laundering. As part of his plea, he agreed to a $400,000 forfeiture money judgment. In the second case, Forney faces a maximum sentence of three years for tax fraud. He agreed to pay $92,000 in restitution to the IRS.
According to the statement of offense submitted in the mail fraud and money laundering case, Forney was the sole owner of Forney Enterprises, Inc. (FEI). FEI was primarily engaged in the construction business as a general contractor. Its principal office was located in the District of Columbia.
As documented in the statement of offense, Forney participated in a scheme with John Vassos and the President of Sharp Business Systems (SBS) to obtain a contract with the Maryland Administrative Office of the Courts (Maryland AOC) for copier maintenance and repair services throughout the state’s court system. In 2009, the Maryland AOC solicited bids for the contract. The contract required that at least 20% of the work be performed by a Minority Business Enterprise (MBE). SBS bid on the contract and identified FEI as the MBE. Forney, on behalf of FEI, signed a subcontracting agreement with the President of SBS. The Maryland AOC awarded the contract to SBS, and renewed the contract in 2010 and 2011.
As detailed in the statement of offense, FEI performed no work and provided no services during the three years that the contract was in effect. Forney falsely stated in a letter to the MBE compliance manager that FEI was providing “logistic support” to SBS. Forney signed monthly work force rosters to the Maryland AOC falsely claiming that an FEI employee was working as a “Logistics/IT Support Technician” on the contract. The FEI employee was in fact a Quality Control Manager for FEI’s construction projects.
FEI submitted monthly $12,500 invoices to SBS for FEI’s purported work as an MBE. Sharp Electronics, the parent company of SBS, then issued checks to FEI. In total, FEI received $400,000 for its purported work as the MBE. Forney provided the entire $400,000 to John Vassos, an SBS consultant.
According to the statement of offense, Forney and James Redding owned Stadium Club, an establishment in Southeast Washington. In May 2010, Vassos provided approximately $2 million to Forney and Redding to finance the purchase of the property where Stadium Club was built. Additionally, from 2011 until 2014, Vassos loaned hundreds of thousands of dollars to Forney and Redding. Vassos pled guilty in June 2017 to one count of conspiracy to commit mail fraud, one count of tax fraud, and one count of conspiracy to commit wire fraud. He is awaiting sentencing. In May 2015, Redding pled guilty to Tax Evasion and Failure to Pay over Payroll Taxes. He was sentenced to 24 months in prison.
In the statement of offense for the tax fraud case, Forney acknowledged that he knowingly under-reported his income from FEI on his personal federal income tax returns for the 2009 and 2010 calendar years. Forney did so by fraudulently treating certain expenses as deductible business expenses. Those expenses included: FEI payments to reimburse individuals whom Forney had directed to make contributions from their personal funds to candidates for D.C. political offices and to D.C. Council members’ Constituent Services Programs; an FEI contribution to a mayoral campaign; an FEI payment to a law firm for its representation of a former foreign government official from a country where Forney owned investment property, in connection with the official’s trip to Washington, DC; FEI payments to Forney for “consulting” work; and FEI payments for his child’s college education.
In April 2019, Forney was convicted of eleven counts of campaign finance violations, three counts of fraud, two counts of perjury, and one count of corrupt election practices following a trial in the Superior Court of the District of Columbia. He was sentenced to six months in prison for the 11 illegal campaign violations and an additional 36 months, suspended, for fraud, perjury, and corrupt election practices.
In announcing the plea, U.S. Attorney Liu praised the efforts of the FBI’s Washington Field Office and IRS. She also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including financial analyst, Bryan J. Snitselaar, paralegal specialists C. Rosalind Pressley and Amanda Rohde, former paralegals Toni Anne Donato, Kristy Penny, and Joshua Fein, and former U.S. Attorney’s Office investigator Juan Juarez. Finally she expressed appreciation for the work of Assistant U.S. Attorneys Anthony Saler and Michael Marando who investigated and prosecuted the case.