Virginia Businessman Sentenced To 46 Months In Prison For Role In Contracting Scheme Involving U.S. ArmyDefendant Provided Money To Army Official, Paid For Trips, Luxury Vehicles, And Other Things Of Value
WASHINGTON - Oh Sung Kwon, 48, a Northern Virginia businessman, was sentenced today to 46 months in prison on federal charges stemming from a bribery scheme in which he paid thousands of dollars to an Army official in return for government contracts, as well as a separate scheme involving fraudulent real estate sales and refinances.
Kwon, also known as Thomas Kwon, of Vienna, Va., pled guilty in September 2012 in the U.S. District Court for the District of Columbia to one count each of bribery, conspiracy to commit bank fraud and willful failure to file a tax return. He was sentenced by the Honorable Emmet G. Sullivan. Judge Sullivan also ordered Kwon to pay $1,188,500 in restitution and the same amount in a forfeiture money judgment. Upon completion of his prison term, Kwon will be placed on three years of supervised release.
Kwon was the co-founder and chief executive officer of Avenciatech, Inc., a government contractor based in Annandale, Va. He is among 17 people and one corporation that pled guilty to federal charges for their roles in the largest domestic bribery and bid-rigging scheme in the history of federal contracting. The investigation is continuing.
The plea was announced by U.S. Attorney Ronald C. Machen Jr.; Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office; Thomas J. Kelly, 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).
According to a statement of offense, signed by the government and the defendant, Kwon learned of a contract-steering scheme from two business contacts: Alex N. Cho, who was then the chief technology officer for Nova Datacom, LLC, and a second Nova Datacom employee. This scheme involved contracts and subcontracts awarded through the U.S. Army Corps of Engineers in return for hundreds of thousands of dollars in payments to Kerry F. Khan. At the time, Khan was a program manager at the Army Corps of Engineers.
Kwon’s role in the scheme involving the Army Corps of Engineers included Kwon arranging for Cho and another Nova Datacom employee to exchange checks for approximately $700,000 in cash, which was paid to Khan in exchange for government contracts. Kwon later attempted to obstruct the resulting criminal investigation by destroying evidence. However, he also disclosed to law enforcement authorities the efforts by Cho and another Nova Datacom employee to obstruct the criminal investigation, including Cho’s attempts while wearing a recording device to prevent Kwon from making incriminating statements.
Kwon learned of a second, similar scheme involving another business contact: Nick Park, a former Nova Datacom employee who was then the president of Unisource Enterprise Inc. Kwon learned through Park that he had obtained a subcontract for his company by agreeing to pay bribes to a person identified in court documents as “Public Official C.” This official, based at the time in Seoul, South Korea, was an assistant project manager for the U.S. Army who had responsibilities for a major contract.
In or about February 2009, Kwon traveled to South Korea to meet “Public Official C.” In exchange for an undisclosed ownership interest in Avenciatech, “Public Official C” agreed to use his official position to steer subcontracts from the Army to Avenciatech. Plans later called for “Public Official C” to have a 40 percent ownership interest in the company.
In September 2009, Avenciatech obtained an Army subcontract in the amount of $366,844. However, Army change orders later increased the value of this subcontract to $1,913,059. Avenciatech also obtained a second contract in February 2011, in the amount of $551,093. Change orders later increased its value to $1,413,513.
In exchange for the official assistance of “Public Official C,” Kwon made a series of bribe payments. They included cash payments; payments for hotel stays for “Public Official C” and family members, including a trip to the Atlantis resort in the Bahamas; payments to finance the purchase of a 2010 Lexus automobile, and payments for other things of value.
Kwon also assisted “Public Official C” in obtaining financing for the purchase of a home in Fairfax Station, Va., where “Public Official C” resided following his reassignment in 2010 to a position at Fort Belvoir. “Public Official C” wanted to make a $230,000 down payment on the home purchase but did not want to face questions about the source of the money in “Public Official C’s” bank account. Instead “Public Official C” transferred the $230,000 to an account of an Avenciatech employee, Helen Woo. Kwon caused Woo, in turn to execute a phony “gift letter” claiming that she was “Public Official C’s” cousin and that she was providing the $230,000 to a settlement company for the home purchase.
Kwon also pled guilty and was sentenced today on charges in a separate scheme involving bank fraud. In addition to running Avenciatech, Kwon was the operations manager for Onyx Financial Services, a mortgage broker based in Annandale. He admitted involvement in at least six fraudulent real estate sales and refinances in northern Virginia, with loan amounts of about $1.8 million. Finally, Kwon pled guilty and was sentenced today for the willful failure to file a tax return. This charge involved his 2010 income tax return.
Cho, Khan, Park and Woo are among those pleading guilty in the case.
Cho pled guilty to one count of conspiracy to commit bribery, money laundering, and wire fraud, and to defraud the United States, and one count of bribery. Khan pled guilty to one count each of bribery and conspiracy to commit money laundering. Park pled guilty to two counts of bribery. Woo pled guilty to a misdemeanor fraud charge for her role in the home financing scheme.
Khan was sentenced to 19 years and seven months in prison. Woo was sentenced to two years of probation. Cho and Park are awaiting sentencing.
In announcing Kwon’s sentence, U.S. Attorney Machen, Assistant Director in Charge Parlave, Special Agent in Charge Kelly, 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 Washington Field Office of the Internal Revenue Service-Criminal Investigation, 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, 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 and Bryan Seeley 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, Sarah Reis, Christopher Samson, and Nicole Wattelet, and Legal Assistants Krishawn Graham and Jessica McCormick.