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Press Release

Three Face Federal Charges In A Military Procurement Fraud Scheme Involving Helicopters That Support The President

For Immediate Release
U.S. Attorney's Office, Eastern District of North Carolina

RALEIGH - United States Attorney Thomas G. Walker announces that a federal grand jury in Raleigh, North Carolina returned a 5 count indictment charging CRAIG KOLHAGEN, DENNIS PENNINGTON, and JAMES BOWLING with conspiracy to commit wire fraud, wire fraud, major fraud against the government, and procurement fraud. 

The Grand Jury charges that, from 2011 until December 2013, KOLHAGEN, PENNINGTON, and BOWLING engaged in a conspiracy to defraud the United States in connection with a bid proposal for a contract to perform maintenance work on helicopters in Marine Helicopter Squadron One (HMX-1).  The HMX-1 squadron is tasked with providing helicopter transport to the President of the United States, among other duties. 

KOLHAGEN, who is a Chief Warrant Officer in the United States Marine Corps, had been the Contracting Officer’s Representative for the HMX-1 squadron.  BOWLING and PENNINGTON are retired Marine Corps senior non-commissioned officers, who served as helicopter mechanics during their military careers.  Currently, PENNINGTON is Chief Executive Officer and BOWLING is President of Valour, LLC, a Louisiana-based defense contractor engaged in the business of helicopter repair for the military.  

The Indictment alleges that KOLHAGEN illegally leaked confidential information regarding the cost of a proposed contract for the maintenance of HMX-1 helicopters.  In turn, PENNINGTON and BOWLING unlawfully colluded with KOLHAGEN to artificially inflate the cost estimate of the bid proposal, and to draft the proposed contract’s statement of work and technical requirements in a way to favor Valour over other potential bidders, according to the indictment. 

Mr. Walker remarked, “This investigation highlights the unwavering determination of the Department of Justice to root out corruption in the military contracting process and to safeguard taxpayer dollars.”
"We are committed to protecting Navy and USMC personnel and materiel assets, extending to ethical and equitable contracting practices" stated Andrew Traver, Director of the Naval Criminal Investigative Service. 

These comments were underscored by Special Agent in Charge John F. Khin of the Defense Criminal Investigative Service, who said, “DCIS remains committed to working with its law enforcement partners to investigate individuals who attempt to manipulate the procurement process for their own gain.”

The charges and allegations contained in the indictment are merely accusations, and the defendants are considered innocent unless and until proven guilty in a court of law.  The case is being investigated by the Naval Criminal Investigative Service (NCIS) and the Defense Criminal Investigative Service (DCIS).  Assistant United States Attorney Evan Rikhye is  prosecuting the case for the government.

Updated July 14, 2015