Former Department Head at Walter Reed National Military Medical Center Pleads Guilty to Federal Charges in Maryland for Accepting Gratuities
Public Official Received Money, Travel, and Sporting Event Tickets From A Maryland Company Receiving Over $25 Million in Government Business
Greenbelt, Maryland – David Laufer, age 63, of Pittsburgh, Pennsylvania, formerly of Bethesda, Maryland, pleaded guilty today to acceptance of gratuities by a public official.
The guilty plea was announced by United States Attorney for the District of Maryland Robert K. Hur; Special Agent in Charge Robert E. Craig, Jr. of the Defense Criminal Investigative Service - Mid-Atlantic Field Office; Special Agent in Charge Maureen Dixon, Office of Investigations, Office of Inspector General of the Department of Health and Human Services; and Special Agent in Charge Jennifer C. Boone of the Federal Bureau of Investigation, Baltimore Field Office.
According to his plea agreement, from 2009 until May 2019, Laufer worked as the Chief of the Prosthetics and Orthotics Department at Walter Reed National Military Medical Center, the largest joint military medical center in the United States. Walter Reed is located in Bethesda and provides medical services, including orthotic and prosthetic services to U.S. service members and their dependents, including wounded soldiers. Person B lived in Montgomery County and owned, operated, and controlled Company B, located in Germantown, Maryland. Company B provided prosthetics and orthotics materials to Walter Reed in return for payments from the government. According to the plea agreement, Person B regularly interacted with Laufer about Company B’s business with Walter Reed.
As detailed in the plea agreement, from 2010 until May 2019, the Walter Reed Prosthetics and Orthotics department used Blanket Purchase Agreements (BPAs) to order and purchase prosthetics and orthotics materials. This allowed the department to obligate funds to purchase materials so that employees could order materials without charging a credit card each time or engaging in a formal contract for each purchase of materials. Company B was awarded multiple BPAs by Walter Reed, which the Prosthetics and Orthotics department used to order and purchase prosthetics and orthotics materials from Company B. Company B purchased prosthetics and orthotics materials from other manufacturers and distributors, then resold the materials to the Prosthetics and Orthotics department at Walter Reed at a higher price.
Laufer admitted that he restricted the availability of BPAs to some of the manufacturers and distributors from whom Company B purchased products, thereby inhibiting those companies from doing business directly with Walter Reed, and actively encouraged and directed those companies to sell to Walter Reed through Company B, knowing that it would result in a higher price to the government. At the same time that he was funneling business through Company B, Laufer was personally involved in ordering materials and causing materials to be ordered from Company B, as well as taking official acts that impacted Company B. From 2011 to May 2019, Laufer and the Prosthetics and Orthotics department at Walter Reed caused Company B to be paid more than $25 million for prosthetics and orthotics materials. Laufer further admitted that in exchange for his official acts benefitting Company B, he received financial benefits from Company B, including money, travel, and sporting event tickets.
According to the plea agreement, Laufer’s job required him to complete annual Confidential Financial Disclosure forms which required him to report: all sources of outside income greater than $200; any business outside the U.S. Government in which Laufer or his spouse was an employee or consultant, whether or not compensated; any agreements or arrangements concerning past, current, and future employment; and travel-related reimbursement or other gifts totaling more than $350 from any one source during the reporting period. Laufer’s financial disclosure filings from 2014 to 2019 failed to disclose the financial benefits received from Company B.
Furthermore, when interviewed by federal agents as part of a corruption investigation at Walter Reed, Laufer denied receiving any financial benefits from Company B. Laufer also was interviewed by federal agents several times between 2017 and 2019 concerning unexplained cash deposits. On each occasion, Laufer lied to the agents, initially stating that he earned extra money from the purchase and sale of bicycles and small collectibles at swap meets, then falsely stating that he earned cash by working for Person C and Company C, and finally stating that the unexplained cash came from moonshine and liquor sales.
Laufer faces a maximum sentence of two years in federal prison for accepting a bribe. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors. U.S. District Judge Theodore D. Chuang has scheduled sentencing for February 2, 2021, at 10:00 a.m.
United States Attorney Robert K. Hur commended the DCIS, HHS OIG, and the FBI for their work in the investigation and thanked the Veterans Administration Office of Inspector General, the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit, the Office of Personnel Management Office of Inspector General, DOD Cyber Crimes Center Defense Cyber Forensics Laboratory, and the Defense Contract Audit Agency for their assistance. Mr. Hur thanked Assistant U.S. Attorneys Harry M. Gruber and Dana Brusca, who are prosecuting the case.
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