Contractor Charged With $1.2 Million Fraud In Connection With Mechanicsburg Naval Facility Contract

HARRISBURG  - The United States Attorney’s Office for the Middle District of Pennsylvania announced today that a former U.S. Navy contractor has been indicted and arrested for submitting False Statements to the government and defrauding his subcontractors out of $1.2 million involving a project at the Naval Support Activity facility in Mechanicsburg.

According to United States Attorney Peter Smith, an Indictment by a grand jury in Harrisburg, filed with United States District Court today in Harrisburg, Andrew Persaud, age 43, of Mt. Holly Springs, Pennsylvania, was charged with making false statements to the government.

The Indictment alleges Persaud was the President and Corporate Director of Persaud Companies, Inc., a Virginia and Maryland based construction company that entered into a $4.4 million contract in 2011 to renovate warehouses at the Naval facility.  Persaud hired approximately 17 sub-contractors to work on the project which began in May 2012.

In June and July of 2012 Persaud allegedly submitted invoices for progress payments to the Navy.  In the documents Persaud certified that all of the subcontractors had been paid for their work on the project. Relying on the verity of Persaud’s representations, the Navy sent Persaud payments totaling $1,206,470 between June and August 2012.

By September 2012 most of the subcontractors had walked off the job site. The Navy  terminated Persaud’s contract after it learned, contrary to Persaud’s certifications, that none of the subcontractors had received any payment for their work on the project.

Because the Navy had required Persaud to purchase a materials/labor bond, the subcontractors eventually received payments from the bond carrier totaling $1,281,753.

The Indictment alleges that the government is seeking forfeiture of the proceeds of the criminal conduct in the amount of $1,206,470.

No date has been set for Persaud’s arraignment on the charges.

The case was investigated by the Inspector General’s Offices of the US Navy and Department of Defense, and is being prosecuted by Assistant US Attorney Kim Douglas Daniel.

Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.

A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.

The maximum penalty for the offense is 10 years imprisonment, a term of supervised release following imprisonment, and a fine.

Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant's educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.

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