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Justice News

Department of Justice
U.S. Attorney’s Office
Northern District of Alabama

FOR IMMEDIATE RELEASE
Wednesday, May 25, 2016

Army Reserves Lt. Col. Indicted for Fraudulently Supplying Chinese-made Army Promotional Gear as Made in USA

BIRMINGHAM – A federal grand jury today indicted a lieutenant colonel in the U.S. Army Reserves for fraudulently supplying hundreds of thousands of Chinese-produced baseball caps and backpacks to the Army Recruiting Command on Defense Department contracts to supply “100 % U.S. MADE” products, announced U.S. Attorney Joyce White Vance, Defense Criminal Investigative Service Special Agent in Charge John F. Khin, and U.S. Army Criminal Investigation Command Special Agent in Charge James T. Wallis.

A three-count indictment filed in U.S. District Court charges that FREDERICK LAMAR BURNETT, 48, of Madison, through his Huntsville-based company, Lamar International Inc., schemed to defraud the Defense Department on three contracts, worth $6.2 million, between 2005 and 2009. All the contracts, two for baseball caps and one for backpacks, were for promotional items to be given to Army recruits. Burnett certified for all three contracts that he would meet the requirements of the Buy American Act, the Berry Amendment and federal regulations that require the government to buy domestic products and materials, according to the indictment.

The Buy American Act is a law requiring the federal government to buy domestic articles, materials and supplies, primarily to protect American labor. The Berry Amendment is a legal restriction on the Defense Department prohibiting it from spending its funds on clothing, fabrics, fibers and yarns that are not grown, reprocessed, reused or produced in the United States. The purpose of the Berry Amendment is to protect the viability of the textile and clothing production base in the United States.

Under the first contract awarded to Lamar International in 2005, Burnett supplied 209,706 baseball caps over three years and the government paid him $1.4 million, according to the indictment. Under the second contract, awarded in 2007, Lamar supplied 590,042 ball caps and the government paid him about $4 million. Under the third contract, also awarded in 2007, Lamar supplied 146,375 Army Combat Uniform backpacks and the government paid $1.1 million. A Defense Department accounting agency made the payments to Burnett by electronic funds transfer to his Huntsville bank.

Along with the required compliance to the BBA and the Berry Amendment, according to the indictment, both of the 2007 contracts included a statement, in all capital letters, that the “PRODUCT MUST BE 100% U.S. MADE.”

Instead of providing American-made products, however, Burnett negotiated and contracted with suppliers directly from China and with American companies who he knew were procuring the products from China. He used Chinese-made products to fill orders under all three contracts and hid their foreign manufacture by hiring workers on a cash basis to remove all the Chinese labels and repackage the items he sent to the Army Recruiting Command, the indictment says.

After award of the second contract, a competitor protested the bid, claiming Burnett could only bid so low if he were using foreign suppliers. The government allowed Burnett to proceed with the contract after he submitted documentation that he was using only American-made products and that he would comply with all aspects of the Buy American Act and the Berry Amendment, according to the indictment.

 The total amount of the three contracts was $6.2 million. The indictment seeks to have Burnett forfeit that amount to the government as proceeds of illegal activity.

The maximum penalty for wire fraud is 20 years in prison and a $250,000 fine.

DCIS and Army CID investigated the case, which Assistant U.S. Attorney David H. Estes is prosecuting.

An indictment contains only charges. A defendant is presumed innocent unless and until proven guilty.

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Updated May 25, 2016