Former Georgia Tech Employees Charged with Fraud
ATLANTA - James G. Maloney has been charged with committing and conspiring to commit mail and wire fraud against the United States and Georgia Tech. James J. Acree and James D. Fraley, III were also charged with participating in the conspiracy.
“The defendants in this case were successful members of the scientific and research communities who allegedly allowed their judgment to be clouded by greed,” said U. S. Attorney John Horn.
“The allegations contained in the charging federal indictment are disheartening in that these three defendants offered so much to a technical program that very much needed their skills and intellect. The allegations, however, assert that they chose instead to engage in fraud driven by financial greed,” said J. Britt Johnson, Special Agent in Charge, FBI Atlanta Field Office.
“This case was enabled by the outstanding teamwork with the Federal Bureau of Investigations, Air Force Office of Special Investigations, and US Attorney's office,” OSI Special Agent Natalie Spaur said. “In addition, it demonstrates the focus of law enforcement agencies to protect the public's critical resources.”
According to U.S. Attorney Horn, the charges, and other information presented in court: The defendants were employed by Georgia Tech and were members of the research faculty at the Georgia Tech Research Institute (GTRI), where they were assigned to the Advanced Concepts Laboratory. The defendants are experts in electromagnetic analysis and measurements and worked on projects funded by the United States Department of Defense, various intelligence agencies, and private industry. The defendants are charged with conspiring to defraud the United States and Georgia Tech by engaging in Georgia Tech Procurement Card (“PCard”) fraud and by engaging in fraudulent consulting activity.
As part of his duties and responsibilities at GTRI, Fraley had access to a Georgia Tech PCard. Fraley was supposed to use his PCard to purchase materials and supplies for official Georgia Tech business purposes. Neither he nor anyone else was allowed to charge personal purchases on a PCard. Nevertheless, Maloney, Acree, and Fraley allegedly charged more than $250,000 worth of personal expenses on Fraley’s PCard, including two four-wheelers and a trailer, two Sony 52-inch flat-screen televisions, Apple computers, iPads, OtterBox protective cases, iPods, Kindle E-readers, Leica and Nikon digital cameras, video cameras, a mini micro pinhole video camcorder pen, a night vision monocular, two pairs of binoculars, Bose headphones, a 3D printer, sports watches with heart-rate monitors, sunglasses, materials used to perform defendants’ private consulting contracts, computer monitors and solar panels for a private hunting club, a personal video network for home use, and an uninterruptible power supply for a tennis ball machine.
According to documents filed in court, Maloney and Fraley also used Fraley’s PCard to pay for remodeling and maintenance expenses related to six rental properties they owned together in the name of a Georgia corporation called J’s Services. Some of the payments for the benefit of J’s Services were charged to the United States on one of the contracts that Maloney controlled at GTRI. In addition, Fraley used his PCard to make PayPal payments to friends and relatives who “kicked back” some of the money to him. To make their personal PCard charges look like legitimate Georgia Tech business expenses, the defendants provided and caused others to provide false information and fraudulent documents to Georgia Tech and the United States.
After the defendants learned that they were being investigated by Georgia Tech’s Internal Auditing Department, they met to discuss their PCard fraud, get their stories straight, and plan a cover-up. Fraley recorded these conversations on his phone and later turned the recordings over to the FBI.
Fraudulent Consulting Activity
While employed full-time by Georgia Tech, Maloney, Acree, and Fraley allegedly moonlighted as consultants on various projects for which they were paid a total of more than $600,000. In competing for and performing this outside consulting work, the defendants allegedly diverted customers and revenue away from GTRI for their own personal gain and benefit. In addition, Maloney and Fraley allegedly caused and directed some of the Georgia Tech employees and students they supervised at GTRI to help perform this consulting work. And Maloney and Fraley allegedly caused those Georgia Tech employees and students to bill their time for such work to the United States on one of the government contracts that Maloney controlled at GTRI.
James G. Maloney, 50, of Marietta, Georgia, was arraigned before United States Magistrate Judge Janet F. King. Maloney was indicted by a federal grand jury on June 28, 2016. James D. Fraley, III, 38, of Acworth, Georgia, and James J. Acree, 50, of Atlanta, Georgia, also appeared before Judge King, waived indictment, and indicated that they intend to plead guilty to a criminal information charging them with participating in the conspiracy.
This case is being investigated by the Federal Bureau of Investigation and the Air Force Office of Special Investigations.
Assistant United States Attorneys J. Russell Phillips and Stephen H. McClain are prosecuting the case.
For further information please contact the U.S. Attorney’s Public Affairs Office at USAGAN.PressEmails@usdoj.gov or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga