Owner And Employees Of Defense Contracting Firm Charged With Conspiracy To Defraud The U.S. Department Of Defense And To Violate The Arms Export Control Act
For Immediate Release
U.S. Attorney's Office, District of New Jersey
NEWARK, N.J. – The owner and two employees of a New Jersey defense contracting business were charged today in connection with an alleged scheme to fraudulently acquire lucrative manufacturing contracts with the U.S. Department of Defense (DoD), U.S. Attorney Paul J. Fishman announced.
Ferdi Murat Gul, a/k/a “Fred Gull,” 39, of Turkey, was charged with one count of wire fraud conspiracy, one count of conspiring to violate the Arms Export Control Act and five counts of violating the act. Fatih Civi, a/k/a “Frank Civi,” 44, of Paterson, New Jersey, and Serap Basci, a/k/a “Sarah Basci,” 29, of Clifton, New Jersey, both naturalized U.S. citizens born in Turkey, were arrested today and each charged in a separate complaint with one count of wire fraud conspiracy and one count of conspiring to violate the Arms Export Control Act for their roles in conspiring with Gul to defraud the DoD and to export military technical drawings to Turkey without prior approval from the U.S. Department of State. Civi and Basci made their initial court appearance earlier today before U.S. Magistrate Judge Joseph A. Dickson in Newark federal court. Gul remains at large.
According to the documents filed in this case and statements made in court:
Gul is the principal owner, chief executive officer, and general manager of two companies: Bright Machinery Manufacturing Group Inc. (BMM), a defense contracting company in Paterson, New Jersey; and FMG Machinery Group (FMG), a purported manufacturing company with addresses in Paterson, New Jersey, and Long Island City, New York. Gul also has an ownership interest in HFMG Insaat (HFMG), a manufacturing company located in Turkey. Civi is BMM’s production manager; Basci is BMM’s sales and purchasing manager, and is responsible for handling the company’s government sales, commercial sales, and purchasing activities.
Over the past five years, BMM allegedly obtained hundreds of contracts with the DoD by falsely claiming that the military parts it contracted to produce would be manufactured in the United States. From October 2010 through June 2015, the total value of the contracts awarded to BMM under this scheme was $7.3 million.
The complaint alleges that Gul routinely submitted to DoD electronic bids that contained false representations about BMM’s purported domestic manufacturing operations. He submitted quotes to the DoD claiming that BMM would provide military goods manufactured in the United States, when in fact the company relied almost exclusively on Gul’s Turkish-based production facilities at HFMG. Gul routinely and unlawfully exported drawings and technical data, some of which was subject to U.S. export control laws, in order to secretly manufacture military parts in Turkey. Gul, Civi, and Basci then supplied those foreign-made parts to unwitting DoD customers in the United States.
The conspirators allegedly took substantial measures to conceal their illicit manufacturing activities and ongoing fraud. Gul and Basci routinely submitted forged certifications and fabricated information by e-mail to DoD representatives in New Jersey, which falsely represented that BMM and its U.S.-based subcontractors performed necessary quality control procedures in their purported domestic manufacture of military parts. Civi routinely met with DoD representatives at BMM’s Paterson facility to review and confirm the same false information that had been electronically submitted by Gul and Basci. DoD personnel were deceived into authorizing payment to BMM for military parts that were not, in fact, manufactured in the United States, in direct violation of DoD protocol and, in some instances, U.S. export control laws. The conspirators’ shipping and banking transactions were conducted in a manner to eliminate any direct links between the conspirators’ foreign manufacturing process at HFMG and their U.S. based-operations at BMM.
BMM fraudulently acquired 346 contracts from the DoD, purportedly for the domestic manufacture of military parts. Some of these contracts included the manufacture of parts for torpedoes used in U.S. Navy submarines, bomb ejector racks and armament utilized in U.S. Air Force aircraft, and firearms and mine clearance systems used by U.S. military personnel abroad. In several instances, subsequent testing by the DoD revealed that parts supplied by the conspirators had numerous design flaws and non-conformities and were unusable.
The count of wire fraud conspiracy carries a maximum penalty of 20 years in prison and a fine of $250,000. The count of conspiracy to violate the Arms Control Export Act carries a maximum penalty of five years in prison and a fine of $250,000. The counts of violating the Arms Control Export Act carry a maximum penalty of 20 years in prison and a $1 million fine.
The Arms Export Control Act prohibits the export of defense articles and defense services without first obtaining a license from the U.S. Department of State and is one of the principal export control laws in the United States.
U.S. Attorney Fishman credited special agents of the U.S. Department of Defense, Defense Criminal Investigative Service Northeast Field Office, under the leadership of Special Agent in Charge Craig W. Rupert, and special agents of the Department of Homeland Security, Homeland Security Investigations, Counter Proliferation Investigations, under the supervision of Acting Special Agent in Charge Kevin Kelly, with the investigation leading to today’s charges.
The government is represented by Assistant U.S. Attorneys Dennis C. Carletta of the U.S. Attorney’s Office National Security Unit, and Sarah Devlin of the office’s Asset Forfeiture Unit, in Newark, along with the assistance of Trial Attorney David Recker of the Justice Department’s National Security Division.
The charges and allegations contained in the federal criminal complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Updated February 4, 2016
Press Release Number: 15-440