Two Individuals Plead Guilty in Conspiracy to Defraud Over Ten Federal Agencies
Brian J. Garrahan, 42, and Kelly A. Spillman 34, both of Delray Beach, Florida, pled guilty today for their participation in a conspiracy to defraud over ten federal agencies by issuing fraudulent bonds to insure government contracts.
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Jerry Polk, Special Agent in Charge, United States Environmental Protection Agency, Office of the Inspector General (EPA-OIG), Atlanta Field Office, made the announcement.
Garrahan and Spillman each pled guilty, before U.S. District Judge Kenneth L. Ryskamp, to one count of conspiracy to commit mail and wire fraud, in violation of Title 18, United States Code, Section 371. The defendants are scheduled to be sentenced by U.S. District Judge Ryskamp on June 29, 2016 at 1:30 p.m. in West Palm Beach.
According to court documents, from approximately June 2008 through June 2013, Garrahan and Spillman conspired with each other and others to obtain payments from government contractors for issuing fraudulent bonds, that is, insurance, for large government contracts. The fraudulent bonds were individual surety bonds, usually signed by Garrahan and two other co-conspirators, a relative of Garrahan, and an individual who had prior experience with government bonds.
Individual surety bonds require collateral. The collateral used was land or cash or cash equivalent assets held in bank accounts. However, Garrahan and Spillman knew that the claims of ownership of land and the claims of possessing funds were false. In addition, the supporting documents related to these assets were fraudulent.
Garrahan and Spillman also knew that a co-conspirator, who was directing them, had a prior fraud conviction. They also knew that this was the reason his name was not included in any of the paperwork.
Garrahan, Spillman and their co-conspirators issued a large number of bonds dealing with over 100 contractors and at least 15 federal agencies, and other entities. Often contracts had “modifications,” that is, contract expansions, that led to more bonds being issued.
Over ten federal agencies reimbursed contractors over $4.3 million in bond fees for the fraudulent bonds issued by Garrahan, Spillman and their co-conspirators. The federal agencies included, among others:
a. The United States Army;
b. The United States Department of Energy;
c. The United States Environmental Protection Agency;
d. The United States Department of Housing and Urban Development;
e. The United States Department of State; and
f. The United States Department of Veterans Affairs.
Mr. Ferrer commended the investigative efforts of EPA-OIG and the U.S. Department of Veterans Affairs-OIG, together with the Criminal Investigation Command of the U.S. Army; U.S. Department of Defense-OIG, Defense Criminal Investigative Services; U.S. Department of Energy-OIG; General Services Administration-OIG; U.S. Department of Housing and Urban Development-OIG; and U.S. Department of State-OIG;. This case is being prosecuted by Assistant U.S. Attorney Ana Maria Martinez.