Utah Man Pleads Guilty In Chinese Magnesium Scheme
CONTACT: Barbara Burns
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BUFFALO, N.Y.--U.S. Attorney William J. Hochul Jr. announced today that Eldon Bott, 66, of Bringham City, UT, pleaded guilty conspiracy to commit money laundering before Chief U.S. District Judge William M. Skretny. The charge carries a maximum penalty of 10 years in prison and a $250,000.
Assistant U.S. Attorney Michael DiGiacomo, who is handling the case, stated that the defendant and Gregory Magness arranged to become a source of supply for magnesium used in the production of countermeasure flares. Bott thereafter entered into an agreement with ESM Group, Inc., whereby he was compensated based on the amount of magnesium ESM sold for the production of countermeasure flares.
Between December 2003 and continuing through October 2006, the defendant sold magnesium powder used in the production of countermeasure flares for the United States Department of Defense. During this time period, the Department of Defense had a restriction that the magnesium used to produce countermeasure flares for the Department of Defense could not be from a foreign source. Aware of this restriction, the defendant knew that the magnesium blend that had been and continued to be sold for use in the production of countermeasure flares for the DoD contained atomized magnesium from China. Bott prepared certificates, relied on by the DoD, that misrepresented the supplied magnesium.
“The defendants in this case stand convicted of violating laws which protect American soldiers serving in times of war, and American businesses operating in times of peace,” said U.S. Attorney Hochul. “Particularly where the defense industry is concerned, this Office will not allow anyone to put personal profit ahead of public duty and military necessity.”
“These guilty pleas bring this nearly decade-long probe closer to full resolution,” said James Spero, HSI Special Agent in Charge. “HSI special agents, through an extensive investigation, proved that the individuals perpetuating this scheme essentially engaged in a reckless pattern of shortcut taking that put American servicemembers’ lives at risk. Our action in this case prevented untold harm.”
"Today's guilty plea demonstrates the continued commitment of the Defense Criminal Investigative Service (DCIS) and our partner agencies to pro-actively identify those intent on providing substandard, substituted products to the U.S. military in exchange for unwarranted exorbitant profits," said Craig W. Rupert, Special Agent in Charge, DCIS Northeast Field Office, the investigative arm of the Department of Defense (DoD), Office of the Inspector General. "Such schemes, perpetrated by dishonest contractors and individuals, place the American Warfighter in danger and erodes the confidence of the American taxpaying public."
IRS-Criminal Investigation Acting Special Agent in Charge Thomas E. Bishop said: “IRS Criminal Investigation was pleased to lend its expertise in conducting financial investigations to this diverse team of investigators. Through the cooperation among several law enforcement agencies, a complex scheme to defraud the U.S. government and potentially harm our nation’s security has been unraveled.”
In April 2010, Gregory Magness, Justin Magness, William Nehill, Charles Wright, and Eldon Bott were charged with participating in a conspiracy to import Chinese magnesium into the United States. All defendants now stand convicted.
The plea is the culmination of an investigation on the part of the Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of James C. Spero, the Internal Revenue Service, Criminal Investigation Division, under the direction of Shantelle P. Kitchen, Special Agent in Charge, and the Department of Defense Criminal Investigative Service, under the direction of Edward T. Bradley, Special Agent in Charge, Northeast Field Office.
Eldon Bott is scheduled to be sentenced on May 27, 2015 at 2:00 p.m. by Judge Skretny.