Articles Posted in Government Contracting

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Entrapment is making a comeback.

As a defense I mean. It started making a comeback as a government tactic shortly after September 11 before it migrated to the non-national security law enforcement world.

And the Seventh Circuit appears to be the new home of the entrapment defense as it rises, phoenix-like, on the shores of Lake Michigan. In United States v. Barta, the Seventh Circuit again affirmed the new strength of an entrapment defense in that part of the country.

If you remember one quote from this opinion, remember this one: “The point is that the government is supposed to catch criminals, not create them.”

the-venus-flytrap-4-1234316-m.jpgMr. Barta’s Business

James Barta founded a company called Sav-Rx. Sav-Rx was a “prescription benefit management business.” I believe that means that they help businesses that offer a prescription benefit to their employees with that.

Mr. Barta Meets with the FBI (Unwittingly)

In any event, Mr. Barta came to meet with a man named Castro. Or, referred to as Castro, since he was actually an undercover FBI agent. Castro was known as a guy who could deliver contracts with people at Los Angeles County. He delivered those contracts by bribing them.

When Mr. Barta first met with Castro he told him, right off the jump, “I’m not trying to sell you anything.” He said he was merely there to tell Castro what Sav-Rx does.

Castro told Mr. Barta that he could connect Sav-Rx with the Los Angeles County government because he knew a guy and he’d need to be paid. Barta left twelve minutes after the meeting started.

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It’s good to be king.

The government, in a criminal investigation, can issue a grand jury subpoena to collect evidence and put witnesses under oath. It can execute search warrants to go into a home or business and take documents. It can cut deals with people it thinks are involved in a criminal enterprise, so that they’ll spend less time – or no time – in prison if they turn in someone else.

Someone fending off a government investigated can’t do any of this.

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Federal employees are in a vulnerable position for an investigation by an Office of Inspector General (or OIG).  Basically, an OIG investigation can run in two different directions.  Each has it’s own dangers that a federal employee who hears from an OIG Agent needs to be aware of.

If an OIG Agent is investigating a criminal violation of law, then the federal employee has the risk of being prosecuted.  If the OIG Agent thinks he or she can prove that the federal employee committed a crime, and the OIG Agent can convince an Assistant United States Attorney to bring a case, then the federal government is bringing its resources to bear to convict the federal employee of a crime.  Often, this means that the government wants a felony conviction, and it can quickly mean that prison time is a real risk.

If, however, the Assistant United States Attorney decides that a criminal prosecution is not warranted, either because there isn’t enough evidence of a crime, or because what happened isn’t serious enough to warrant a prosecution, or because what the OIG Agent is investigating isn’t a violation of a criminal law, then the federal employee is still not in a good position, because he or she can lose his or her job.  If criminal charges aren’t an option, the OIG Agent can require that a federal employee give an interview.  If the employee doesn’t give the interview, then that can be a basis for a disciplinary action.

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For many federal contractors, TARP and the American Recovery and Reinvestment Act are a godsend. The economy isn’t great overall, but the federal government is still spending. This is good for the economy around Washington, D.C., and it’s good for those who sell services and products to the federal government.

The government, though, has a concern about fraud in government contracting. Some of this is generic. Every agent with an Office of Inspector General can tell you that his or her job is to combat waste, fraud, and abuse. Even in normal times, Inspector General offices spend a lot of time investigating whether federal contractors have engaged in fraud. As a result, even in normal times, government contractors need to take reasonable steps to prepare themselves in case an OIG agent comes calling.

But these are not normal times. The federal government is spending an astounding amount of money, and it’s worried that this spending is ripe for fraud. The Department of Justice’s Criminal Division is gearing up to investigate and prosecute those who receive government funds and who they suspect of fraud. The White House has unveiled a web page where anyone can track the spending from the Recovery Act and it’s express purpose is to prevent fraud.

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Apparently, a Kuwait company is suspected of getting millions of dollars of improper contracts after an Army office plead guilty to bribery.

The article above is an odd bit of journalism. The headline says that a Kuwaiti firm is “tied” to a scandal, but it isn’t clear who “ties” the two together. As I read it, there is a bribery case in federal court that may involve, very tangentially, a Kuwaiti company. That company, in an unrelated matter, had a problem with a government contract that was treated a little strangely.

This is a nice example of how journalists have even fewer checks on their power than prosecutors. That this stuff gets published to make a company look bad is disappointing.

Here’s the background:

An Army Major named Cockerham has entered a plea to taking about $9.6 million in bribes from a ledger that he maintained that said there were $15 million in bribes. [Note – if you’re planning on taking bribes, do not keep them in a ledger.]

On the ledger, the Kuwaiti company, KMS Co., has an entry for $40,000, suggesting that the company gave the Major $40,000 in bribe money.

The company has other problems not related to the Major; it billed the government for gasoline that was reported stolen, and the reporter doubts that’s an accurate description of why the gasoline didn’t make it to the Army. The sanction for this missing gasoline is not what a source for the reporter says it should be.

The Major is cooperating with prosecutors, hoping to get more time off his sentence. The government isn’t saying anything. The Major’s defense lawyer says he doesn’t know if they’re going to talk about the $40,000 at sentencing.

I don’t see any link in this story between the bribery investigation and the gasoline issue. Which makes me wonder who is feeding this story to the reporter.

If you have questions about how federal criminal charges are different than state criminal charges, please visit this page on Maryland federal criminal charges or Washington DC federal criminal charges.
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