Friday, August 01, 2008

Antitrust Division Active in Challenging Procurement Fraud

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The National Procurement Fraud Task Force of the Department of Justice was created less than two years ago to target procurement fraud associated with the increase in contracting activity for national security and other government programs. The Department of Justice Antitrust Division has played an active role in many of its investigations. As a result, the government has uncovered anticompetitive conduct with respect to contracts for marine products purchased by the U.S. Navy and the U.S. Coast Guard, freight forwarding services to transport equipment for the U.S. military, and services to support the troops in Iraq.

Conspiracy to Defraud EPA

Most recently, the Antitrust Division has announced criminal charges related to efforts to defraud the Environmental Protection Agency (EPA). On July 31, a Canadian company that treats and disposes of contaminated soils-- Bennett Environmental Inc.—was charged with participating in a conspiracy to defraud the EPA at a New Jersey Superfund site. The company pleaded guilty to conspiring to defraud the EPA at the Federal Creosote site in Manville, New Jersey, by inflating the prices it charged to a prime contractor of the EPA and paying kickbacks to employees of that prime contractor during, 2002, 2003, and 2004. Along with the $1 million criminal fine, the Justice Department will recommend to the court that the company and its co-conspirators pay a total of $1.66 million in restitution.

As part of the same investigation, a New Jersey wastewater treatment supply company, its owner, and a former contracts administrator were charged a week earlier with conspiring to rig bids in connection with sub-contracts for wastewater treatment supplies and services at the Federal Creosote site. JMJ Environmental Inc., its owner John Drimak Jr., and Norman Stoerr, a former employee of a prime contractor that provided environmental remediation services at Federal Creosote and another Superfund site--Diamond Alkali in Newark--pleaded guilty on July 23 to rigging bids at Federal Creosote from approximately October 2002 to February 2006. Drimak also pleaded guilty to one count of conspiracy to defraud the EPA at the Federal Creosote site and to defraud a general contractor at the Diamond Alkali site. The Justice Department alleged that, as part of the conspiracy, Drimak participated in a false invoicing and kickback scheme from January 2002 until April 2007.

The ongoing investigation is being conducted by the Antitrust Division's New York Field Office, the EPA Office of Inspector General and the Internal Revenue Service Criminal Investigation.

Details of U.S. v. Norman Stoerr, Criminal No. 08-521, U.S. v. JMJ Environmental Inc., and John Drimak Jr., Criminal No. 08-522, and U.S. v. Bennett Environmental Inc., all filed in the federal district court for the District of New Jersey, will appear in the CCH Trade Regulation Reporter.

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