General · December 7, 2020 0

Defense Contractor and Employees Plead Guilty to Fraud Scheme

Defense Contractor and Employees Plead Guilty to Fraud Scheme

NEWPORT NEWS, VA (STL.News) A Hampton-based business owner and four employees have all pleaded guilty to engaging in an extensive procurement fraud scheme involving millions of dollars in government contracts targeting the Department of Defense and other federal government agencies.

According to court documents, from 2011 to 2018, Iris Kim, Inc., (aka I-Tek) owner Beyung S. Kim, 61, of Newport News, and employees Seung Kim, 30, of Newport News, Dongjin Park, 53, of Yorktown, Chang You, 61, of Yorktown, Pyongkon Pak, 53, of Toano, and Li-Ling Tu, 57, of China, engaged in a conspiracy and scheme related to certain government contracts for which I-Tek acted as a supplier of goods, including items for the U.S. Marine Corps, U.S. Army, U.S. Coast Guard, and the National Guards of various states, among other agencies.

These government contracts had certain set-aside preferences and source of good requirements. The conspirators acted to defraud the U.S. and commit other substantive offenses by fraudulently importing goods into the U.S. that were made in China, in violation of the terms of these contracts.  They then falsely relabeled these goods as if they were made in the U.S. Kim and his employees also acted through a separate nominee company to conceal the importing of goods from China and installed a nominee officer of I-Tek in order to be able to fraudulently qualify for certain set-aside contracts.  The conspirators also submitted false documents and further falsely classified the value of the goods imported into the U.S. so as to avoid higher duties and taxes.

The five conspirators are scheduled to be sentenced mid-March.  Each defendant faces a maximum term of five to seven years in prison.  Actual sentences for federal crimes are typically less than the maximum penalties.  A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.

G. Zachary Terwilliger, U.S. Attorney for the Eastern District of Virginia; Raymond Villanueva, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations; Chris Dillard, Acting Special Agent in Charge for the Defense Criminal Investigative Service’s (DCIS) Mid-Atlantic Field Office; and Gregory Scovel, Special Agent in Charge of the Naval Criminal Investigative Service (NCIS) Norfolk Field Office, made the announcement after U.S. District Judge David J. Novak accepted the pleas.

Assistant U.S. Attorneys Brian J. Samuels and D. Mack Coleman, and Trial Attorney Matthew P. Mattis of the Justice Department’s Criminal Division are prosecuting the case.

The Defense Contract Audit Agency, the U.S. Small Business Administration’s Office of Inspector General, the U.S. Coast Guard Investigative Services, the U.S. Customs and Border Patrol Regulatory Audit and Agency Advisory Services, Office of Trade, and the U.S. Department of State Office of Inspector General all provided significant assistance to this case.

SOURCE: USDOJ.Today

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