Contractor sentenced for $53M fraud scheme, illegal gratuities

BALTIMORE, Md. --

On April 27, 2017, U.S. District Judge Marvin J. Garbis sentenced John Wilkerson, 51, of Moultrie, Georgia, to five years in prison, followed by three years of supervised release, for a wire fraud conspiracy and for paying illegal gratuities to a government official, in connection with the award of more than $53 million in federal government contracts. 

Judge Garbis also ordered Wilkerson to pay forfeiture and restitution of $9,441,340.11.

The sentence was announced by Acting United States Attorney for the District of Maryland Stephen M. Schenning; Brig. Gen. Keith M. Givens, Commander of the Air Force Office of Special Investigations (OSI); Special Agent in Charge Robert Craig, Defense Criminal Investigative Service (DCIS), Mid-Atlantic Field Office; and U.S. Small Business Administration Acting Inspector General Mike Ware.

Schenning thanked Air Force OSI, DCIS, and the U.S. Small Business Administration Office of Inspector General for their work in the investigation.

According to his plea agreement, Wilkerson was a Department of Defense account manager for Iron Bow Technologies, LLC, which provided IT consulting and other services to government and industry customers. Wilkerson was also part owner and operated an information technology company, Superior Communications Solutions, Inc.

Andrew Bennett, who was separately charged and has pled guilty, was a program manager for information technology company, Advanced C4 Solutions, from 2005 until 2011. In 2011, Bennett left AC4S to work for Wilkerson at SCSI.

James T. Shank, who was separately charged and has pled guilty, was a program manager at the United States Navy’s Space and Naval Warfare (SPAWAR) Systems Center.

From September 2009 through August 2012 Wilkerson, Bennett and Shank conspired to steer government contracts at Joint Base Andrews, Md., to companies affiliated with Wilkerson and Bennett. After the award of the contracts, Wilkerson offered, and Shank accepted, employment with SCSI while Shank was still a government employee and while he was taking official actions that benefited Wilkerson. In addition, Wilkerson paid Shank $86,000 the year after Shank retired from government service, funneling the payment through two other companies in order to conceal the source of the funds. Wilkerson also hired Bennett and paid him a $500,000 bonus using proceeds from the fraud scheme.

For example, Shank, Wilkerson and Bennett developed a request for proposal for DO27, a contract to supply labor services for an Air Force technology project, including for overall project management services, so AC4S would win the contract. On June 10, 2010, DO27 was awarded to AC4S for $18,332,738.10. Wilkerson provided Bennett with a quote for labor on behalf of SCSI that was less than the quote he previously submitted on behalf of Iron Bow as their sales representative.

After SCSI was selected as a subcontractor on DO27, it subcontracted with Iron Bow to provide most of the labor SCSI was supposed to provide under DO27. Wilkerson was able to earn income from the work Iron Bow employees were doing by having SCSI act as a middleman and charging a mark-up on Iron Bow’s work. Wilkerson and Bennett also directed an SCSI employee to create false invoices supposedly documenting the hours SCSI employees spent working on DO27, which were submitted to AC4S and paid by the United States government. SCSI received $6,794,432.98 on DO27 from the $18 million AC4S received for providing labor for the project.

Shank also initiated the procurement process on more than 11 delivery orders purchasing telecommunications equipment and furniture as part of the Air Force project. Those delivery orders were issued to Iron Bow in 2010 and 2011. Wilkerson took multiple items of commercially available furniture, bundled them together and assigned them an SCSI specific number and a price that included a significant mark up over what SCSI paid the furniture manufacturer for the items. Shank then submitted to SPAWAR contracting officers a purchase order asking for authority to buy the bundle of furniture that bore the SCSI specific part number. SCSI received approximately $33 million of the $35 million paid to Iron Bow under the various furniture and equipment delivery orders. Wilkerson charged the United States a 25 percent markup on furniture purchased under these two purchase orders, resulting in a profit to him of more than $6 million.

In addition, from 2010 until his retirement in June 2011, Shank falsely certified the United States government received more than $1 million worth of goods under the W91QUZ-07-D-0010 contract the government did not in fact receive.

In late 2010 or early 2011, Wilkerson offered Shank employment. Shank did not disclose that fact to anyone at SPAWAR and did not recuse himself from any of the contracts that benefited Wilkerson. In February 2011, Bennett left AC4S and went to work for Wilkerson at SCSI. Bennett received a $500,000 bonus when he joined SCSI, which was paid for by profit Wilkerson had earned on the furniture contracts.

Shank accepted employment with SCSI in May 2011, but was still working for SPAWAR when he approved more than $1.1 million worth of invoices that benefitted SCSI and Wilkerson.

Between July 2011 until August 2012, Wilkerson paid Shank approximately $86,000. The funds Wilkerson paid Shank were funneled through T&M Communications, LLC, a company owned by T.R., a senior executive at SCSI, who ultimately paid out the funds to Shank. In some instances funds paid to Shank were also funneled through Decision Point Technologies, LLC, another company owned by Wilkerson. Shank did no work for Decision Point Technologies or T&M Communications during that time.

The National Procurement Fraud Task Force was formed in October 2006 to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs. The Procurement Fraud Task Force includes the United States Attorneys’ Offices, the FBI, the U.S. Inspectors General community and a number of other federal law enforcement agencies.

This case, as well as other cases brought by members of the Task Force, demonstrate the Department of Justice’s commitment to helping ensure the integrity of the government procurement process.

Schenning commended Assistant U.S. Attorneys Leo J. Wise and Philip A. Selden, who are prosecuting the case.