Federal Contractors Accused of $6.5M Fraud

Courthouse News Service on November 7, 2011 released the following:

“By DAVID LEE

(CN) – A federal grand jury in San Antonio accused three government contractors of conspiring to defraud the Air Force of $6.5 million through false invoices. Donald Dean Brewer, 62, of Clovis, N.M., his wife, Sherri Lynn Brewer, 62, and James McKinney, 60, of San Antonio, were named in a 17-count indictment.

They are charged with one count of conspiracy to defraud the United States, 12 counts of wire fraud and four counts of major fraud against the United States, the U.S. Attorney for the Western District of Texas said.

The Brewers and McKinney are accused of creating a sham subcontracting business, Enterprise and Deployment LLC, to insert it as an extra subcontractor between prime contractors and Ark Systems, a company for which McKinney worked for as vice president of government systems.

By submitting false invoices, the defendants allegedly caused prime contractors to overcharge the Air Force by including Enterprise and Deployment’s fraudulent charges in the prime contractor invoices.

The indictment claims that from July 2002 through 2008, the obtained about $33.5 million in subcontracts for Enterprise and Deployment, enriching themselves by almost $6.5 million.

Donald Brewer worked for KARTA Technologies, as medical systems infrastructure modernization program manager at Brooks City Base in San Antonio. Both KARTA and Ark contracted with the Air Force. KARTA provided engineers and analysts to evaluate projects and proposals and Ark installed electronics at government medical facilities.

“Allegedly, the taxpayers were overcharged $6 million by a company created by the defendants,” General Services Administration Inspector General Brian D. Miller said in a statement. “This is why we need ethics laws for federal contractors who can in effect steer taxpayer dollars to their own pockets.”

The conspiracy charge carries a statutory maximum penalty of 5 years in federal prison. Each wire fraud charge is punishable by up to 20 years in federal prison and each major fraud charge by up to 10 years.”

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