$998,798 to Ship Two 19-Cent Washers
WTH!
Pentagon Paid $998,798 to Ship Two 19-Cent Washers
Tony Capaccio
Thu Aug 16, 12:52 PM ET
Aug. 16 (Bloomberg) -- A small South Carolina parts supplier collected about $20.5 million over six years from the Pentagon for fraudulent shipping costs, including $998,798 for sending two 19-cent washers to a Texas base, U.S. officials said.
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The company also billed and was paid $455,009 to ship three machine screws costing $1.31 each to Marines in Habbaniyah, Iraq, and $293,451 to ship an 89-cent split washer to Patrick Air Force Base in Cape Canaveral, Florida, Pentagon records show.
The owners of C&D Distributors in Lexington, South Carolina -- twin sisters -- exploited a flaw in an automated Defense Department purchasing system: bills for shipping to combat areas or U.S. bases that were labeled ``priority'' were usually paid automatically, said Cynthia Stroot, a Pentagon investigator.
C&D's fraudulent billing started in 2000, Stroot, the Defense Criminal Investigative Service's chief agent in Raleigh, North Carolina, said in an interview. ``As time went on they got more aggressive in the amounts they put in.''
The price the military paid for each item shipped rarely reached $100 and totaled just $68,000 over the six years in contrast to the $20.5 million paid for shipping, she said.
``The majority, if not all of these parts, were going to high-priority, conflict areas -- that's why they got paid,'' Stroot said. If the item was earmarked ``priority,'' destined for the military in Iraq, Afghanistan or certain other locations, ``there was no oversight.''
Scheme Detected
The scheme unraveled in September after a purchasing agent noticed a bill for shipping two more 19-cent washers: $969,000. That order was rejected and a review turned up the $998,798 payment earlier that month for shipping two 19-cent washers to Fort Bliss, Texas, Stroot said.
The Pentagon Defense Logistics Agency orders millions of parts a year. Stroot said the agency and the Defense Finance and Accounting Service, which pays contractors, have made major changes, including thorough evaluations of the priciest shipping charges.
Dawn Dearden, a spokeswoman for the logistics agency, said finance and procurement officials immediately examined all billing records. Stroot said the review showed that fraudulent billing is ``is not a widespread problem.''
``C&D was a rogue contractor,'' Stroot said. While other questionable billing has been uncovered, nothing came close to C&D's, she said. The next-highest contractor billed $2 million in questionable transport costs, she said.
Guilty Pleas
C&D and two of its officials were barred in December from receiving federal contracts. A federal judge in Columbia, South Carolina, today accepted the guilty plea of the company and one sister, Charlene Corley, to one count of conspiracy to commit wire fraud and one count of conspiracy to launder money, Assistant U.S. Attorney Kevin McDonald said.
Corley, 46, was fined $750,000. She faces a maximum prison sentence of 20 years on each count and will be sentenced in the near future, McDonald said in a telephone interview from Columbia. Stroot said her sibling died last year.
Corley didn't immediately return a phone message left on her answering machine at her office in Lexington. Her attorney, Gregory Harris, didn't immediately return a phone call placed to his office in Columbia.
Stroot said the Pentagon hopes to recoup most of the $20.5 million by auctioning homes, beach property, jewelry and ``high- end automobiles'' that the sisters spent the money on.
``They took a lot of vacations,'' she said.
To contact the reporter on this story: Tony Capaccio at acapaccio@bloomberg.net .
Pentagon Paid $998,798 to Ship Two 19-Cent Washers
Tony Capaccio
Thu Aug 16, 12:52 PM ET
Aug. 16 (Bloomberg) -- A small South Carolina parts supplier collected about $20.5 million over six years from the Pentagon for fraudulent shipping costs, including $998,798 for sending two 19-cent washers to a Texas base, U.S. officials said.
ADVERTISEMENT
The company also billed and was paid $455,009 to ship three machine screws costing $1.31 each to Marines in Habbaniyah, Iraq, and $293,451 to ship an 89-cent split washer to Patrick Air Force Base in Cape Canaveral, Florida, Pentagon records show.
The owners of C&D Distributors in Lexington, South Carolina -- twin sisters -- exploited a flaw in an automated Defense Department purchasing system: bills for shipping to combat areas or U.S. bases that were labeled ``priority'' were usually paid automatically, said Cynthia Stroot, a Pentagon investigator.
C&D's fraudulent billing started in 2000, Stroot, the Defense Criminal Investigative Service's chief agent in Raleigh, North Carolina, said in an interview. ``As time went on they got more aggressive in the amounts they put in.''
The price the military paid for each item shipped rarely reached $100 and totaled just $68,000 over the six years in contrast to the $20.5 million paid for shipping, she said.
``The majority, if not all of these parts, were going to high-priority, conflict areas -- that's why they got paid,'' Stroot said. If the item was earmarked ``priority,'' destined for the military in Iraq, Afghanistan or certain other locations, ``there was no oversight.''
Scheme Detected
The scheme unraveled in September after a purchasing agent noticed a bill for shipping two more 19-cent washers: $969,000. That order was rejected and a review turned up the $998,798 payment earlier that month for shipping two 19-cent washers to Fort Bliss, Texas, Stroot said.
The Pentagon Defense Logistics Agency orders millions of parts a year. Stroot said the agency and the Defense Finance and Accounting Service, which pays contractors, have made major changes, including thorough evaluations of the priciest shipping charges.
Dawn Dearden, a spokeswoman for the logistics agency, said finance and procurement officials immediately examined all billing records. Stroot said the review showed that fraudulent billing is ``is not a widespread problem.''
``C&D was a rogue contractor,'' Stroot said. While other questionable billing has been uncovered, nothing came close to C&D's, she said. The next-highest contractor billed $2 million in questionable transport costs, she said.
Guilty Pleas
C&D and two of its officials were barred in December from receiving federal contracts. A federal judge in Columbia, South Carolina, today accepted the guilty plea of the company and one sister, Charlene Corley, to one count of conspiracy to commit wire fraud and one count of conspiracy to launder money, Assistant U.S. Attorney Kevin McDonald said.
Corley, 46, was fined $750,000. She faces a maximum prison sentence of 20 years on each count and will be sentenced in the near future, McDonald said in a telephone interview from Columbia. Stroot said her sibling died last year.
Corley didn't immediately return a phone message left on her answering machine at her office in Lexington. Her attorney, Gregory Harris, didn't immediately return a phone call placed to his office in Columbia.
Stroot said the Pentagon hopes to recoup most of the $20.5 million by auctioning homes, beach property, jewelry and ``high- end automobiles'' that the sisters spent the money on.
``They took a lot of vacations,'' she said.
To contact the reporter on this story: Tony Capaccio at acapaccio@bloomberg.net .
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Shame on them for robbing the military and the American tax payer. Glad they were caught and hopefully they are made an example of. 0 -
"C&D's fraudulent billing started in 2000"
I'm surprised the pentagon caught on so quickly.0 -
quote:Originally posted by Horney toad
"C&D's fraudulent billing started in 2000"
I'm surprised the pentagon caught on so quickly.
Maybe this will help ...
When faced with a 20-year threat, the
government responds with a 15-year plan,
in a 6-year defense program, managed by
3-year personnel, attempting to develop a
2-year budget, which in reality is funded
by a 1-year appropriation (which is
typically 1 to 6 months late), actually
formulated over a 3-day weekend and
approved in a 1-hour decision briefing.0 -
I can believe that it happened. Govt spending, especially on defense related issues, has always been very wasteful. Many years ago when I was only 19-20 yrs old, GDA (General Dynamics) was the primary contractor installing Atlas Missle (ICBMs) sites near Roswell, NM. I was a lowly paid employee there (making more than twice the hourly rate that could be made at any other local job). Once I was told to help unload and uncrate the contents of three semi trucks. They were loaded with new wrenches. Wrenches of every size, shape and description. Torque wrenches, from tiny to 600 ft lbs, open end wrenches, box end wrenches, pipe wrenches, cresent wrenches, sockets, etc. Three truck loads of them.
All of the wrenches were uncrated and one-by-one check in by the supervisors. Then, we tossed them into dump trucks. The dump trucks hauled them to the disposal site (the dump) at Walker Air Force Base. They were dumped, run over with a Cat, and buried. This was in 1962. I have not gotten over that experience yet.0 -
Why does the US Navy have airplanes chasing ships at sea to port loaded with nothing more than wooden pallet skids that are free for the taking....in every port?
PX/BX's have wooden pallet skids sitting behind them free for the taking.....yet in the 21st Century....no one with common sense in the US Navy is taking advantage of this and request airlift via commercial aircraft/military for wooden pallet skids.
I poop you not.......$1 mill is a drop in the bucket for the stupid things that goes on in DOD.
Why does it happen? Political kickbacks stupid.0 -
Wow! Guess I better quit complaining about shipping costs here on GB Auctions![:p] 0 -
Wow! Guess I better quit complaining about shipping costs here on GB Auctions![:p] 0 -
"That company knowingly and intentionally cheated our government (and its' tax payers). It deserves to be shut down and the principals imprisoned. I believe this type of fraud should be treated as treason."
Cheating the taxpayer can't be treason. If it was, you'd have to imprison the whole government. [V]0 -
When I worked construction one job I was on was building a high school. As on all construction jobs, there's a measure of over-buying. The workers are going to need 400 steel beams, so 410 are bought just in case somebody makes a mistake cutting one or if a couple are defective or whatever. You don't want 100 guys standing around waiting for a truck from Pennsylvania to bring around another 10 beams.
I was the low, low, low guy on the totem pole, so I did all the grunt jobs. One of the last rooms finished was a biology / greenhouse room. It was going to have a solid wall and partial ceiling of windows, and that space was left open so construction supplies could be poked through the wall on a big fork lift. Outside the big open space off to one side a big was a big construction dumpster.
One of the bosses tells me and my buddy to clean out the room, that they're ready to bring in the window and floor guys and finish it. There's about 6 pallets of cinderblocks, cases of caulk, screws, whatever in there, all wrapped in plastic, good as new. We tell the guy it will take us two days to take all the stuff down the stairs and out the building. No, idiots, he says. We don't need this stuff. Throw it in the dumpster. Really, we say. #$@$%^^$% really, he says.
So my buddy and I spend two hours throwing brand new cinderblocks, cases of caulk, screws, insulation, and so forth into the dumpster. Threw it all in the dumpster, they used a backhoe to mash it down, and then the dumpster was hauled off. I have to think that all we threw away probably cost at least $5000, and probably a whole lot more.
I know that when you're talking about a $15,000,000 school $5000 is next to nothing, and probably equivalent to me throwing away a half used tube of caulk and painting supplies and so forth when I finish painting a bedroom. I always remember, though, how much of a waste it all seemed.0 -
When i worked at the mines i saw alotttt of new/useable stuff taken to the dump...some of whiuch i scavenged.[:)]
One time i got into the warehouse computer and one example that sticks in my mind was: i saw where they were giving $11. for a roll of duct tape (this was in the 70's). I though then..they've learned well from the guberment.[;)]0 -
sorry i didn't read all the post and might have been said already:
right or wrong these people were just plain supid.
reason
1) the crazy large amounts instead of just a little bit each time. 10/20 grand probably would never had been cought compared to almost 1 mil
2) ok your going for a mil and got it - but you go for that much again multiple times. no matter who your dealing with 20 mil will eventually be noticed.
the 20th mil got them just think if they had stopped 5 mil ago. they would have 15 mil, personally i would have closed the buisness or sold and moved free and clear to somewhere they couldn't get me
again not saying its right0 -
You would have thought it was at least a $600 toilet seat to warrant those kind of shipping charges.[:D]
The above examples are exactly what I was talking about to some friends when discussing ways for our state and nation to balance their respective budgets.
What a crock...0 -
I thought this is how they financed their super secret UFO research?
just kidding0 -
That's tax dollars. Someone worked hard and sweated to make the money that some one else just threw away. That pisses me off.
Next they find they need more tax money to buy more stuff so someone in DC can just spend it like monopoly money. Shameful.0 -
quote:Originally posted by A J Christ
That's tax dollars. Someone worked hard and sweated to make the money that some one else just threw away. That pisses me off.
Next they find they need more tax money to buy more stuff so someone in DC can just spend it like monopoly money. Shameful.
So totally agreed!!!!0 -
I've seen several instances where the guys building an apartment complex, etc. order more materials, which end up being used to make an addition onto their house, extra garage, etc.
at one time I was working at about the fanciest restaurant/club in town, this place was so uppity you had to have a $500/yr membership, and be sponsored by 3 existing members. one time they had a political fund raiser dinner (schmoozefest) apparently paid for by contributors to whoever's political fund... they had 7 or 8, maybe 10 (I forgot) multi-tiered tables full of the finest gourmet food you could think of, the idea being, the whole time people are walking around schmoozing they're snacking on it. well, by the end of the night, most all of the food was still there, got thrown away. it was obscene! obviously it cost thousands of dollars of campaign contributor funds. wasted like it was nothing.0 -
i have heard this has happened many years ago nothing new 0
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