SAN ANTONIO – A San Antonio man was sentenced in a federal court in San Antonio Monday to 188 months in prison for wire fraud and tax fraud.

According to court documents, Keith Alan Seguin, 57, was a civilian government employee authorized by the Air Force to solicit and accept orders for flight simulator technology and support, and to promote and manage related contracts.  As part of a scheme that spanned more than 10 years, Seguin conspired with others who paid him more than $2.3 million in cash and bribes for $100 million in work on Air Force projects.

Senior United States District Judge David Ezra sentenced Seguin to 36 months confinement with one year of supervised release for the charge of making a false income tax return, and 188 months confinement followed by three years of supervised release for the charge of conspiracy to commit wire fraud.  Those sentences will run concurrently. The judge also ordered Seguin to pay $736,618 in restitution to the IRS and, $38,733,720.65 in restitution to the Air Force, Army and General Services Administration and to  forfeit $2,342,095 that he received in bribe money.

“Government employees who collude with dishonest contractors to defraud the integrity of a government contracting system for personal gain will not be tolerated,” said U.S. Attorney Jaime Esparza of the Western District of Texas.  “It removes legitimate businesses from competition and harms the American taxpayer. It harms our nation’s warfighters by inflating the cost to the Government, thereby reducing the materials and training available to our service members.  This office will continue to work with our law enforcement partners to bring those offenders to justice.”

“The GSA OIG is committed to holding accountable those who abuse their government positions of trust for personal gain,” said the Honorable Carol Fortine Ochoa, Inspector General for the U.S. General Services Administration. "The outcome in this complex procurement fraud case is due to the dedicated efforts of GSA OIG special agents and our law enforcement partners."

"These results are a testament to the commitment of the Department of Defense Office of Inspector General, Defense Criminal Investigative Service (DCIS), together with our investigative partners to protect the integrity of the DoD contracting process,” said The Honorable Robert P. Storch, Inspector General, Department of Defense Office of Inspector General.  "DCIS stands vigilant to combat corruption within the DoD and will tirelessly pursue those who seek to fraudulently enrich themselves at the American taxpayer's expense."

"Today's sentencing should serve as a stark reminder that our agents, and those of our partner law enforcement agencies, are relentless in their pursuit of those who choose to defraud the government," said Special Agent in Charge Larry S. Moreland, of the Department of the Army Criminal Investigation Division’s, Major Procurement Fraud Field Office.

"The sentences reflect the results of the skilled and hard work put forth by all agencies involved," said Special Agent in Charge Blair Holmstrand, Air Force Office of Special Investigations, Procurement Fraud Detachment 3, San Antonio, Texas.

“Keith Seguin’s decade of millions of dollars of bribes and fraudulent contracts is insidious, infecting the trust placed in our government to serve the needs of its citizens. Now, he can dwell on his crimes while sitting in prison,” said Special Agent in Charge Ramsey E. Covington of IRS Criminal Investigation’s IRS-CI Houston Field Office. “IRS-CI and our law enforcement partners are here to help restore the trust that was lost and protect the interests of this nation and its people.”

The GSA OIG; DCIS; AFOSI; Army CID; and IRS-CI investigated the case.

Assistant U.S. Attorneys William Lewis, Kelly Stephenson and Special Assistant U.S. Attorney Jay Porier prosecuted the case.

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NEWS RELEASE SUMMARY – June 27, 2023

SAN DIEGO – Donald Felix Zampach of Poway pleaded guilty in federal court today to money laundering and social security fraud, admitting that he fraudulently concealed his mother’s death for decades and that he received and then laundered hundreds of thousands of dollars in government benefits intended for her, that should have ceased upon her death.

According to his plea agreement, Zampach’s mother died in Japan in 1990, and at the time of her death she was receiving a widow’s pension from the Social Security Administration and an annuity from the Department of Defense Finance Accounting Service. Just before his mother’s death, Zampach fraudulently conveyed her Poway home and filed for Chapter 7 personal bankruptcy, disclosing neither his ownership of the Poway home nor the government benefits payments he was receiving. After his mother’s death, Zampach maintained her bank accounts, forged her signature on certificates of eligibility to keep her government benefits in pay, and filed forged federal income tax returns, posing as his mother, for over two decades. 

Zampach admitted that between November 1990 and September 2022, he received at least $830,238 in stolen public money intended for his mother. Zampach also admitted to using his mother’s identity to fraudulently open credit accounts with at least nine different financial institutions, causing them to suffer a loss of more than $28,000. Zampach admitted to laundering the stolen money to pay off the mortgage on his Poway home, in order to conceal both his ownership of the Poway home and the fact that the money he used constituted criminal proceeds of his fraud.

Under the terms of his plea agreement, Zampach has agreed to pay more than $830,000 in criminal forfeiture, including the forfeiture of his Poway home to make restitution for his crimes.



“This crime is believed to be the longest-running and largest fraud of its kind in this district,” said U.S. Attorney Randy Grossman. “This defendant didn’t just passively collect checks mailed to his deceased mother. This was an elaborate fraud spanning more than three decades that required aggressive action and deceit to maintain the ruse. He filed false income tax returns, posed as his mother and signed her name to many documents, and when investigators caught up to him, he continued to claim she was still alive. As a result of this fraud, he received more than $800,000 in stolen public money. For his deceit, he will face justice.” Grossman thanked the prosecution team and investigating agencies for their diligence.



“For more than three decades, Mr. Zampach failed to report the death of his mother to the Social Security Administration (SSA) and used more than $250,000 in benefits for himself,” said Gail S. Ennis, Inspector General for SSA. “We will continue to pursue and hold those accountable who defraud SSA. I want to thank the U.S. Attorney’s Office and Special Assistant U.S. Attorney Jeffrey D. Hill for prosecuting this case.”

“Mr. Zampach's guilty plea is an acknowledgement of his decades-long identity theft scheme in which he benefited financially from the theft of Department of Defense (DoD) and Social Security retirement benefits,” said DoD Inspector General Robert P. Storch.  “The DoD Office of Inspector General, through the Defense Criminal Investigative Service, stands together with our law enforcement partners and the Department of Justice to hold accountable those who choose to engage in beneficiary fraud, particularly as it relates to the DoD.”

Zampach was released on bail pending his sentencing hearing, which is scheduled before U.S. District Judge Cathy Ann Bencivengo on September 20, 2023, at 9:00 a.m.

DEFENDANT                                   Case Number 23cr1268-CAB           

Donald Felix Zampach                       Age: 65                                   Poway, CA

SUMMARY OF CHARGES

Money Laundering – Title 18, U.S.C., Section 1956(a)(1)(B)(i)

Maximum penalty: Twenty years in prison and $500,000 fine

Social Security Fraud – Title 42, U.S.C. Section 408(a)(4)

Maximum penalty: Five years in prison and $250,000 fine

AGENCIES

Social Security Administration – Office of the Inspector General

Department of Defense – Office of the Inspector General – Defense Criminal Investigative Service

NEWS RELEASE SUMMARY – October 27, 2023

SAN DIEGO – Donald Felix Zampach, who concealed his mother’s death in 1990 then stole more than $800,000 in government benefits intended for her, was sentenced in federal court today to 24 months in prison.

Zampach pleaded guilty to money laundering and Social Security fraud in June 2023. According to his plea agreement, Zampach’s mother died in Japan in 1990. At the time of her death, she was receiving a widow’s pension from the Social Security Administration and an annuity from the Department of Defense (DoD). Zampach maintained his mother’s bank accounts for over three decades after her death, forged her signature on certificates of eligibility to keep her government benefits in pay, and filed forged federal income taxes.

Zampach admitted that between November 1990 and September 2022, he received at least $830,238 intended for his mother. Zampach used his mother’s identity to fraudulently open credit accounts with at least nine financial institutions, causing losses of more than $28,000. Zampach laundered the stolen monies in part to pay off the mortgage on his Poway home.

Zampach was ordered to pay $858,876.28 in restitution and to forfeit more than $830,000, including his home.



“This is theft on a grand scale,” said U.S. Attorney Tara K. McGrath. “Mr. Zampach stole from service members and those who dutifully pay into Social Security, expecting that when their time comes to retire, the money will be there. Thanks to the diligent efforts of our Social Security Administration partners, Mr. Zampach must pay back what he stole, and be held accountable for this decades-long crime.” 



“Mr. Zampach’s sentencing culminates a more than 30-year fraud scheme that he knowingly and willingly implemented to the detriment of the American taxpayer by unlawfully obtaining Department of Defense and Social Security benefits,” said DoD Inspector General Robert P. Storch. “My office, working through its Defense Criminal Investigative Service and with our law enforcement partners, will continue to vigorously investigate and prosecute criminal activities that siphon away the invaluable resources entrusted to the DoD.”

“Mr. Zampach intentionally withheld material information from the Social Security Administration (SSA) to fraudulently obtain more than $250,000 in SSA benefits. This sentence holds him accountable for his devious, decades-long fraud,” said Gail S. Ennis, Inspector General for SSA. “In total, he stole more than $800,000 in public money; and my office will continue to partner with law enforcement to investigate those who defraud SSA and government agencies. I thank the investigators, the U.S. Attorney’s Office, and Special Assistant U.S. Attorney Jeffrey D. Hill for their successful efforts in investigating and prosecuting this crime.”

This case was prosecuted by Special Assistant U.S. Attorney Jeffrey D. Hill.

DEFENDANT                                   Case Number 23cr1268-CAB           

Donald Felix Zampach                       Age: 65                                   Poway, CA

SUMMARY OF CHARGES

Money Laundering – Title 18, U.S.C., Section 1956(a)(1)(B)(i)

Maximum penalty: Twenty years in prison and $500,000 fine

Social Security Fraud – Title 42, U.S.C. Section 408(a)(4)

Maximum penalty: Five years in prison and $250,000 fine

AGENCIES

Social Security Administration – Office of the Inspector General

Department of Defense – Office of the Inspector General – Defense Criminal Investigative Service

Damian Williams, the United States Attorney for the Southern District of New York; Brian M. Boynton, the Principal Deputy Assistant Attorney General and head of the Department of Justice’s Civil Division; Patrizia Cavazzoni, M.D., the Director of the Center for Drug Evaluation and Research of the Food and Drug Administration (“FDA”); Michael Rogers, the Associate Commissioner for Regulatory Affairs of the FDA; Christi A. Grimm, the Inspector General of the Department of Health and Human Services (“HHS-OIG”); Robert P. Storch, the Inspector General of the Department of Defense (“DOD”); Michael J.  Missal, the Inspector General of the Department of Veterans Affairs (“VA”); and Derek M. Holt, the Special Agent in Charge of the Office of Personnel Management – Office of Inspector General (“OPM OIG”), announced today that the United States has reached an agreement to resolve its monetary claims — including claims arising from criminal and civil investigations — against ENDO INTERNATIONAL PLC and its affiliates (together, “ENDO”), a large pharmaceutical company that previously manufactured Opana ER, a powerful branded opioid drug, in its Chapter 11 bankruptcy proceeding.  As part of ENDO’s bankruptcy plan, a group of ENDO’s secured lenders will purchase ENDO’s assets and operate the business under a new corporate structure.  The agreement provides that this new business will pay the United States $364.9 million over 10 years, which can be prepaid at $200 million on the bankruptcy plan’s effective date, plus up to an additional $100 million contingent on the business performance of the new company.  The bankruptcy settlement, which is subject to court approval, resolves multiple federal claims against ENDO, including criminal and civil fraud claims, healthcare agency claims, and tax claims.

As part of the overall settlement, the Department of Justice announced that Endo Health Solutions, Inc. (“EHSI”), one of ENDO’s affiliates, has agreed to resolve criminal and civil investigations related to the company’s sales and marketing of the opioid drug Opana ER with INTAC (“Opana ER”).  The payments required by the civil and criminal agreements will be paid as claims in the Chapter 11 bankruptcy proceedings. 

Under the proposed global resolution, EHSI agreed to plead guilty in federal court in the Eastern District of Michigan to a one-count misdemeanor information charging it with violating the Federal Food, Drug, and Cosmetic Act (“FDCA”) by introducing misbranded drugs into interstate commerce.  The criminal resolution includes the second-largest set of criminal financial penalties ever levied against a pharmaceutical company, including a criminal fine of $1.086 billion and an additional $450 million in criminal forfeiture.  The proposed resolution includes a corporate criminal release regarding conduct relating to the sale, marketing, and distribution of Opana ER, but does not release any individual criminal liability.

EHSI also has agreed to a civil settlement of $475.6 million to resolve its civil liability under the False Claims Act.  The civil settlement will address alleged losses to federal healthcare programs that paid for Opana ER. 

When ENDO filed for bankruptcy in August 2022, it proposed to sell substantially all of its assets in a manner that contravened key requirements of the Bankruptcy Code.  ENDO’s original proposal would have provided virtually no recovery to the federal government on account of its claims, while improperly paying several other creditor groups on account of their claims, even though they were entitled to lower or equal priority as the Government’s claims.  This settlement was achieved after the Government objected to the proposed sale in Bankruptcy Court.  Through the settlement, the Government has ensured both that it is compensated for its claims and that ENDO does not run afoul of the Bankruptcy Code by paying only certain of its creditors or violating the Bankruptcy Code’s priority scheme.



U.S. Attorney Damian Williams said: “Chapter 11 is an important tool for businesses to preserve value for their stakeholders.  Bankruptcy protections are not a free pass to evade responsibility for criminal misconduct, civil fraud, or taxes.  Today’s settlement ensures that Endo takes responsibility for its past misconduct, pays its federal debts, helps abate the nation’s opioid crisis by funding evidence-based treatment programs at the state and local level, and distributes payments to individuals harmed by the opioid epidemic.”



Principal Deputy Assistant Attorney General Brian M. Boynton said: “Companies that profit from the opioid abuse epidemic by misrepresenting the safety of their opioid products and using reckless marketing tactics to increase sales threaten the health and safety of Americans.  With today’s announcement of a criminal guilty plea and a substantial civil settlement, the Department of Justice re-affirms its commitment to holding accountable those whose illegal conduct contributed to the opioid crisis.”

FDA Director Patrizia Cavazzoni, M.D. said: “Combatting the opioid epidemic remains a top public health priority for the FDA.  This case demonstrates FDA and DOJ’s commitment to work collaboratively to hold drug manufacturers accountable if they fail to share accurate information with health care professionals about the risks and benefits of opioids.”

FDA Associate Commissioner Michael Rogers said: “The metrics of the opioid crisis are staggering.  When companies do not provide accurate information about the safety and abuse potential of their products, they put patients at risk of abuse and addiction.  Such conduct will not be tolerated, and we will aggressively pursue and bring to justice those who endanger the public health in this manner.”

HHS-OIG Inspector General Christi A. Grimm said: “The opioid crisis remains a public health emergency nationwide, and those impacted are at the forefront of our work.  HHS-OIG is staunchly committed to protecting the millions of people served by federal healthcare programs from schemes such as this, while also striving to ensure they have access to necessary treatment.”

DOD Inspector General Robert P. Storch said: “The misbranding of opioids negatively impacts the integrity of TRICARE, the military’s healthcare system relied on by more than nine million service members, retirees, and their families.  Today’s settlement demonstrates the ongoing commitment of the Defense Criminal Investigative Service and its law enforcement partners to promote accountability and transparency throughout the pharmaceutical industry and prosecute those who put profits ahead of patient welfare.  The delivery of quality healthcare is too important to let a single dollar go to waste.”

VA Inspector General Michael J. Missal said: “Veterans and their families expect and deserve the highest quality health care delivered in a safe and accountable setting.  False or misleading claims about potentially dangerous drugs put veterans’ care at risk.  The VA Office of Inspector General is committed to working with our law enforcement partners to ensure the safety of those who entrust their health care to the providers and staff at VA’s 1,300 medical facilities.”

OPM OIG Special Agent in Charge Derek M. Holt said: “Protecting the health and safety of Federal employees, annuitants, and their families is a top priority for OPM OIG.  Today’s criminal and civil resolutions demonstrate the exemplary work of our investigative staff, law enforcement partners, and colleagues at the Department of Justice in holding manufacturers accountable for actions that contribute to the opioid epidemic.”

The Bankruptcy Resolution

As part of ENDO’s bankruptcy plan, a group of ENDO’s secured lenders will purchase ENDO’s assets and operate the business under a new corporate structure.  The agreement provides that this new business will pay the United States $364.9 million over 10 years, which can be prepaid at $200 million on the bankruptcy plan’s effective date, plus up to an additional $100 million contingent on the business performance of the new company.  The bankruptcy settlement resolves multiple federal claims against ENDO, including the criminal and civil fraud claims, as well as additional healthcare agency claims and tax claims. 

In addition to the Justice Department’s criminal and civil claims, the HHS Centers for Medicare and Medicaid Services (“CMS”), HHS’s Indian Health Service, and the VA have asserted claims against ENDO for the costs these programs incurred in providing medical care to treat individuals who suffer from opioid-use disorder as a result of their use of Opana ER and other opioids manufactured and sold by ENDO.  CMS has also filed a claim to recover costs it incurred based on Medicare beneficiaries’ use of other ENDO products, including transvaginal mesh and ranitidine.

Finally, the Internal Revenue Service (“IRS”) filed substantial tax claims against ENDO based on ongoing audits.  These audits concerned, among other things, ENDO’s valuation of assets it transferred to foreign affiliates and its payment of a large loan pre-payment penalty to a foreign affiliate for which it sought a tax deduction.  A substantial majority of these payments were entitled to priority in bankruptcy over ENDO’s other unsecured claims.  The health care agency and IRS claims have also been resolved though the bankruptcy settlement.

In the settlement agreement, the Government will receive up to a total of $464.9 million to satisfy all of these categories of claims in the bankruptcy.  First, the Government will receive $364.9 million in 10 annual payments that can be prepaid at either party’s request.  If prepaid on the effective date of the bankruptcy plan, the Government will receive $200 million.  The Government will also receive up to an additional $100 million if the new company substantially exceeds its revenue projections in the next several years.  The settlement agreement further precludes the new company from acquiring any unused tax credits or other beneficial tax attributes of ENDO.

Besides paying government claims, the bankruptcy plan has other significant features.  Earlier in the bankruptcy case, ENDO agreed to stop promoting opioids to prescribers and to turn over millions of documents related to its role in the opioid crisis for publication in a public online archive.  The new ENDO business will also make significant payments to state, local, and tribal governments to fund programs to help abate the opioid crisis.  The Government has agreed to credit these payments, which will support programs to treat and prevent opioid-use disorder, against ENDO’s criminal forfeiture judgment.

In addition, one important condition in the resolution is that ENDO would cease to operate in its current form and would not emerge from the bankruptcy.  Moreover, as part of its resolution with bankruptcy opioid claimants, ENDO’s affiliates have agreed to a Voluntary Operating Injunction that restrains opioid marketing and sales and requires ENDO to turn over millions of documents related to its role in the opioid crisis for publication in a public online archive.

The settlement is contingent on Bankruptcy Court approval of ENDO’s Chapter 11 plan.  U.S. Bankruptcy Judge James M. Garrity has scheduled a hearing on March 19, 2024, to consider approving this plan.

The Criminal Plea

As part of the criminal plea, EHSI will admit that from April 2012 through May 2013, certain EHSI sales representatives marketed Opana ER to prescribers by touting Opana ER’s purported abuse deterrence, tamper resistance, and/or crush resistance, despite a lack of clinical data supporting those claims.  According to the plea agreement, certain EHSI sales managers were aware that the sales representatives were making claims of purported abuse deterrence, tamper resistance, and/or crush resistance during sales calls, including hitting demonstration “blister packs” of non-medicated sample pills with hammers and conducting other demonstrations to convey the message that Opana ER was, in fact, crush proof and tamper resistant.  The approved labeling for Opana ER did not provide adequate information for healthcare providers to safely prescribe Opana ER for use as an opioid that is abuse deterrent.  According to the plea agreement, EHSI was responsible for the misbranding of Opana ER by marketing the drug with a label that failed to include adequate directions for its claimed abuse deterrence use, in violation of the FDCA.

EHSI voluntarily withdrew Opana ER from the market in 2017.

The Civil Settlement

The civil settlement announced today resolves allegations that, from 2011 to 2017, EHSI used a marketing scheme that targeted healthcare providers that EHSI knew were prescribing Opana ER for non-medically accepted indications.  Aware that fewer than 10% of Opana ER prescribers wrote more than half of all Opana ER prescriptions, EHSI allegedly sought to increase its revenue from Opana ER prescriptions by focusing its marketing on those healthcare providers who prescribed the highest levels of opioids in general and Opana ER in particular.  When EHSI employees raised concerns about prescribers believed to be engaged in abuse, diversion, or pill mill prescribing, EHSI allegedly ignored or minimized such concerns and continued to directly market Opana ER to such prescribers.

The allegations resolved by the civil settlement relating to EHSI’s marketing activities include that in 2015, after marketing the reformulated Opana ER for years, EHSI sought to further increase prescriptions by partnering with a consulting company to “pull[] all the levers” it could “to drive incremental growth” of Opana ER prescriptions.  In what it termed a “sales force blitz,” EHSI allegedly added 3,000 priority targets to its sales representatives’ call lists, with nearly all of these priority targets chosen because they prescribed a high volume of opioids in general or Opana ER in particular.  EHSI allegedly used sales goals and contests to ensure that its sales representatives targeted these outlier prescribers, including prescribers who previously had been excluded from EHSI’s call lists as posing risks of abuse and diversion.

*                *                *

Mr. Williams thanked the U.S. Department of Justice’s Tax Division and Civil Division’s Commercial Litigation Branch, Corporate/Financial Litigation and Civil Fraud Sections, and Consumer Protection Branch; the U.S. Attorney’s Office for the Southern District of Florida; the IRS; the Office of the U.S. Trustee for Region 2; the HHS Office of General Counsel, CMS, and Indian Health Service; and the VA for their assistance in achieving this settlement agreement.

This bankruptcy case is being handled by the Office’s Tax & Bankruptcy Unit.  Assistant U.S. Attorneys Jean-David Barnea, Peter Aronoff, and Tara Schwartz are in charge of the case.

Except to the extent that EHSI’s admissions are part of its criminal resolution, the claims resolved by the civil settlement are allegations only and there has been no determination of liability.

BOSTON – Raytheon Company (Raytheon), a subsidiary of RTX (formerly Raytheon Technologies Corporation) in Arlington, Va., has agreed to pay over $950 million to resolve the government’s investigations into a major government fraud scheme involving defective pricing on certain government contracts and violations of the Foreign Corrupt Practices Act (FCPA) and the Arms Export Control Act (AECA) and its implementing regulations, the International Traffic in Arms Regulations (ITAR).The U.S. Attorney’s Office in Massachusetts announced today that Raytheon will pay over $574 million to resolve criminal civil liability for overcharging government contracts. Raytheon has entered into a three-year deferred prosecution agreement (DPA) in connection with a criminal Information filed today in the District of Massachusetts charging Raytheon with two counts of major fraud against the United States. Raytheon has agreed to pay $147 million to resolve the criminal allegations. Today’s settlement with the District of Massachusetts also resolves civil allegations that Raytheon provided untruthful certified cost or pricing data when negotiating prices with the DOD for numerous government contracts and double billed DOD on a weapons maintenance contract. Raytheon has agreed to pay $428 million, the second largest government procurement fraud recovery under the False Claims Act, to resolve the civil allegations. Under both resolutions, Raytheon will pay a total of $574.7 million. Under the terms of the DPA, Raytheon will pay $146.7 million in a criminal monetary penalty, $111.2 million in victim compensation and retain an independent compliance monitor for three years.Separately, Raytheon entered into a three-year DPA in connection with a criminal information unsealed today in the Eastern District of New York charging Raytheon with two counts: conspiracy to violate the anti-bribery provision of the FCPA for a scheme to bribe a government official in Qatar and conspiracy to violate the AECA for willfully failing to disclose the bribes in export licensing applications with the Department of State as required by Part 130 of ITAR.The agreements in Boston the District of Massachusetts and the Eastern District of New York require that Raytheon retain an independent compliance monitor for three years, enhance its internal compliance program, report evidence of additional misconduct to the Justice Department, and cooperate in any ongoing or future criminal investigations.  Raytheon also reached a separate False Claims Act settlement with the department relating to the defective pricing schemes. The Justice Department’s FCPA and ITAR resolution is coordinated with the Securities and Exchange Commission (SEC).In addition, the Justice Department’s resolutions ensure that the appropriate federal agencies can proceed with determining whether Raytheon or any other individuals or entities associated with the company should be suspended or debarred as federal contractors. Pursuant to the Federal Acquisition Regulations (FAR), when more than one agency has an interest in an entity’s potential suspension or debarment, the FAR requires that the Interagency Suspension and Debarment Committee (ISDC) identify the lead agency for conducting governmentwide suspension or debarment proceedings. In connection with this resolution, the Justice Department has referred Raytheon’s factual admissions to the appropriate officials within the DOD to initiate the process with the ISDC to identify which federal agency will take the lead in such administrative proceedings, which occur independently of the Justice Department’s criminal and civil resolutions.“Through deliberate and deceptive actions, Raytheon not only defrauded the U.S. government – it compromised the integrity of our defense procurement process,” said Acting United States Attorney Joshua S. Levy. “Our office is committed to holding accountable those who prioritize profits over national security and clear legal obligations. This case underscores our unwavering commitment to pursuing justice, particularly when taxpayer dollars and DOD operations are at stake. We will continue to work tirelessly with our law enforcement partners to ensure that this type of misconduct is fully exposed and addressed with serious consequences.”“Raytheon engaged in criminal schemes to defraud the U.S. government in connection with contracts for critical military systems and to win business through bribery in Qatar,” said Deputy Assistant Attorney General Kevin Driscoll of the Justice Department’s Criminal Division. “Such corrupt and fraudulent conduct, especially by a publicly traded U.S. defense contractor, erodes public trust and harms the Department of Defense, businesses that play by the rules, and American taxpayers. Today’s resolutions, with criminal and civil penalties totaling nearly $1 billion, reflect the Criminal Division’s ability to tackle the most significant and complex white-collar cases across multiple subject matters.”“Government contractors have an obligation to be fully transparent about their cost and pricing data when they seek an award of a sole source contract,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The Department will use all available tools to hold accountable contractors that knowingly provide inflated pricing information or otherwise violate their legal obligations when negotiating or performing contracts with the United States.”“Investigating procurement fraud impacting DOD contracts is a top priority for the Defense Criminal Investigative Service (DCIS), the law enforcement arm of the DOD Office of Inspector General,” said Inspector General Robert Storch for the Department of Defense. “When DOD contractors fail to provide truthful pricing data and overcharge the government, they undermine the integrity of the DOD procurement process and harm critical DOD programs. The DCIS will continue to work with its law enforcement partners and the Department of Justice to ensure DOD contractors that engage in defective pricing schemes are held accountable for their actions. The Defense Contract Audit Agency's Operations Investigative Support Division provided valuable expertise during this investigation.”“We rely on private contractors to help build our unparalleled defense technology, not to pull the wool over our eyes by convincing the government to shell out tens of millions more than what their technology is actually worth,” said Jodi Cohen, Special Agent in Charge of the Federal Bureau of Investigation (FBI) Boston Division. “Today’s settlement holds Raytheon both criminally and financially responsible for doing just that, using fraud and deceit to gouge American taxpayers to boost its company’s bottom line. The FBI and our partners will not hesitate to investigate any entity that sets out to undermine the principles of fair and free competition to defraud the federal government and waste precious tax dollars.”“This recovery exemplifies the commitment of the Department of the Army Criminal Investigation Division to ensure that contracts supporting our warfighters are executed effectively and fairly, guaranteeing our armed forces remain unmatched in capability and lethality,” said Special Agent-in-Charge Keith K. Kelly, Department of the Army Criminal Investigation Division’s (CID) Fraud Field Office. “Army CID applauds the efforts of our partners in this investigation and recovery. We will continue to work tirelessly to defend our defense procurement enterprise against any party which would seek financial advantage to the detriment of our men and women in uniform.”“Any attempt to defraud the government also degrades our military’s ability to invest in the capabilities needed to protect our nation,” said Special Agent Jason Hein of the Air Force Office of Special Investigations (AFOSI) Director of Procurement Fraud. “The AFOSI procurement fraud team is committed to working with our partners to protect the procurement process and the government funds entrusted to the Department of the Air Force.”According to admissions and court documents filed in the District of Massachusetts, Raytheon employees provided false and misleading information to the DOD during contract negotiations concerning two contracts with the United States for the benefit of a foreign partner, one to purchase PATRIOT missile systems and the other to operate and maintain a radar station. In both instances, Raytheon employees provided false and deceptive information to DOD in order to mislead DOD into awarding the two contracts at inflated prices. These schemes to defraud caused the DOD to pay Raytheon $111.2 million more than Raytheon should have been paid on the contracts.Raytheon cooperated with the investigation and engaged in remedial measures, including, terminating employees who remained at the company that were responsible for the misconduct; establishing a broad defective pricing awareness campaign; developing and implementing policies, procedures and controls relating to defective pricing compliance; and engaging additional resources with appropriate expertise to evaluate and test the new policies, procedures and controls relating to defective pricing compliance.  Pursuant to the DPA, Raytheon has also agreed to retain an independent compliance monitor for a period of three years, and Raytheon and RTX have agreed to continue to implement a compliance and ethics program at Raytheon designed to prevent and detect fraudulent conduct throughout its operations. Raytheon and RTX also agreed to continue to cooperate with the Department of Justice in any ongoing or future criminal investigations by the Criminal Division’s Fraud Section or the U.S. Attorney’s Office for the District of Massachusetts. Under the False Claims Act settlement Raytheon will pay $428 million for knowingly failing to provide truthful certified cost and pricing data during negotiations on numerous government contracts between 2009 and 2020, in violation of the Truth in Negotiations Act (TINA). Congress enacted TINA in 1962 to help level the playing field in sole source contracts, where there is no price competition, by making sure that government negotiators have access to the cost or pricing data that the offeror used when developing its proposal. As part of the settlement, Raytheon admitted that it failed to disclose cost or pricing data, as required by TINA, regarding its labor and material costs to supply weapons systems to DOD, and that it failed to disclose cost or pricing data, as required by TINA, regarding its labor costs to staff a radar station. As a result, Raytheon overcharged the United States and received profits in excess of the negotiated profit rates. Raytheon also admitted it billed the same costs twice on a maintenance contract for the DOD.The DOD’s Principal Director of Defense Pricing, Contracting, and Acquisition Policy, Mr. John Tenaglia said, “The Defense Department greatly appreciates DOJ’s outstanding efforts culminating in this significant recovery. The price we pay for equipment and services absolutely matters. The more we pay, the less combat capability we can deliver for our nation’s warfighters. This DOJ recovery both restores funding that will be used to acquire more capability while also serving as a strong deterrent to all companies that might seek to deny DOD contracting officers with factual information they require to negotiate contracts at fair and reasonable prices.”“During the course of a Truth in Negotiations audit, DCAA’s auditors found indicators of suspected irregular conduct and elevated these concerns to the Department of Defense Inspector General and the Department of Justice. DCAA’s Investigative Support team assisted on the case and provided valuable insight into the calculations of the damages to the Government.  Preventing fraud and ensuring a fair and reasonable price for products is everyone’s job and DCAA is a valuable member of the team required to investigate and prosecute those who seek to defraud the government,” said Terri L. Dilly, Director, Defense Contract Audit Agency (DCAA).The civil settlement includes a resolution of a lawsuit filed under the qui tam or whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and share in a portion of the Government’s recovery.  The qui tam lawsuit was filed by a former Raytheon employee, and is captioned United States ex rel. Atesoglu v. v. Raytheon Technologies Corporation, 21-CV-10690-PBS (D. Mass.). The whistleblower will receive $4.2 million as her share of the settlement.The criminal case is being prosecuted by Assistant U.S. Attorneys Brian LaMacchia and Benjamin Saltzman of the District of Massachusetts and Assistant Chief Kyle Hankey, Acting Assistant Chief Laura Connelly and Trial Attorney Tamara Livshiz of the Criminal Division’s Fraud Section. The case was investigated by DCIS, Army-CID, FBI and Air Force OSI.The civil investigation was handled by Assistant U.S. Attorney Brian LaMacchia of the District of Massachusetts, along with Trial Attorneys Art J. Coulter, Patrick Klein and Jared S. Wiesner of the Civil Division’s Commercial Litigation Branch, Fraud Section. 

Raytheon Company (Raytheon) — a subsidiary of Arlington, Virginia-based defense contractor RTX (formerly known as Raytheon Technologies Corporation) — will pay over $950 million to resolve the Justice Department’s investigations into: (i) a major government fraud scheme involving defective pricing on certain government contracts and (ii) violations of the Foreign Corrupt Practices Act (FCPA) and the Arms Export Control Act (AECA) and its implementing regulations, the International Traffic in Arms Regulations (ITAR).Raytheon will enter into a three-year deferred prosecution agreement (DPA) in connection with a criminal information filed today in the District of Massachusetts charging Raytheon with two counts of major fraud against the United States. As part of that resolution, Raytheon admitted to engaging in two separate schemes to defraud the Department of Defense (DOD) in connection with the provision of defense articles and services, including PATRIOT missile systems and a radar system.Separately, Raytheon entered into a three-year DPA in connection with a criminal information unsealed today in the Eastern District of New York charging Raytheon with two counts: conspiracy to violate the anti-bribery provision of the FCPA for a scheme to bribe a government official in Qatar and conspiracy to violate the AECA for willfully failing to disclose the bribes in export licensing applications with the Department of State as required by part 130 of ITAR.Both agreements require that Raytheon retain an independent compliance monitor for three years, enhance its internal compliance program, report evidence of additional misconduct to the Justice Department, and cooperate in any ongoing or future criminal investigations.Raytheon also reached a separate False Claims Act settlement with the department relating to the defective pricing schemes. The Justice Department’s FCPA and ITAR resolution is coordinated with the Securities and Exchange Commission (SEC).In addition, the Justice Department’s resolutions ensure that the appropriate federal agencies can proceed with determining whether Raytheon or any other individuals or entities associated with the company should be suspended or debarred as federal contractors. Pursuant to the Federal Acquisition Regulations (FAR), when more than one agency has an interest in an entity’s potential suspension or debarment, the FAR requires that the Interagency Suspension and Debarment Committee (ISDC) identify the lead agency for conducting governmentwide suspension or debarment proceedings. In connection with this resolution, the Justice Department has referred Raytheon’s factual admissions to the appropriate officials within the DOD to initiate the process with the ISDC to identify which federal agency will take the lead in such administrative proceedings, which occur independently of the Justice Department’s criminal and civil resolutions.“Raytheon engaged in criminal schemes to defraud the U.S. government in connection with contracts for critical military systems and to win business through bribery in Qatar,” said Deputy Assistant Attorney General Kevin Driscoll of the Justice Department’s Criminal Division. “Such corrupt and fraudulent conduct, especially by a publicly traded U.S. defense contractor, erodes public trust and harms the DOD, businesses that play by the rules, and American taxpayers. Today’s resolutions, with criminal and civil recoveries totaling nearly $1 billion, reflect the Criminal Division’s ability to tackle the most significant and complex white-collar cases across multiple subject matters.”“Government contractors have an obligation to be fully transparent about their cost and pricing data when they seek an award of a sole source contract,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The department is committed to holding accountable those contractors that knowingly misrepresent their cost and pricing data or otherwise violate their legal obligations when negotiating or performing contracts with the United States.”“International corruption in military and defense sales is a violation of our national security laws as well as an anti-bribery offense,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “Raytheon willfully failed to disclose bribes made in connection with contracts that required export licenses. Today’s resolution should serve as a stark warning to companies that violate the law when selling sensitive military technology overseas.”“Over the course of several years, Raytheon employees bribed a high-level Qatari military official to obtain lucrative defense contracts and concealed the bribe payments by falsifying documents to the government, in violation of laws including those designed to protect our national security,” said U.S. Attorney Breon Peace for the Eastern District of New York. “We will continue to pursue justice against corruption, and as this agreement establishes, enforce meaningful consequences, reforms and monitorship to ensure this misconduct is not repeated.”“Through deliberate and deceptive actions, Raytheon not only defrauded the U.S. government — it compromised the integrity of our defense procurement process,” said Acting U.S. Attorney Joshua S. Levy for the District of Massachusetts. “Our office is committed to holding accountable those who prioritize profits over national security and clear legal obligations. This case underscores our unwavering commitment to pursuing justice, particularly when taxpayer dollars and DOD operations are at stake. We will continue to work tirelessly with our law enforcement partners to ensure that this type of misconduct is fully exposed and addressed with serious consequences.”“Investigating procurement fraud impacting DOD contracts is a top priority for the Defense Criminal Investigative Service (DCIS), the law enforcement arm of the DOD Office of Inspector General,” said Inspector General Robert Storch of DOD. “When DOD contractors fail to provide truthful pricing data and overcharge the government, they undermine the integrity of the DOD procurement process and harm critical DOD programs. The DCIS will continue to work with its law enforcement partners and the Justice Department to ensure DOD contractors that engage in defective pricing schemes are held accountable for their actions. The Defense Contract Audit Agency’s (DCAA’s) Operations Investigative Support Division provided valuable expertise during this investigation.”“The Raytheon Company set out to intentionally defraud the U.S. government,” said Assistant Director Chad Yarbrough of the FBI Criminal Investigative Division (CID). “This agreement highlights the importance of integrity when it comes to government contracting. The FBI, with its law enforcement partners, will continue to investigate these types of crimes that waste taxpayer dollars and prosecute all those who are intent on cooking up these major fraud schemes.”“Raytheon Corporation engaged in a systematic and deliberate conspiracy that knowingly and willfully violated U.S. fraud and export laws,” said Special Agent in Charge William S. Walker of Homeland Security Investigations (HSI) New York. “Raytheon’s bribery of government officials, specifically those involved in the procurement of U.S. military technology, posed a national security threat to both the United States and its allies. As this investigation reflects, national security continues to be a top priority for HSI New York. The global threats facing the United States have never been greater, and HSI New York is committed to working with our federal and international partners to ensure that sensitive U.S. technologies are not unlawfully and fraudulently acquired.”The Defective Pricing CaseThe Criminal ResolutionAccording to admissions and court documents filed in the District of Massachusetts, from 2012 through 2013 and again from 2017 through 2018, Raytheon employees provided false and fraudulent information to the DOD during contract negotiations concerning two contracts with the United States for the benefit of a foreign partner — one to purchase PATRIOT missile systems and the other to operate and maintain a radar system. In both instances, Raytheon employees provided false and fraudulent information to DOD in order to mislead DOD into awarding the two contracts at inflated prices. These schemes to defraud caused the DOD to pay Raytheon over $111 million more than Raytheon should have been paid on the contracts.Under the terms of the DPA, Raytheon will pay a criminal monetary penalty of $146,787,972, pay $111,203,009 in victim compensation, and retain an independent compliance monitor for three years. The Justice Department has agreed to credit the victim compensation amount against restitution Raytheon pays to the Civil Division in its related, parallel False Claims Act proceeding.Pursuant to the DPA, in addition to the independent compliance monitor, Raytheon and RTX have agreed to continue to implement a compliance and ethics program at Raytheon designed to prevent and detect fraudulent conduct throughout its operations. Raytheon and RTX have also agreed to continue to cooperate with the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the District of Massachusetts in any ongoing or future criminal investigations.The Justice Department reached this resolution with Raytheon based on a number of factors, including, among others, the nature and seriousness of the offense conduct, which involved two separate schemes to defraud the U.S. government. Raytheon received credit for its affirmative acceptance of responsibility and cooperation with the department’s investigation, which included (i) facilitating interviews with current and former employees; (ii) providing information obtained through its internal investigation, which allowed the department to preserve and obtain evidence as part of its own independent investigation; (iii) making detailed presentations to the department; (iv) proactively identifying key documents in the voluminous materials collected and produced; (v) engaging experts to conduct financial analyses; and (vi) demonstrating its willingness to disclose all relevant facts by analyzing whether the crime-fraud exception applied to certain potentially privileged documents and releasing the documents that it deemed fell within the exception. However, in the initial phases of the investigation prior to March 2022, Raytheon’s cooperation was limited by unreasonably slow document productions.Raytheon also engaged in timely remedial measures, including (i) terminating certain employees who were responsible for the misconduct; (ii) establishing a broad defective pricing awareness campaign; (iii) developing and implementing policies, procedures, and controls relating to defective pricing compliance; and (iv) engaging additional resources with appropriate expertise to evaluate and test the new policies, procedures, and controls relating to defective pricing compliance.In light of these considerations, as well as Raytheon’s prior history, the criminal penalty calculated under the U.S. Sentencing Guidelines reflects a 25% reduction off the 10th percentile above the low end of the otherwise applicable guidelines fine range.The False Claims Act SettlementRaytheon also entered into a civil False Claims Act settlement to resolve allegations that it provided untruthful certified cost or pricing data when negotiating prices with the DOD for numerous government contracts and double billed on a weapons maintenance contract.Under the False Claims Act settlement, which is the second largest government procurement fraud recovery under the Act, Raytheon will pay $428 million for knowingly failing to provide truthful certified cost and pricing data during negotiations on numerous government contracts between 2009 and 2020, in violation of the Truth in Negotiations Act (TINA). Congress enacted TINA in 1962 to help level the playing field in sole source contracts — where there is no price competition — by making sure that government negotiators have access to the cost or pricing data that the offeror used when developing its proposal. As part of the settlement, Raytheon admitted that it failed to disclose cost or pricing data, as required by TINA, regarding its labor and material costs to supply weapon systems to DOD.Raytheon also admitted that by misrepresenting its costs during contract negotiations it overcharged the United States on these contracts and received profits in excess of the negotiated profit rates. Further, Raytheon admitted that it failed to disclose truthful cost or pricing data on a contract to staff a radar station. Raytheon also admitted that it billed the same costs twice on a DOD contract.As part of the civil resolution, Raytheon received credit under the Justice Department’s guidelines for taking disclosure, cooperation, and remediation into account in False Claims Act cases for cooperation provided by RTX. That cooperation included conducting and disclosing the results of an internal investigation, disclosing relevant facts and material not known to the government but relevant to its investigation, providing the department with inculpatory evidence, conducting a damages analysis, identifying and separating individuals responsible for or involved in the misconduct, admitting liability and accepting responsibility for the misconduct, and improving its compliance programs.“The Defense Department greatly appreciates the Justice Department’s outstanding efforts culminating in this significant recovery,” said Principal Director of Defense Pricing, Contracting, and Acquisition Policy John Tenaglia of DOD. “The price we pay for equipment and services absolutely matters. The more we pay, the less combat capability we can deliver for our nation’s warfighters. This Justice Department recovery both restores funding that will be used to acquire more capability while also serving as a strong deterrent to all companies that might seek to deny DOD contracting officers the factual information they require to negotiate contracts at fair and reasonable prices.”The civil settlement includes the resolution of a lawsuit filed under the qui tam or whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery. The qui tam lawsuit was filed by Karen Atesoglu, a former Raytheon employee, and is captioned United States ex rel. Atesoglu v. Raytheon Technologies Corporation, 21-CV-10690-PBS (DMA). Ms. Atesoglu will receive $4.2 million as her share of the settlement.The FCPA CaseAccording to admissions and court documents filed in the Eastern District of New York, between approximately 2012 and 2016, Raytheon, through certain of its employees and agents, engaged in a scheme to bribe a high-level official at the Qatar Emiri Air Force (QEAF), a branch of Qatar’s Armed Forces (QAF) that was primarily responsible for the conduct of air warfare, in order to assist Raytheon in obtaining and retaining business from the QEAF and QAF. Raytheon entered into and made payments on sham subcontracts for air defense operations-related studies in order to corruptly obtain the QEAF official’s assistance in securing certain air defense contracts. Raytheon also entered into a teaming agreement with a Qatari entity in order to corruptly obtain the QEAF official’s assistance in directly awarding a potential contract to Raytheon to build a joint operations center that would interface with Qatar’s several military branches.Under the terms of the DPA, Raytheon will pay a criminal monetary penalty of $230.4 million, pay forfeiture of $36,696,068, and retain an independent compliance monitor for three years. In addition, as part of the resolution of the SEC’s parallel investigation, Raytheon will pay approximately $49.1 million in disgorgement and prejudgment interest and a civil penalty of $75 million ($22.5 million of which will be credited against the criminal monetary penalty). The Justice Department has agreed to credit approximately $7.4 million of the disgorgement Raytheon pays to the SEC against the criminal forfeiture.As part of the DPA, Raytheon and RTX have agreed to continue to cooperate with the Criminal Division’s Fraud Section, the National Security Division’s Counterintelligence and Export Control Section, and the U.S. Attorney’s Office for the Eastern District of New York in any ongoing or future criminal investigations. In addition to the independent compliance monitor, Raytheon and RTX have agreed to continue to enhance Raytheon’s compliance program.The Justice Department reached this resolution with Raytheon based on a number of factors, including, among others, the nature and seriousness of the offense. Raytheon received credit for its affirmative acceptance of responsibility and cooperation with the department’s investigation, which included (i) providing information obtained through its internal investigation, which allowed the government to preserve and obtain evidence as part of its own independent investigation; (ii) facilitating interviews with current and former employees; (iii) making detailed factual presentations to the government; (iv) proactively disclosing certain evidence of which the government was previously unaware and identifying key documents in materials it produced; and (v) engaging experts to conduct financial analyses. However, in the initial phases of the investigation, prior to in or around 2022, Raytheon was at times slow to respond to the government’s requests and failed to provide relevant information in its possession.Raytheon also engaged in timely remedial measures, including (i) recalibrating third party review and approval processes to lower company risk tolerance; (ii) implementing enhanced controls over sales intermediary payments; (iii) hiring empowered subject matter experts to oversee its anti-corruption compliance program and third party management; (iv) implementing data analytics to improve third party monitoring; and (v) developing a multipronged communications strategy to enhance ethics and compliance training and communications.In light of these considerations, as well as Raytheon’s prior history, the criminal penalty calculated under the U.S. Sentencing Guidelines reflects a 20% reduction off the 20th percentile above the low end of the otherwise applicable guidelines fine range.The ITAR CaseAccording to admissions and court documents filed in the Eastern District of New York, between approximately 2012 and 2016, Raytheon, through certain of its employees and agents, engaged in a scheme to willfully violate the AECA and ITAR Part 130 by failing to disclose to the State Department, Directorate of Defense Trade Controls, fees and commissions paid in connection with two Qatar-related contracts — specifically, the bribes Raytheon paid to the high-level QEAF official through sham subcontracts.The Justice Department reached this resolution with Raytheon based on a number of factors, including, among others, the nature and seriousness of the offense. Raytheon received credit for its cooperation with the department’s investigation, which included (i) gathering evidence of interest to the government and proactively identifying key documents related to willful ITAR-related misconduct; (ii) making factual presentations concerning the ITAR-related misconduct; and (iii) facilitating witness interviews and expediting the government’s ability to meet with witnesses. Raytheon did not receive full credit for its cooperation because in the initial phase of the investigation, before the National Security Division joined the investigation, it failed to provide information relevant to the ITAR violations beyond what was requested in the FCPA investigation.Raytheon also received credit for remediation, which included, in addition to the remediation described above in connection with the FCPA case, (i) hiring additional empowered subject matter experts in legal and compliance; (ii) developing a multipronged communications strategy to enhance ethics and compliance training and communications; and (iii) making enhancements to its ITAR-related compliance program.In light of these considerations, the ITAR-related financial penalty of $21,904,850 includes a cooperation and remediation credit of 20% off the otherwise applicable penalty.******DCIS, Army Criminal Investigation Division, FBI, and Air Force Office of Special Investigations are investigating the criminal defective pricing case. Senior Auditor Glen Hughes from DCAA’s Office of Investigative Support Division assisted in the civil investigation of the False Claims Act Matter. HSI and the FBI’s International Corruption Unit are investigating the FCPA and ITAR case. The Justice Department’s Office of International Affairs assisted in the investigation for the FCPA and ITAR case.Assistant Chief Kyle Hankey, Acting Assistant Chief Laura Connelly, and Trial Attorney Tamara Livshiz of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Brian LaMacchia and Benjamin Saltzman for the District of Massachusetts are prosecuting the criminal defective pricing case.Attorneys Art J. Coulter, Patrick Klein, and Jared S. Wiesner of the Civil Division’s Commercial Litigation Branch, Fraud Section, and Assistant U.S. Attorney Brian LaMacchia for the District of Massachusetts are prosecuting the False Claims Act matter.Acting Assistant Chief Katherine Raut and Trial Attorney Elina A. Rubin-Smith of the Criminal Division’s Fraud Section, Trial Attorneys Christine Bonomo and Leslie Esbrook of the National Security Division’s Counterintelligence and Export Control Section, and Assistant U.S. Attorneys David Pitluck, Hiral Mehta, and Jessica Weigel for the Eastern District of New York are prosecuting the FCPA and ITAR case.The Justice Department also expresses its appreciation for the assistance provided by the State Department and the legal offices of the Army, Air Force, Defense Logistics Agency, Defense Contract Management Agency, and Department of Navy.The Criminal Division’s Fraud Section is responsible for investigating and prosecuting FCPA and Foreign Extortion Prevention Act matters. Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal-fraud/foreign-corrupt-practices-act.View the Executed Civil False Claims Act Settlement Agreement here.

Baltimore, Maryland – A federal jury convicted Jacky Lynn McComber (formerly Jacky Lynn Kimmel), age 50, of Elkridge, Maryland, on federal charges of submitting false claims and making false statements, in connection with the hours she claimed to have worked on a federal contract with the National Security Agency (NSA).  McComber was the CEO and owner of InfoTeK, an information technology (IT) services corporation, which had an ongoing contract with the NSA. 

The guilty verdict was announced by Erek L. Barron, United States Attorney for the District of Maryland; Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division; Kevin Gerrity, Acting Inspector General of the National Security Agency; and Robert P. Storch, Inspector General of the Department of Defense. 

According to evidence presented at trial, from July 2011 until March 2018, the NSA had an ongoing contract, known as the Ironbridge contract, with InfoTeK to provide maintenance and enhancement support for the information technology and software requirements of the NSA’s National Security Operations Center (NSOC) and the Counter Terrorism Mission Management Center (CTMMC).  Because the subject matter of these contracts involved classified information, most of the work had to be performed at secure, access-controlled locations and there were severe limitations on the amount of work that could be performed off-site.  InfoTeK billed the NSA monthly for the hours worked by its employees and contractors.

According to the evidence presented at the four-week trial, the Ironbridge contract required InfoTeK to identify a Program Manager (PM) who would be responsible for overseeing InfoTeK’s performance of its contractual obligations and serve as InfoTeK’s point of contact with government officials.  From 2011 to 2013, several individuals, including McComber, served as the PM on the Ironbridge contract.  Starting in the summer of 2013, Individual A held the position of Senior Program Manager on the Ironbridge contract, until she was replaced by McComber in mid-March 2016.  McComber held the position through September 2017.  According to trial testimony, for 17 months, beginning in mid-March 2016 when McComber took over the PM position, she billed an average of 144 hours per month to the NSA for her supposed work.  In all, between March 14, 2016 and September 30, 2017, InfoTeK billed NSA for 2,603.5 hours of work on the Ironbridge contract purportedly performed by McComber in her role as Senior Program Manager.  NSA paid these charges in full, at a total cost of $388,878.78.

A subsequent review and comparison by the NSA OIG in the fall of 2017 of McComber’s NSA access control records with the time InfoTeK billed for her work on the Ironbridge contracts established that McComber was not within access control at the NSA’s Fort Meade location for 2,342.5 (90%) of the 2.603.5 hours she had recorded on her timesheets and that InfoTeK subsequently billed to NSA.  In addition to not being physically present at the worksite for the vast majority of hours she billed to the Ironbridge contract, the evidence showed that McComber did not work the number of hours on the Ironbridge contract that she recorded on her timesheet.  For example, on occasions when McComber billed a full eight-hour day to the Ironbridge contract, she participated in charity events, attended her high school reunion, vacationed in Texas and in Ocean City, Maryland, and performed business development efforts on behalf of InfoTeK that were unrelated to the Ironbridge contract.  Other testimony by former InfoTeK officers indicated that McComber was only in InfoTeK’s Columbia, Maryland offices irregularly and when she was there, she did not appear to be working on Ironbridge-related matters.  As a result of McComber’s false claims as to the time she worked on the Ironbridge contract between March 2016 and September 2017, the NSA substantially overpaid InfoTeK.

As further detailed in trial testimony, on October 3, 2017, McComber participated in a voluntary interview with NSA OIG investigators concerning allegations received from a whistleblower that she had charged the government for hours that she did not actually work.  McComber falsely claimed that her consistent billings of eight hours per day spent on Ironbridge-related work most days were legitimate and that she did not falsely fill out her timesheet or put any false information on it.  

McComber faces a maximum sentence of five years in federal prison for each of 19 counts of submitting false claims and for one count of making false statements.  U.S. District Judge Ellen L. Hollander has scheduled sentencing for May 12, 2023. 

United States Attorney Erek L. Barron and Assistant Attorney General Kenneth A. Polite commended the National Security Agency Office of Inspector General and DCIS for their work in the investigation.  Mr. Barron and Mr. Polite thanked Assistant U.S. Attorney Jefferson M. Gray and Trial Attorney Peter L. Cooch of the Justice Department’s Fraud Section, who are prosecuting the case.

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Baltimore, Maryland – A federal grand jury has indicted Jacky Lynn McComber, formerly Jacky Lynn Kimmel age 48, of Elkridge, Maryland, on the federal charges of submitting false claims and making false statements, in connection with the hours she claimed to have worked on a federal contract.  McComber is the CEO and owner of InfoTeK, an information technology (IT) services corporation.  At her initial appearance and arraignment today in U.S. District Court in Baltimore, McComber pleaded not guilty and U.S. Magistrate Judge Thomas M. DiGirolamo ordered that she be released pending trial.  The indictment was returned on February 25, 2021.

The indictment was announced by Acting United States Attorney for the District of Maryland Jonathan F. Lenzner; Robert P. Storch, Inspector General of the National Security Agency; and Special Agent in Charge Chris Dillard of the Defense Criminal Investigative Service - Mid-Atlantic Field Office.

The National Security Agency (NSA) is a component of the United States Department of Defense.  According to the indictment, from July 2011 until February 2018, the NSA had an ongoing contract, known as the Ironbridge contract, with InfoTeK to provide maintenance and enhancement support for the information technology and software requirements of the NSA’s National Security Operations Center (NSOC) and the Counter Terrorism Mission Management Center (CTMMC).  Because the subject matter of these contracts involved classified information, all of the work had to be performed at secure, access-controlled locations.  McComber was therefore required to be physically present at her assigned duty locations to do her work. InfoTeK billed the NSA on a monthly basis for the hours worked by its employees and contractors.

According to the 20-count indictment, the Ironbridge contract required InfoTeK to identify a Program Manager (PM) who would be responsible for overseeing InfoTeK’s performance of its contractual obligations and serving as InfoTeK’s point of contact with government officials.  From 2011 to 2013, several individuals, including McComber, served as the PM on the Ironbridge contract.  Starting in the summer of 2013, Individual A held the position of Senior Program Manager on the Ironbridge contract, until she was replaced by McComber in mid-March 2016.  McComber held the position through September 2017.  The indictment alleges that for 17 months, beginning in mid-March 2016 when McComber took over the PM position, she billed an average of 144 hours per month to the NSA for her supposed work.  In all, between March 14, 2016 and September 8, 2017, InfoTeK billed NSA for 2,603.5 hours of work on the Ironbridge contract allegedly performed by McComber in her role as Senior Program Manager.  NSA paid these charges in full, at a total cost of $388,878.78.

The indictment alleges that a subsequent review and comparison by the NSA OIG in the fall of 2017 of McComber’s NSA key card with the time InfoTeK billed for her work on the Ironbridge contracts established that McComber was not present at her duty station for 2,342.5 (90%) of the 2.603.5 hours she had recorded on her timesheets and that InfoTeK subsequently billed to NSA.  In addition to allegedly not being physically present at the worksite for the vast majority of hours she billed to the Ironbridge contract, the indictment alleges that McComber did not work the number of hours on the Ironbridge contract that she recorded on her timesheet.  For example, the indictment alleges that on occasions when McComber billed a full eight-hour day to the Ironbridge contract, she participated in charity events, attended her high school reunion,  vacationed in Texas and in Ocean City, Maryland, and performed other business development efforts on behalf of InfoTeK that were unrelated to the Ironbridge contract.  As a result of McComber’s alleged false claims as to the time she worked on the Ironbridge contract between April 2016 and September 2017, the indictment alleges that NSA substantially overpaid InfoTeK.

Finally, the indictment alleges that on October 3, 2017, McComber participated in a voluntary interview with NSA OIG investigators concerning allegations that she had charged the government for hours that she did not actually work.  McComber allegedly falsely claimed that she did not falsely fill out her timesheet or put any false information on it.  

If convicted, McComber faces a maximum sentence of five years in federal prison for each of 19 counts of submitting false claims and for one count of making false statements.  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. 

An indictment is not a finding of guilt.  An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings. 

Acting United States Attorney Jonathan F. Lenzner commended the National Security Agency Office of Inspector General and DCIS for their work in the investigation.  Mr. Lenzner thanked Assistant U.S. Attorneys Jefferson M. Gray and Joyce K. McDonald, who are prosecuting the case.

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Greenbelt, Maryland – Today, a Washington, D.C., man pleaded guilty to bribing a United States General Services Administration (GSA) official.According to court documents, James Tillman, 57, bribed a public official (Public Official A), a former GSA contracting officer representative.  GSA is a federal agency that manages federal property.  Tillman was the sole owner of a general construction company that performed subcontracting work on GSA projects.Phil Selden, Acting United States Attorney for the District of Maryland; Supervisory Official Antoinette T. Bacon, Justice Department Criminal Division; GSA Deputy Inspector General Robert C. Erickson, GSA Office of Inspector General (GSA-OIG); Special Agent in Charge William J. DelBagno of the FBI Baltimore Field Office; Inspector General Robert P. Storch, U.S. Department of Defense Office of Inspector General (DOD-OIG); and Inspector General Joseph V. Cuffari Ph.D., U.S. Department of Homeland Security Office of Inspector General (DHS-OIG) made the announcement.As outlined in court documents, in 2020 and 2021, Tillman provided approximately $59,800 worth of money and items of value to Public Official A in exchange for Public Official A’s role in directing GSA federal-project work to Tillman’s company.  In 2020, Tillman paid Public Official A approximately $8,000 cash in a parking lot in Clinton, Maryland and in 2021, at Public Official A’s direction, Tillman purchased a sports car for Public Official A.  Tillman and his company grossed more than $100,000 in profits from this scheme.Tillman pleaded guilty to conspiracy to commit bribery of a federal public official and bribery of a federal public official.  He faces a maximum penalty of 20 years in prison followed by up to three years of supervised release.  U.S. District Judge Deborah L. Boardman has scheduled sentencing for June 2, 2025 at 2 p.m.  A federal district court judge determines sentencing after considering the U.S. Sentencing Guidelines and other statutory factors.Acting United States Attorney Phil Selden commended GSA-OIG, FBI Baltimore Field Office, DOD-OIG, and DHS-OIG for their work in the investigation.  Mr. Selden also thanked Assistant U.S. Attorney Joel Crespo, and Department of Justice Trial Attorney Jonathan E. Jacobson, who are prosecuting the federal case. For more information about the Maryland U.S. Attorney’s Office, its priorities, and resources available to help the community, please visit www.justice.gov/usao-md and https://www.justice.gov/usao-md/community-outreach.# # #

Baltimore, Maryland – U.S. District Court Judge Ellen L. Hollander sentenced Jacky Lynn McComber, of Elkridge, Maryland, to thirteen months in federal prison and ordered her to pay $176,913 in restitution for submitting false invoices to the National Security Agency (“NSA”) for overstating her hours worked on a contract and for making false statements to investigators from the NSA’s Office of the Inspector General (“NSA-OIG”). 

The sentence was announced by Erek L. Barron, U.S. Attorney for the District of Maryland, Kevin Garrity, Deputy Inspector General for NSA’s Office of Inspector General and Robert P. Storch, Inspector General of the Department of Defense.

According to evidence presented at her four-week jury trial, McComber was the Chief Executive Officer of an information technology company that had contracts with the NSA. Because the subject matter of these contracts involved classified information, most of the work had to be performed at a secure location, and there were significant limitations to the amount of work that could be performed off-site. According to the testimony, during approximately 19 months, McComber billed for her supposed work physically at the NSA, when in reality approximately 90% of the work she billed for was not when she physically was at the NSA. The evidence further showed that McComber at times did not work the number of hours on the contract that she recorded on her timesheets. For example, on occasions when McComber billed a full day to the contract, she participated in charity events, attended a reunion, and was on vacation. As further detailed in trial testimony, McComber participated in a voluntary interview with NSA-OIG investigators as a result of information received from a whistleblower indicating that McComber was billing the government for hours that she was not actually working. 

U.S. Attorney Barron commended the NSA-OIG and the DOD Office of Inspector General, Defense Criminal Investigative Service, for their work in the investigation. Mr. Barron thanked Assistant U.S. Attorney Jefferson M. Gray and Department of Justice Fraud Section Trial Attorney Peter L. Cooch, who prosecuted the case.

For more information on the Maryland U.S. Attorney’s Office, its priorities, and resources available to help the community, please visit www.justice.gov/usao-md and https://www.justice.gov/usao-md/community-outreach.

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Baltimore, Maryland – Eagle Alliance, a Northrop Grumman partnership, has paid the United States $110,000 to resolve False Claims Act allegations that it improperly billed the government for computer hardware.

The settlement was announced by United States Attorney for the District of Maryland Robert K. Hur; Special Agent in Charge Robert E. Craig, Jr. of the Defense Criminal Investigative Service - Mid-Atlantic Field Office (DCIS); and Inspector General Robert P. Storch of the National Security Agency (NSA).

“We rely on government contractors to bill the government fairly,” said U.S. Attorney Robert K. Hur.  “When the government is overbilled or billed improperly under its contracts, taxpayers suffer.  We will pursue government contractors to recover the fraudulently obtained funds.”

According to the settlement agreement, Eagle Alliance contracted with a government agency to provide new computer hardware.  However, during several periods of time between 2012 and 2013, Eagle Alliance billed the government twice for the same equipment.  Moreover, the government contends that Eagle Alliance also improperly billed certain used computer equipment to the government as if it were new.

The claims resolved by this settlement are allegations.  The settlement is not an admission of liability by Eagle Alliance or Northrop Grumman, nor a concession by the United States that its claims are not well founded.

Jeffrey Brenner, a former Eagle Alliance employee, originally filed this lawsuit under the qui tam, or whistleblower, provisions of the False Claims Act.  These provisions permit private individuals with knowledge of fraud to sue on behalf of the government for false claims and to share in any recovery, even where the government intervenes to take over the action, as it did here. Brenner will receive $18,700 of the settlement.

The settlement reminds contractors of their obligations to carefully account for their billings under government contracts, as improper billings and overages will subject them to liability under the False Claims Act.

United States Attorney Robert K. Hur commended the DCIS and the NSA Office of the Inspector General for their work in the investigation.  Mr. Hur also thanked Assistant United States Attorney Molissa H. Farber, who handled the case.

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The Justice Department today announced criminal charges in five cases from four U.S. Attorney’s offices in connection with the multi-agency Disruptive Technology Strike Force (Strike Force).

The Strike Force is co-led by the Departments of Justice and Commerce to counter efforts by hostile nation states to illicitly acquire sensitive U.S. technology to advance their authoritarian regimes and facilitate human rights abuses. Launched in February 2023, the Strike Force’s work has led to the unsealing of charges against 34 defendants in 24 cases involving alleged export control violations, smuggling, theft of trade secrets, and other charges by actors connected to Russia, China, and Iran.

The cases announced today took place over the course of multiple weeks, culminating in the arrest today of a Russian national allegedly seeking to illegally export electronics for use in Unmanned Aerial Vehicles (UAVs) to Russia. The other cases also cover spearfishing of U.S-based scientists by an employee of a state-owned Chinese defense company and the smuggling of laser welding machines used in nuclear munition production to Russia.

“The prosecutions of these cases under the Disruptive Technology Strike Force reflects the joint efforts of five agencies across the government focused on the shared goal of stopping the transfer of sensitive, cutting-edge technologies to Iran, China, and Russia,” said Assistant Attorney General Matthew G. Olsen of the Justice Department's National Security Division. “The Justice Department, through the work of the Strike Force, will continue to do all we can to prevent advanced technologies from falling into the hands of our adversaries and protect our national security.”

“We launched the Disruptive Technology Strike Force a year and half ago to advance the vital mission of safeguarding U.S. technology,” said Assistant Secretary for Export Enforcement Matthew S. Axelrod of the U.S. Department of Commerce. “As today’s announcements make clear, our efforts to protect sensitive U.S. technologies – which to date have yielded 24 publicly charged criminal cases, millions of dollars in administrative penalties, and multiple Entity List additions – remain relentless and unyielding.” 

“It’s no secret that the threats we face today are more complex and severe than ever before,” said Executive Assistant Director Robert Wells of the FBI’s National Security Branch. “The best way – and the only way – we can stay ahead of current and emerging threats is by working together. With these indictments, the Disruptive Technology Strike Force is an excellent example of the power of partnerships in practice.”

“Those who facilitate the illegal proliferation of sensitive technologies and material to hostile nations and terrorist groups pose a serious threat to the safety and security of the United States,” said Executive Associate Director Katrina W. Berger of Homeland Security Investigations (HSI). “HSI is committed to working with our partners to disrupt and dismantle the criminal networks that aid and abed U.S. adversaries.”

“Disrupting the efforts of foreign nations, international criminal organizations, and other potentially hostile entities that seek to illegally obtain sensitive DoD technology and weapon systems that could potentially be used against our military forces remains a top priority of the Defense Criminal Investigative Service, the criminal investigative arm of Department of Defense (DoD) Office of Inspector General,” said Inspector General Robert P. Storch of DoD. “We will continue to work with the Justice Department and our strike force partners to thwart the efforts of criminal elements whose activities threaten the security of the United States.”

United States v. Postovoy (District of Columbia)

A federal grand jury returned a seven-count indictment charging Denis Postovoy, a Russian citizen living in the United States, with conspiring to violate the Export Control Reform Act, commit smuggling, commit money laundering and defraud the United States. HSI arrested Postovoy this morning in Sarasota, Florida.

According to court documents, beginning in at least February 2022, following Russia’s full-scale invasion of Ukraine, Postovoy procured and illicitly exported from the United States to Russia microelectronic components with military applications. The exported microelectronics can be used in UAVs or drones. Through a web of companies that he owns or operates in Russia, Hong Kong, and elsewhere, Postovoy and individuals in his network purchased the microelectronics from U.S.-based distributors and exported them to Russia without the required licenses from the Department of Commerce.

As alleged, Postovoy’s companies included WowCube HK Limited, JST Group Hong Kong, Jove HK Limited, all based in Hong Kong, and the Vector Group in Russia. Postovoy repeatedly concealed and misstated the true end users and end destinations of the microelectronics by submitting false information on export-related documents. He transshipped items that were ultimately destined for Russia through intermediary destinations, including Hong Kong, Switzerland and elsewhere, and received payments in U.S. dollars from foreign bank accounts. His companies transferred funds for the purchase and shipment of the goods through bank accounts in Hong Kong, Russia, and elsewhere to bank accounts in the United States, including bank accounts maintained by the U.S. suppliers of microelectronics and other sensitive technologies.

HSI is investigating the case.

Assistant U.S. Attorney Stuart Allen for the District of Columbia and Trial Attorney Sean Heiden of the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case.

United States v. Song Wu (Northern District of Georgia)

Today, a federal court in Atlanta, unsealed an indictment charging Chinese national, Song Wu, 39, with wire fraud and aggravated identity theft arising from his efforts to fraudulently obtain computer software and source code created by the National Aeronautics and Space Administration (NASA), research universities, and private companies. Song remains at large.

According to the indictment, Song allegedly engaged in a multi-year “spear phishing” email campaign in which he created email accounts to impersonate U.S.-based researchers and engineers and then used those imposter accounts to obtain specialized restricted or proprietary software used for aerospace engineering and computational fluid dynamics. This specialized software could be used for industrial and military applications, such as development of advanced tactical missiles and aerodynamic design and assessment of weapons.

In executing the scheme, Song allegedly sent spear phishing emails to individuals employed in positions with the U.S. government, including NASA, the Air Force, Navy, and Army, and the Federal Aviation Administration. Song also sent spear phishing emails to individuals employed in positions with major research universities in Georgia, Michigan, Massachusetts, Pennsylvania, Indiana, and Ohio, and with private sector companies that work in the aerospace field. Song’s spear phishing emails appeared to the targeted victims as having been sent by a colleague, associate, friend, or other person in the research or engineering community. His emails requested that the targeted victim send or make available source code or software to which Song believed the targeted victim had access.

According to the indictment, while conducting this spear phishing campaign, Song was employed as an engineer at Aviation Industry Corporation of China (AVIC), a Chinese state-owned aerospace and defense conglomerate headquartered in Beijing. AVIC manufactures civilian and military aircrafts and is one of the largest defense contractors in the world.

In total, Song is charged with 14 counts of wire fraud and 14 counts of aggravated identity theft. If convicted, Song faces a maximum statutory penalty of 20 years in prison for each count of wire fraud. Song also faces a mandatory, two-year consecutive penalty in prison for aggravated identity theft. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The FBI and the NASA’s Office of Inspector General are investigating the case.

Assistant U.S. Attorney Samir Kaushal for the Northern District of Georgia and Trial Attorney Tanner Kroeger of the National Security Division's Cyber Section are prosecuting the case with assistance from the Counterintelligence and Export Control Section.

United States v. Teslenko (District of Massachusetts)

Massachusetts resident, Samer Bhambhani, 55, and Russian national, Maksim Teslenko, 35, have been charged with smuggling and one count of conspiracy to violate and evade export controls, commit smuggling, and defraud the United States. Bhambhani was arrested on Sept. 9 and was released on conditions following an initial appearance in federal court in Boston. Teslenko remains at large overseas.

It is alleged that from in or around 2015 through at least 2021, Bhambhani and Teslenko conspired to export laser welding machines from Bhambhani’s employer in the United States to the Ural Electromechanical Plant (UEMZ) in Yekaterinburg, Russia, while falsifying the export documentation submitted to the U.S. government in order to conceal the fact that the UEMZ was the true end user of the machines. The UEMZ is a subsidiary of Rosatom, a Russian state corporation headquartered in Moscow, that oversaw Russia’s civilian and military nuclear program. According to the indictment, Teslenko knew that the laser welding machines were intended for the portion of the UEMZ involving the Russian nuclear weapons program.

The charge of smuggling provides for a sentence of up to 10 years in prison, three years supervised release and a fine of up to $250,000. The charge of conspiracy provides for a sentence of up to five years in prison, three years supervised release and a fine of up to $250,000. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Assistant U.S. Attorneys Timothy H. Kistner and Laura S. Kaplan for the District of Massachusetts and Trial Attorney Sean O’Dowd of the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case.

United States v. Goodarzi (Southern District of Texas)

Gholam Reza Goodarzi, also known as Ron Goodarzi, 76, a dual U.S. and Iranian citizen who resides in Porter, Texas, was arrested at the George Bush International Airport on Aug. 30 based on a criminal complaint alleging he smuggled parts and components used in the production of unmanned aerial vehicles (UAVs), as well as other manned aircraft, from the United States to Iran.

According to court documents, from December 1, 2020, through July 5, Goodarzi illegally exported aircraft-related parts, in addition to oil and drilling components, to Iran. As alleged, Goodarzi purchased U.S.-origin aircraft components from U.S.-based suppliers and then exported them to Iran – typically through Dubai, UAE. He also traveled to and from Iran multiple times per year and concealed aircraft parts and other items in his checked luggage. Goodarzi exchanged multiple emails with suppliers and customers, acknowledging that parts could not be shipped to Iran because of sanctions.

The complaint alleges that on several occasions, authorities searched Goodarzi’s luggage and found numerous aircraft parts and components hidden within articles of clothing. Some of the items had characteristics consistent with parts for the production of UAVs, as well as parts with electrical motor and generator applications. Goodarzi does not have the required licenses to export such items to sanctioned countries, including Iran, according to the complaint.

The FBI, with assistance from and Customs and Border Protection, is investigating the case. 

Assistant U.S. Attorney Heather Winter for the Southern District of Texas and Trial Attorney Christopher Cook of the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case. 

United States v. Nader (District of Columbia)

U.S.-Iranian national Jeffrey Chance Nader, 66, of Arcadia, California, was arrested on Aug. 13, 2024, based on an indictment charging him with crimes related to the procurement of U.S.-manufactured aircraft components, including components used on military aircraft, in violation of U.S. economic sanctions and other federal laws.

According to the indictment, beginning at least in 2023, Nader and others conspired to purchase and export – and attempted to export – from the United States to Iran four types of aircraft components, totaling nearly three dozen individual pieces. Some of these components are for use on military aircraft operated by Iran’s armed forces, including the F-4 fighter jet.

Nader, acting on purchase orders he received from customers in Iran, would coordinate the purchase of relevant aircraft components with business associates in Iran, by which they would reach out to U.S.-based suppliers of such components. In several instances, Nader identified himself and his company, California-based Pro Aero Capital, to these U.S.-based suppliers as the end-user of these items. Victim companies in this procurement scheme were located across the United States.

Once the aircraft components were obtained, Nader attempted to export the items on multiple separate occasions. The items were then transshipped to the ultimate customer in Iran. None of the transactions discussed in the indictment were successfully exported; they were detained on export by a Special Agent with the Department of Commerce.

This case is being investigated by the FBI’s Washington Field Office and the Commerce Department's Bureau of Industry and Security. Significant assistance was provided by the FBI’s Los Angeles Field Office.  

The case is being prosecuted by Assistant U.S. Attorney Steven B. Wasserman for the District of Columbia and Trial Attorney Sean Heiden of the National Security Division’s Counterintelligence and Export Control Section. Significant assistance was provided by the U.S. Attorney’s Office for the Central District of California.

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Today’s actions were coordinated through the Justice and Commerce Departments’ Disruptive Technology Strike Force. The Disruptive Technology Strike Force is an interagency law enforcement strike force co-led by the Departments of Justice and Commerce designed to target illicit actors, protect supply chains and prevent critical technology from being acquired by authoritarian regimes and hostile nation states.  The Postovoy and Teslenko investigations were also coordinated through the Justice Department’s Task Force KleptoCapture, an interagency law enforcement task force dedicated to enforcing sanctions, export controls and economic countermeasures imposed in response to Russia’s unprovoked military invasion of Ukraine.

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Also today, the Department is announcing the unsealing of an indictment in Chicago, Illinois, charging Chinese national Jia Wei with unlawfully accessing the computer network of a U.S. communications company to steal proprietary information for the benefit of the China-based entities. 

As alleged, Wei was a member of the People’s Liberation Army (PLA), the military of the People’s Republic of China, and assigned to a PLA unit tasked with obtaining communications and information of third parties through computer hacking. In March 2017, Wei and his co-conspirators accessed the U.S. company’s network without authorization approximately two days after the U.S. company filed a civil action against a China-based competitor for theft of communication-device trade secrets. Through this unauthorized access, Wei and his co-conspirators stole U.S. company documents relating to, among other things, the company’s civilian and military communication devices, product development, testing plans, internal product evaluations and commercial information about competitors. These documents pertained to some of the same technology and information that the China-based competitor stole from the U.S. company, as alleged in the civil action. In addition, Wei and his co-conspirators stole documents from the U.S. company discussing the China-based competitor.

During his unauthorized access, Wei and his co-conspirators attempted to install malicious software designed to provide persistent unauthorized access to the U.S. company’s network. Wei’s unauthorized access continued until approximately late May 2017.

The six-count indictment, returned in March 2022, charges Wei with wire fraud, conspiracy to commit computer intrusions, computer intrusions and aggravated identity theft. A warrant for his arrest has been issued. If convicted, Wei faces a maximum statutory penalty of 20 years in prison for each wire fraud count, five years in prison for each of the conspiracy and computer intrusion counts, and a mandatory, two-year consecutive penalty in prison for each aggravated identity theft count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The FBI Chicago Field Office is investigating the case.

Assistant U.S. Attorneys Melody Wells, Steven Dollear and Thomas Peabody for the Northern District of Illinois and Trial Attorney Brett Reynolds of the National Security Division are prosecuting the case. Significant assistance was provided by the National Security Division’s National Security Cyber Section.

An indictment, complaint or criminal information is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Note: This press release was updated on Sept. 16, 2024, to include two additional cases.