Military Vendors Scrutinized for Contract Fraud

A rash of negative publicity over the past six months has the United States Navy investigating government contractors for criminal fraud.  Government contract fraud occurs when a private vendors contracts with a government entity to provide a good or service and intentionally and fraudulent overbills.

Within the past couple of weeks, white-collar attorneys learned with interest that Navy Secretary, Ray Mabus, established a task force to address the Navy’s susceptibility to fraud by its own vendors.

These problems all came to light in the fall of 2013 when Leonard Glenn Francis, the owner of “Glenn Defense Marine Asia” was arrested and charged with bribery.  Francis’ company was a large supplier to the United States Navy in the Pacific is alleged to have bribed United States Navy Officials to turn a blind eye to his company’s system of overbilling the federal government.

Also, the Justice Department is purportedly investigating Inchcape Shipping Services on allegations of overbilling.  For years, Inchcape was a major Naval supplier in the Middle East and Africa.

It is unclear whether any domestic United States companies are actively under investigation, but any vendors to the United States Navy, or any other branch of military, would be wise to make sure their books are ship shape, or else they could face criminal prosecution.

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