Guest guest Posted August 16, 2007 Report Share Posted August 16, 2007 Pentagon Paid $998,798 to Ship Two 19-Cent Washers (Update3) By Tony Capaccio Aug. 16 (Bloomberg) -- A small South Carolina parts supplier collected about $20.5 million over six years from the Pentagon for fraudulent shipping costs, including $998,798 for sending two 19-cent washers to an Army base in Texas, U.S. officials said. The company also billed and was paid $455,009 to ship three machine screws costing $1.31 each to Marines in Habbaniyah, Iraq, and $293,451 to ship an 89-cent split washer to Air Force Base in Cape Canaveral, Florida, Pentagon records show. The owners of C & D Distributors in Lexington, South Carolina -- twin sisters -- exploited a flaw in an automated Defense Department purchasing system: bills for shipping to combat areas or U.S. bases that were labeled ``priority'' were usually paid automatically, said Stroot, a Pentagon investigator. C & D and two of its officials were barred in December from receiving federal contracts. Today, a federal judge in Columbia, South Carolina, accepted the guilty plea of the company and one sister, Charlene Corley, to one count of conspiracy to commit wire fraud and one count of conspiracy to launder money, Assistant U.S. Attorney Mc said. Corley, 46, was fined $750,000. She faces a maximum prison sentence of 20 years on each count and will be sentenced soon, Mc said in a telephone interview from Columbia. Stroot said her sibling died last year. Corley didn't immediately return a phone message left on her answering machine at her office in Lexington. Her attorney, , didn't immediately return a phone call placed to his office in Columbia. `Got More Aggressive' C & D's fraudulent billing started in 2000, Stroot, the Defense Criminal Investigative Service's chief agent in Raleigh, North Carolina, said in an interview. ``As time went on they got more aggressive in the amounts they put in.'' The price the military paid for each item shipped rarely reached $100 and totaled just $68,000 over the six years in contrast to the $20.5 million paid for shipping, she said. ``The majority, if not all of these parts, were going to high-priority, conflict areas -- that's why they got paid,'' Stroot said. If the item was earmarked ``priority,'' destined for the military in Iraq, Afghanistan or certain other locations, ``there was no oversight.'' Scheme Detected The scheme unraveled in September after a purchasing agent noticed a bill for shipping two more 19-cent washers: $969,000. That order was rejected and a review turned up the $998,798 payment earlier that month for shipping two 19-cent washers to Fort Bliss, Texas, Stroot said. The Pentagon's Defense Logistics Agency orders millions of parts a year. ``These shipping claims were processed automatically to streamline the re-supply of items to combat troops in Iraq and Afghanistan,'' the Justice Department said in a press release announcing today's verdict. Stroot said the logistics agency and the Defense Finance and Accounting Service, which pays contractors, have made major changes, including thorough evaluations of the priciest shipping charges. Dawn Dearden, a spokeswoman for the logistics agency, said finance and procurement officials immediately examined all billing records. Stroot said the review showed that fraudulent billing is ``not a widespread problem.'' ``C & D was a rogue contractor,'' Stroot said. While other questionable billing has been uncovered, nothing came close to C & D's, she said. The next-highest billing for questionable costs totaled $2 million, she said. Stroot said the Pentagon hopes to recoup most of the $20.5 million by auctioning homes, beach property, jewelry and ``high- end automobiles'' that the sisters spent the money on. ``They took a lot of vacations,'' she said. Quote Link to comment Share on other sites More sharing options...
Guest guest Posted August 17, 2007 Report Share Posted August 17, 2007 No wonder they kept telling us that they didn't have enough money to buy us the stuff we needed. And when we did get the stuff we needed it'd take 6 months for it to get there. For the amount of money they were paying for shipping when I was ordering stuff it should have showed up at my clinic door overnight! That's a load of garbage. I'm glad to hear that they are getting what is coming to them. > > Pentagon Paid $998,798 to Ship Two 19-Cent Washers (Update3) > > By Tony Capaccio > > Aug. 16 (Bloomberg) -- A small South Carolina parts supplier collected about > $20.5 million over six years from the Pentagon for fraudulent shipping > costs, including $998,798 for sending two 19-cent washers to an Army base in > Texas, U.S. officials said. > > The company also billed and was paid $455,009 to ship three machine screws > costing $1.31 each to Marines in Habbaniyah, Iraq, and $293,451 to ship an > 89-cent split washer to Air Force Base in Cape Canaveral, Florida, > Pentagon records show. > > The owners of C & D Distributors in Lexington, South Carolina -- twin sisters > -- exploited a flaw in an automated Defense Department purchasing system: > bills for shipping to combat areas or U.S. bases that were labeled > ``priority'' were usually paid automatically, said Stroot, a > Pentagon investigator. > > C & D and two of its officials were barred in December from receiving federal > contracts. Today, a federal judge in Columbia, South Carolina, accepted the > guilty plea of the company and one sister, Charlene Corley, to one count of > conspiracy to commit wire fraud and one count of conspiracy to launder > money, Assistant U.S. Attorney Mc said. > > Corley, 46, was fined $750,000. She faces a maximum prison sentence of 20 > years on each count and will be sentenced soon, Mc said in a telephone > interview from Columbia. Stroot said her sibling died last year. > > Corley didn't immediately return a phone message left on her answering > machine at her office in Lexington. Her attorney, , didn't > immediately return a phone call placed to his office in Columbia. > > `Got More Aggressive' > > C & D's fraudulent billing started in 2000, Stroot, the Defense Criminal > Investigative Service's chief agent in Raleigh, North Carolina, said in an > interview. ``As time went on they got more aggressive in the amounts they > put in.'' > > The price the military paid for each item shipped rarely reached $100 and > totaled just $68,000 over the six years in contrast to the $20.5 million > paid for shipping, she said. > > ``The majority, if not all of these parts, were going to high- priority, > conflict areas -- that's why they got paid,'' Stroot said. If the item was > earmarked ``priority,'' destined for the military in Iraq, Afghanistan or > certain other locations, ``there was no oversight.'' > > Scheme Detected > > The scheme unraveled in September after a purchasing agent noticed a bill > for shipping two more 19-cent washers: $969,000. That order was rejected and > a review turned up the $998,798 payment earlier that month for shipping two > 19-cent washers to Fort Bliss, Texas, Stroot said. > > The Pentagon's Defense Logistics Agency orders millions of parts a year. > ``These shipping claims were processed automatically to streamline the > re-supply of items to combat troops in Iraq and Afghanistan,'' the Justice > Department said in a press release announcing today's verdict. > > Stroot said the logistics agency and the Defense Finance and Accounting > Service, which pays contractors, have made major changes, including thorough > evaluations of the priciest shipping charges. > > Dawn Dearden, a spokeswoman for the logistics agency, said finance and > procurement officials immediately examined all billing records. Stroot said > the review showed that fraudulent billing is ``not a widespread problem.'' > > ``C & D was a rogue contractor,'' Stroot said. While other questionable > billing has been uncovered, nothing came close to C & D's, she said. The > next-highest billing for questionable costs totaled $2 million, she said. > > Stroot said the Pentagon hopes to recoup most of the $20.5 million by > auctioning homes, beach property, jewelry and ``high- end automobiles'' that > the sisters spent the money on. > > ``They took a lot of vacations,'' she said. > > > > > > > > Quote Link to comment Share on other sites More sharing options...
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