A Screw Loose: Corporate Contractors That Rip Off Our Military

The United States armed forces believe themselves to be the best equipped, most high-tech forces in the world. And that’s likely true — right now.

But ever since the military-industrial complex got its name from Eisenhower, there have been instances of military contractor overcharges, defective manufacturing, and at times out and out fraud.

That sort of behavior not only costs lives, it can degrade our national security.

Now, expecting shoddy manufacturing, overcharges and fraud is standard operating procedure when the consumer deals with the products of our corporations.

But when it comes to our citizens who put themselves in harm’s way, who risk life and limb to carry out the whims and wishes of the politicians in power — (or if you like, to protect our freedoms), is it too much to expect that the industrial side of the complex will be more careful, more honest, and do like it says it would?

Apparently, it is too much to expect, as we shall see below.

Let’s pay a visit to contractor, Mason Engineering Parts LLC. You may not be familiar with this company, but the Department of Justice is. In May, 2024, on the DOJ pubic site, it was announced, ‘Defense Contractor Pleads Guilty to Fraud, Money Laundering and Unlawful Export of Military Data.’[1]

So, what happened?

The LLC obtained a government contract for parts for:

‘The U.S. Navy Nimitz and Ford Class Aircraft Carriers, U.S. Navy Submarines, U.S. Marine Corps Armored Vehicles, and U.S. Army M-60 Series Tank and Abrahams Battle Tanks, among other weapons systems.’[2]

The company represented itself as a vetted and qualified military contractor. It wasn’t. Instead, Mason had a Turkish contractor manufacture the parts — a contractor that had been barred from dealing with the US government.

The company knowingly supplied the Turkish outfit with sensitive documents in violation of security regulations. Six figures worth of government payments to Mason were then laundered back to Turkey.

The parts did not conform to agreed specifications. In fact, as it was related on the DOJ site, the parts related to ‘“critical application items,” meaning that failure of these components would have potentially rendered the end system inoperable.’

The perpetrators of these acts will find themselves living in a government gated community with excellent security for a long, long time.

In January 2022, a defense contractor, Craig Klund of South Dakota, won himself an all expenses paid visit to federal prison for ten years. That arose out of his defrauding the government, money laundering and aggravated identity theft, according to a posting on the IRS website.

According to the Internal Revenue Service, Klund's fraud scheme included:

1. Use of 15 shell corporations to hide his control of entities bidding on DoD contracts;

2. Use of multiple aliases;

3. Repeated identity theft;

4. Collusive bids submitted by multiple Klund entities on the same contract;

5. Knowingly shipping nonconforming parts and requesting payment for these parts;

6. Signing Federal Acquisition Regulation certificates using fake names;

7. Lying to Defense Contract Management Agency (DCMA) inspectors by claiming to be someone other than himself;

8. Relocating his business from Wisconsin to South Dakota to evade DCMA inspectors who were questioning his operations in Wisconsin;

9. Concealing receipt of DoD proceeds by not reporting these monies on his federal income tax returns; and

10. Laundering DoD proceeds by moving the funds between accounts.[3]

The site posting revealed, ‘Klund had three previous federal felony convictions, two of which were for defense contracting fraud, making his criminal history a very important factor in the judge's sentencing analysis.’

So, it appears there is such a thing as a bad boy, and sometimes people don’t learn from their mistakes.

Here’s another instance of military contractor misdoings. Envistacom LLC received its fifteen minutes of infamy on the DOJ public affairs site, when it was posted on 3/29/23 that ‘Military Contractors Convicted for $7 Million Procurement Fraud Scheme.’

What did Envistacom do? According to the site:

‘Preparing and procuring sham quotes for government contracts totaling over $7.8 million. Carson, Hayes, and Flores also fraudulently prepared “independent” government cost estimates and other procurement documents for the award of these contracts and made false statements, representations, and material omissions to federal government contracting officials regarding these estimates being legitimate independent cost estimates and the sham quotes being “competitive.”’[4]

How about one more for good luck?

This guy was from Missouri, so the government had to show him. They showed him and in a 2/7/24 posting from the GSA OIG (English-the General Services Administration Office of Inspector General), our man in Missouri admitted illegally obtaining parts for the military overseas, undercutting domestic suppliers.

The contractor, according to the GSA:

‘Received at least nine U.S. government contracts by way of fraudulent misrepresentations, including that he would provide parts from domestic sources. Murar actually provided parts from China and other foreign countries. By doing so, Murar was able to underbid domestic suppliers. Murar broke the law by providing “military critical technical data,” which was restricted and protected information, to foreign individuals and/or entities.’[5]

The individual guilty of the above behavior had better like Federal cooking, because he will be eating it for a long time.

Why You Should Care

A hefty portion of the taxes you pay go to defense. You have not only a financial stake in seeing that those dollars don’t get abused or wasted, you have a personal survival stake in seeing that our military has the equipment it needs.

Not only that, but that the equipment is made to work, made to last, and that the parts for it are up to specifications.

The world is now seeing up close what happens when corruption and neglect enter into military manufacturing, because the Russians are directly experiencing it in the Ukraine.

We the people of the United States of America don’t want that to happen to us when it’s our time to once again step into the battlefield.

[1] DOJ PUBLIC AFFAIRS SITE 5/8/24 https://www.justice.gov/opa/pr/defense-contractor-pleads-guilty-fraud-money-laundering-and-unlawful-export-military-data

[2] DOJ PUBLIC SITE op.cit.

[3] IRS SITE 1/20/22 https://www.irs.gov/compliance/criminal-investigation/former-defense-contractor-sentenced-to-10-years-for-fraud-money-laundering-and-id-theft

[4] DOJ PUBLIC AFFAIRS 3/29/23 https://www.preparing and procuring sham quotes for government contracts totaling over $7.8 million. Carson, Hayes, and Flores also fraudulently prepared “independent” government cost estimates and other procurement documents for the award of these contracts and made false statements, representations, and material omissions to federal government contracting officials regarding these estimates being legitimate independent cost estimates and the sham quotes being “competitive.”justice.gov/opa/pr/military-contractors-convicted-7-million-procurement-fraud-scheme

[5] GSA OIG SITE 2/7/24 https://www.gsaig.gov/news/missouri-based-defense-department-contractor-admits-fraud