DLALM Employees Honored For Efforts In Long-Running Fraud Case
by Kristin Molinaro, Defense Logistics Agency Land and Maritime
September , 2021
The Department of Defense Office of Inspector General’s Defense Criminal Investigative Service honored two Defense Logistics Agency Land and Maritime employees recently for their efforts in tracking a decades-long scheme by New Orleans businessman Robert Klein to defraud the Department of Defense of millions of dollars.
Two members of the DLA Land and Maritime Counterfeit Material and Unauthorized Product Substitution Team received plaques on behalf of DCIS during a gathering at the U.S. Attorney’s Office for the Southern District of Ohio. Due to the sensitive work involved, they have asked not to be named.
September 21, 2021 - The Department of Defense Office of the Inspector General's Defense Criminal Investigative Service honored several members of the team involved in the arrest and conviction of the New Orleans businessman responsible for a decades-long scheme to provide fraudulent parts to the DOD. Pictured left to right: Internal Revenue Service Agent Della Blunk, Assistant U.S. Attorney with the Southern District of Ohio Jessica Knight, DCIS Resident Agent in Charge and Case Lead Jared Camper and Defense Logistics Agency Land and Maritime Associates Dave Loughman and Carol Matheke. Loughman worked in the Product Verification Program Division and Matheke is an assistant fraud counsel. (Defense Logistics Agency Land and Maritime photo by Shannon Mormon)
The effort to hold Klein accountable was a partnership between DLA Land and Maritime, DCIS, the Internal Revenue Service and the U.S. Attorney’s Office, who prosecuted the case.
Klein pled guilty last November to one count of wire fraud, three counts of money laundering and one count of tax evasion in his plot to fraudulently obtain government contracts and provide defective replacement parts for military weapons systems. As part of his plea agreement, Klein was sentenced to three years of home detention and agreed to pay more than $2.2 million in restitution to DOD and the IRS.
A CM/UPS Team member initially referred the case to DCIS in 2003, when Klein’s company delivered nonconforming parts on a DLA contract. The company and its principals were debarred from conducting business with DLA, only for Klein to start a new company under a different name to disguise the true owner. This continued for several years, with DLA debarring a total of 19 companies controlled by Klein through the efforts of the CM/UPS Team detecting suspicious activity on DLA contracts.
“What sticks out to me was how blatant it was and how persistent and long lasting it was,” said DCIS Acting Resident in Charge Jared Camper, who served as the Klein case’s lead investigator. “DLA would catch him, the CM/UPS Team would recommend debarment of his companies, and then he would go find more people, use their identification and start new companies.”
The lack of technology accessible at the time complicated efforts to track Klein, who’s initial fraudulent activity can be traced back to 1997.
Assistant U.S. Attorney for the Southern District of Ohio Jessica Knight, a prosecutor on the case, explained, “There are things we can do now that weren’t available back then…and as technology caught up, we were able to use other techniques to say ‘’Yes, this all points back to him.’”
The CM/UPS Team methodically tracked the case while continuing to advocate for investigation and prosecution, and its efforts paid off when Klein was arrested in September of 2019. The team then assisted the case’s prosecutors by providing case files gathered on the fraudulent companies.
A quality assurance specialist on the CM/UPS Team was responsible for identifying the fraudulent parts. DCIS investigators relied on his proactiveness as well as his relationships with industry in researching and identifying nonconforming parts.
“We in the U.S. Attorney’s Office work shoulder-to-shoulder every day with our law enforcement partners collectively doing a lot of good work – most done without fanfare or recognition – and from time to time it makes sense to step back and acknowledge good partnerships and good results,” said Brian Martinez, a deputy criminal chief with the U.S. Attorney’s Office for the Southern District of Ohio.
Awards were presented to the DLA Land and Maritime CM/UPS Team, Knight, IRS agent Della Blunk and Special Assistant U.S. Attorney J. Michael Marous.
“This team did something that other teams around the country were not able to do – which was to hold someone accountable who had been defrauding the American people, defrauding the Department of Defense, and putting our men and women in uniform in harm’s way,” Martinez said.
The interdisciplinary CM/UPS Team chaired by DLA Land and Maritime fraud attorneys works hand in hand with acquisition professionals, product testing centers, engineering and technical quality experts, the U.S. Attorney’s Office and DCIS to identify, investigate and interdict fraud or suspected fraudulent contractors.
“The CM/UPS team coordinates the tools of contracting, business integrity and law enforcement to protect the supply chain, advises contracting officers and pursues remedies, and by that we support investigating agencies to prosecute, and we also pursue administrative suspensions and debarments,” DLA Land and Maritime Chief Counsel Mike Gordon said.
DCIS Special Agent in Charge Patrick Hegarty said the CM/UPS Team working group is a model for his organization. Hegarty oversees the northeast field office which includes Ohio and Michigan and traveled to present the awards to the team.
He credited the CM/UPS Team for its dedication in linking the pieces together of Klein’s fraud and providing DCIS agents with details they needed leading to his successful arrest. Likewise, he thanked the team for its expert analysis and identification of nonconforming material.
“DCIS was formed in 1982, and procurement fraud and product substitution is what we did right out of the gate,” he explained. “Taskforces, working groups, initiatives – they come and go – but the longevity of this one is remarkable. We’re in working groups across the country but it’s really nice to be on a DOD-focused working group and this is a great example of DLA caring about the parts.”
Closing out the award presentation, DLA Land and Maritime Deputy Commander Kenneth Watson thanked DCIS and the U.S. Attorney’s Office for their partnership with DLA and credited the CM/UPS Team as a labor of love.
“We all feel passionate about the Warfighter we support each and every day and the harm that these criminals are doing in violating the trust of our supply chain and products we put out there,” Watson said. “It takes a team and it’s really heartening for us to know that a lot of the hard work and effort that we put into this is really shared by all of us in this room. Persistence paid off and we’re going to keep it up. Our hope is that what we do in Columbus becomes a hallmark for the agency in how we’re mitigating supply chain risk and really getting after some of these serious bad actors. Thank you for recognizing it and being such a good partner in all of this.”
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