FORMER EXEC. CHARGED WITH FRAUD AND MONEY LAUNDERING IN FOREIGN KICKBACK SCHEME

FROM:  U.S. JUSTICE DEPARTMENT 
Monday, February 10, 2014
Former Executive of Power Generation Company Charged with Fraud and Money Laundering
Indictment Alleges an Eight-Year Scheme to Obtain More Than $5 Million in Kickbacks from Three Foreign Power Companies to Secure More Than $2 Billion in Lucrative Contracts

Asem Elgawhary, the former principal vice president of Bechtel Corporation and general manager of the Power Generation Engineering and Services Company (PGESCo), was indicted by a grand jury in Maryland today on charges that he defrauded his former employers, laundered the proceeds of the fraudulent scheme and violated federal tax laws.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Rod J. Rosenstein of the District of Maryland, Special Agent in Charge Stephen E. Vogt of the FBI’s Baltimore Division and Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI) made the announcement after the indictment was returned earlier today.

“As today’s indictment alleges, this high-ranking executive took millions of dollars in kickbacks from power companies in exchange for preferential treatment and, in doing so, defrauded his former employer, other companies who were playing by the rules and U.S. tax authorities,” said Acting Assistant Attorney General Raman.  “He then allegedly concealed his kickback scheme by hiding the payments in off-shore bank accounts, giving false information to his former employer and destroying evidence.  The Justice Department is committed to prosecuting not just the companies and individuals who pay bribes and kickbacks, but also those who solicit and accept them.”

“Mr. Elgawhary has been charged with using his corporate position for his own personal gain,” stated IRS-CI Chief Weber.   “No matter what your career or position is in a corporation, all U.S. citizens are obligated to comply with the tax laws.  When individuals and corporations deliberately fail to comply, IRS Criminal Investigation agents conduct investigations and recommend prosecution to the Department of Justice.”

The eight-count indictment alleges that from 1996 to 2011, Elgawhary, 72, of Maryland, was assigned by Bechtel – a U.S. corporation engaged in engineering, construction and project management – to be the general manager at PGESCo, a joint venture between Bechtel and a state-owned and state-controlled electricity company (EEHC).   PGESCo assisted EEHC in identifying possible subcontractors, soliciting bids and awarding contracts to perform power projects for EEHC.   The charges allege that Elgawhary used his position at PGESCo to provide preferential treatment to three power companies attempting to secure projects with EEHC in exchange for kickbacks from those power companies and their third-party consultants.   The court documents allege that the power companies and their consultants paid more than $5 million in kickbacks into various off-shore bank accounts under the control of Elgawhary, including various Swiss bank accounts.   In return, the power companies secured more than $2 billion in lucrative contracts.

The indictment alleges that Elgawhary then also attempted to conceal the kickback scheme and the proceeds he obtained from it.   Elgawhary allegedly sent to Bechtel executives and members of the PGESCo board of directors in Maryland various documents and “Representation Letters” that falsely represented that he had no knowledge of any fraud or suspected fraud at PGESCo and that there were no violations or possible violations of law or regulations whose effects were material and should have been considered for disclosure in PGESCo’s financial statements.   In addition, when Elgawhary was interviewed by counsel for Bechtel in April 2011, he claimed that he never received money from power companies or their consultants and that he did not maintain control over any foreign bank accounts.   With the help of other employees at PGESCo, Elgawhary also allegedly caused evidence about the kickback scheme to be deleted and destroyed, according to the charges.

The court documents also allege that Elgawhary used money from one of his Swiss bank accounts to purchase a $1.78 million home in Maryland for two close family members.   In order to conceal the origin of the money, however, Elgawhary and others made it appear that the money was from an unsecured loan from a marketing company owned and operated by another relative.

Elgawhary also allegedly obstructed and impeded the administration of U.S. tax laws by falsely claiming that he maintained only one foreign bank account and denying that he received any income from any foreign bank account.   Elgawhary also allegedly failed to report any of the kickbacks as income for the tax years 2008 through 2011.

The mail and wire fraud counts each carry a maximum penalty of 20 years in prison and a fine of the greater of $250,000 or twice the value gained or lost.   The conspiracy to commit money laundering count carries a maximum penalty of 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved in the transaction.   The tax count carries a maximum penalty of three years in prison and a fine of $5,000.

The charges contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

The department has received significant assistance in this matter from its law enforcement counterparts in Switzerland, Germany, Italy and Cyprus.   Significant assistance was also provided by the Criminal Division’s Office of International Affairs.

The case is being investigated by the FBI’s and IRS-CI’s Baltimore Divisions.   The case is being prosecuted by Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David Salem of the District of Maryland.

HUSBAND AND WIFE CONVICTED OF FILING LIENS AGAINST IRS COMMISSIONER AND FILING FALSE TAX REFUND CLAIMS

FROM:  U.S. JUSTICE DEPARTMENT 
Friday, November 15, 2013
Northern California Couple Indicted for Filing False Claims for Refunds and for Filing Liens Against the IRS Commissioner

Robert Eldon Robertson and his wife Esther Lynne Robertson of Manteca, Calif., were indicted on charges of filing two false claims for federal tax refunds, filing liens against the former Internal Revenue Service (IRS) commissioner and impeding the administration of federal tax laws, the Justice Department and IRS announced today.  The indictment was unsealed yesterday in the Eastern District of California.

According to the indictment, the Robertsons filed two false federal income tax returns claiming large refunds based on fictitious Form 1099-OID withholdings: one for tax year 2005 claiming a $90,538 refund and one for 2007 claiming a $313,248 refund.  The indictment also charges each of the Robertsons with filing a false lien against the property of the IRS commissioner for “a sum certain amount determined as triple the stated amount of any purported determination of tax liability.”  According to the indictment, the Robertsons also sent a bogus “international promissory note” with a request that the IRS apply the purported $800,000 face value of the note towards their outstanding tax liabilities.  The IRS also received a letter containing credit card bills belonging to the Robertsons asking the IRS to pay nearly $20,000 worth of their credit card debt.

An indictment is merely an allegation and all defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.  If convicted, the Robertsons face a maximum of five years in prison for each false claim count, three years for the obstruction count and 10 years for the count of filing false liens.

The case was investigated by both IRS-Criminal Investigation and the Treasury Inspector General for Tax Administration.  It is being prosecuted by Trial Attorney Ignacio Perez de la Cruz of the department’s Tax Division and Assistant U.S. Attorney Matthew Segal in the Eastern District of California.