FORMER EXECUTIVE PLEADS GUILTY IN KICKBACK SCHEME INVOLVING POWER CONTRACTS IN EGYPT

FROM:  U.S. JUSTICE DEPARTMENT
Thursday, December 4, 2014
Former Bechtel Executive Pleads Guilty in Connection with a $5.2 Million Kickback Scheme

The former Principal Vice President of Bechtel Corporation and General Manager of the Power Generation Engineering and Services Company (PGESCo) pleaded guilty today in connection with a $5.2 million kickback scheme intended to manipulate the competitive bidding process for state-run power contracts in Egypt.

Assistant Attorney General Leslie R. Caldwell 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 Special Agent in Charge Thomas J. Kelly of the Internal Revenue Service-Criminal Investigation (IRS-CI) Washington D.C. Field Office made the announcement.

“Asem Elgawhary took more than $5 million in kickbacks from companies trying to manipulate a competitive bidding process in their favor,” said Assistant Attorney General Caldwell.  “Foreign corruption is an international scourge, and we will pursue those who take bribes, whether they are government officials or high-ranking corporate executives, like Elgawhary.  Every corruption conviction is a step towards rooting out and deterring this global problem.”

“Our economy is so global in this day and age that if we allowed corrupt practices overseas such as taking bribes in exchange for special consideration when comparing bids, it would seriously impact our international trade.  What Mr. Elgawhary admitted to doing has a dramatic affect on U.S. companies being able to expand and grow their work forces overseas in a fair market place, which in the long run hurts our economy,” said Special Agent in Charge Vogt of the FBI in Maryland and Delaware.  “He displayed his blatant disregard for our rule of law when he used a portion of the bribe payment to purchase a house for $1.6 million in cash.  This should send a message to others like Mr. Elgawhary, that hiding behind a foreign government won’t protect you from prosecution.”

“Mr. Elgawhary allowed greed to compromise his business practices by taking kickbacks to provide unfair advantages to companies willing pay for power contracts,” stated Special Agent in Charge Kelly of IRS-CI’s Washington D.C. Field Office.  “He compounded his criminal activities by failing to report any of the kickback payments as income on his tax returns.  It is imperative that honest companies know IRS Criminal Investigation will investigate and bring to prosecution those willing to line their pockets through unethical business practices.”

Asem Elgawhary, 73, of Potomac, Maryland, pleaded guilty today before U.S. District Judge Deborah K. Chasanow of the District of Maryland to mail fraud, conspiracy to commit money laundering, and obstruction and interference with the administration of the tax laws.  Sentencing is scheduled for Mar. 23, 2015.

In his plea agreement, Elgawhary admitted that, from 1996 to 2011, he 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 Egypt’s 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.  Elgawhary admitted to accepting a total of $5.2 million from three power companies, which they paid to secure a competitive and unfair advantage in the bidding process.  According to court documents, the power companies and their consultants paid more than $5.2 million in kickback payments into various off-shore bank accounts under the control of Elgawhary, including various Swiss bank accounts.

As Elgawhary admitted in his plea agreement, he attempted to conceal the kickback scheme by routing the payments through various off-shore bank accounts, including Swiss bank accounts, under his control.  Elgawhary also sent various documents and “Representation Letters” to Bechtel executives and members of the PGESCo Board of Directors in Maryland, falsely certifying 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 that should have been considered for disclosure in PGESCo’s financial statements.  Elgawhary also admitted that, in further attempt to conceal the scheme, he made misrepresentations to counsel for Bechtel when he was interviewed in April 2011.

Elgawhary also admitted to conspiring to launder the proceeds of the scheme and to obstructing and impeding the administration of U.S. tax laws by falsely claiming that he maintained only one foreign bank account, denying that he received any income from a foreign bank account, and failing to report any of the kickback payments as income for the tax years 2008 through 2011.

Elgawhary, a dual U.S. and Egyptian citizen, was arrested on a complaint when he flew into the United States on Nov. 26, 2013, and was indicted on Feb. 10, 2014.  

The case is being investigated by the FBI’s Baltimore Division and IRS-CI’s Washington D.C. Field Office.  Significant assistance was provided by the Criminal Division’s Office of International Affairs, and law enforcement counterparts in Switzerland, Germany, Italy, Saudi Arabia and Cyprus.  The case is being prosecuted by Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David I. Salem of the District of Maryland.  

FORMER OWNER AIRLINE FUEL SUPPLY CO. PLEADS GUILTY IN KICKBACK-FRAUD SCHEME

FORMER OWNER OF FLORIDA AIRLINE FUEL SUPPLY COMPANY PLEADS
GUILTY IN SCHEME TO DEFRAUD ILLINOIS-BASED RYAN INTERNATIONAL
AIRLINES

WASHINGTON — A former owner and operator of a Florida-based airline fuel supply service company pleaded guilty today to participating in a kickback scheme to defraud Illinois-based Ryan International Airlines, a charter airline company located in Rockford, Ill., the Department of Justice announced.

Sean E. Wagner, the former owner and operator of Aviation Fuel International Inc. (AFI), pleaded guilty in the U.S. District Court for the Southern District of Florida in West Palm Beach to one count of conspiracy to commit honest services wire fraud.  On Aug. 13, 2013, a grand jury returned an indictment against Wagner and AFI, charging them for their roles in a conspiracy to defraud Ryan International Airlines.  According to the indictment, Wagner and AFI made kickback payments to Wayne Kepple, a former vice president of ground operations for Ryan, in exchange for awarding business to AFI.  According to court documents, from at least as early as December 2005 through at least August 2009, Wagner and others at AFI made kickback payments to Kepple totaling more than $200,000 in the form of checks, wire transfers, cash and gift cards. The charges against AFI were dismissed on Feb. 21, 2014.

Ryan provided air passenger and cargo services for corporations, private individuals and the U.S. government – including the U.S. Department of Defense and the U.S. Department of Homeland Security.

“These types of kickback schemes subvert the competitive process and increase costs to American consumers,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “The Antitrust Division will vigorously prosecute individuals who defraud American taxpayers and businesses.”

Wagner pleaded guilty to one count of conspiracy to commit honest services wire fraud.  The count carries a maximum sentence of 20 years in prison and a $250,000 criminal fine for individuals.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either amount is greater than the statutory maximum fine.

As a result of the ongoing investigation, four other individuals have pleaded guilty and have been ordered to serve sentences ranging from 16 to 87 months in prison and to pay more than $580,000 in restitution.

The charges are the result of an investigation being conducted by the Antitrust Division’s National Criminal Enforcement Section and the U.S. Department of Defense’s Office of Inspector General’s Defense Criminal Investigative Service, Southeast Field Office, headed by Special Agent in Charge John F. Khin, with assistance from the U.S. Attorney’s Office for the Southern District of Florida. 

OHIO LOBBYIST PLEADS GUILTY IN KICKBACK AND MONEY LAUNDERING CASE

FROM:  U.S. JUSTICE DEPARTMENT 
Monday, December 23, 2013
Ohio Lobbyist Pleads Guilty for Role in Kickback and Money Laundering Scheme

An Ohio attorney and lobbyist pleaded guilty today for his role in a bribery and money laundering scheme involving the Ohio Treasurer’s Office.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, First Assistant U.S. Attorney Mark T. D’Alessandro of the Southern District of Ohio, and Special Agent in Charge Kevin R. Cornelius of the FBI’s Cincinnati Division made the announcement.

Mohammed Noure Alo, 35, of Columbus, Ohio, appeared before U.S. District Judge Michael H. Watson of the Southern District of Ohio and pleaded guilty to aiding and abetting honest services wire fraud.   He faces a maximum penalty of 20 years in prison, and sentencing will be set at a later date.

Alo is a partner and founding member of a Columbus-based law firm and became a registered lobbyist to the State of Ohio in 2010.   Court records state that from approximately January 2009 through January 2011, Alo admitted he conspired with his close personal friend Amer Ahmad, 38, of Chicago, and others to use Ahmad’s role as deputy treasurer to direct official State of Ohio broker services business to Douglas E. Hampton, 39, a securities broker from Canton, Ohio, in return for payments from Hampton.  Hampton funneled in excess of $123,000 to Alo.   Ahmad and Joseph M. Chiavaroli, 33, of Chicago, concealed additional payments from Hampton by passing them through the accounts of a landscaping business in which Ahmad and Chiavaroli held ownership interests.

As a result of the scheme, Hampton received approximately $3.2 million in commissions for 360 trades on behalf of the Ohio Treasurer’s Office.   Ahmad and his co-conspirators received in excess of $500,000 from Hampton.   Both Hampton and Chiavaroli entered guilty pleas in August 2013.

Ahmad was indicted on Aug. 15, 2013, on charges of conspiracy, honest services wire fraud, money laundering, conspiracy to commit money laundering, federal program bribery, and false statements.   He is scheduled for trial on March 3, 2014.   A criminal indictment is a formal accusation of criminal conduct, not evidence.  A defendant is presumed innocent unless convicted through due process of law.

The case was investigated by the FBI’s Central Ohio Public Corruption Task Force, which includes special agents from the FBI and the Ohio Bureau of Criminal Investigation.  The case is being prosecuted by Assistant U.S. Attorney Douglas W. Squires of the Southern District of Ohio and Trial Attorney Eric L. Gibson of the Criminal Division’s Public Integrity Section.