Department of Justice Announces Comprehensive Resolution of Criminal and Civilian Investigations with Military Housing Contractor Privatized for Defrauding US Army | Takeover bid
Today, the Department of Justice announced a comprehensive resolution to its criminal and civil investigations into Balfour Beatty Communities LLC (BBC), one of the largest providers of privatized military housing to the US military, for defrauding the US Air Force, US Army, and US Navy, in a scheme to defraud the US military.
The BBC has pleaded guilty to one count of major fraud against the United States in connection with a criminal investigation filed today in the District of Columbia. U.S. District Judge Emmet G. Sullivan accepted the plea and ordered the BBC to pay more than $ 33.6 million in criminal fines and over $ 31.8 million in restitution to the U.S. military, to serve three years of probation and engage an independent compliance monitor for a period of three years. .
Separately, the BBC also entered into a False Claims Act settlement with the United States to settle its civil liability for $ 35.2 million. Amounts paid as part of the civil settlement will be credited against amounts due under the BBC’s criminal plea.
“Instead of quickly fixing US military housing, the BBC lied about the repairs to pocket millions of dollars in performance bonuses,” Deputy Attorney General Lisa O. Monaco said. “This pervasive fraud was a consequence of the BBC’s shattered corporate culture, which valued profit over military well-being. Today’s global resolution sends a clear message to businesses that if they do not maintain adequate compliance programs, voluntarily disclose wrongdoing, and fully cooperate with government, they will pay a higher price than the profits they make. already harvested. “
According to court documents, BBC was a diversified real estate services company, headquartered in Malvern, Pa., That operated privatized military housing communities at 21 US Air Force bases, 18 US Navy bases and 16 US Army bases in across the United States, where tens of thousands of military personnel and their families lived. The BBC collected fees for the various phases of development and management of each housing community, from design and construction to the ongoing management and maintenance of the community, and service members paid their allowance. living allowance, known as the Basic Housing Allowance, to the BBC for living in these communities.
The BBC’s fees for the ongoing property management and maintenance of its military housing communities typically consisted of a base fee, paid to the BBC monthly, and performance incentive fees, paid to the BBC quarterly or semi-annually. Performance incentive fees were only payable with the approval of the relevant service branch. To obtain the incentive fees, the BBC had to provide service agencies with evidence that it had met performance targets related to, among other things, the upkeep of living quarters and resident satisfaction. The service branches relied on the BBC’s observations in deciding whether or not to approve the payment of the relevant performance incentive fee.
According to court documents, from around 2013 to around 2019, BBC employees including former community manager Stacy Cabrera (who pleaded guilty to related charges on April 21) and former regional manager Rick Cunefare (who pleaded guilty to related charges on June 9), and others, falsified information so that the BBC’s incentive pay claims falsely reflected that the BBC had met its performance targets. In fact, the BBC did not meet these targets in many neighborhoods during this period. These objectives focused on the maintenance and satisfaction of residents of various military housing projects. Specifically, BBC employees altered or manipulated data in property management software and destroyed and tampered with resident comment cards to falsely inflate these metrics and ultimately to fraudulently induce service branches to pay fees. performance incentive that the BBC did not earn.
As a result, according to court documents, there were long and unnecessary delays in resolving maintenance issues to the detriment of service members and their families. Additionally, the military service branches received an inaccurate assessment of the condition of military housing communities from the BBC and were unable to assess, and potentially correct, the performance of the BBC.
A number of relevant considerations contributed to the department’s criminal resolution with the BBC, including the nature and seriousness of the offense, the pervasiveness of misconduct among BBC employees and at several military installations, and the ” status of the BBC’s compliance program and the progress of its remediation, including that the BBC’s compliance program and internal controls have not been fully implemented or tested to demonstrate that they would prevent and would detect similar faults in the future.
As part of the BBC Advocacy Agreement, the BBC has agreed to cooperate fully with the United States on all matters relating to the conduct covered by the Advocacy Agreement and other conduct affecting the United States. ” under investigation by the United States, to report violations of U.S. federal criminal law, and continue to implement a compliance and ethics program designed to effectively detect and deter violations of U.S. anti-fraud laws in all of its operations.
“By defrauding our country’s military services, the BBC has taken advantage of its unique position as a provider of military housing and has placed greed and personal profit above our military,” said the FBI Deputy Director, Paul M. Abbate. “Today’s guilty plea reaffirms that the FBI, along with our partners, are committed to preventing such heinous crimes and will work tirelessly to bring those who engage in this type of crime to justice.”
“The Air Force’s Office of Special Investigations is committed to protecting the integrity of the Air Force Department’s procurement process,” said Special Agent Paul Wachsmuth, director of the Air Force. AFOSI Procurement Fraud Investigation Office. “The extensive and dedicated collaborative efforts between AFOSI, the Air Force Audit Agency, the Defense Criminal Investigative Service and the Department of Justice in this investigation have been essential in ensuring the safety and well-being of our fighters and of their families. “
“The health and safety of service members and their families remains of critical importance to the Defense Criminal Investigation Service (DCIS) of the Office of the Inspector General of Defense,” said Senior Deputy Director James R. Ives from DCIS. “DCIS and our law enforcement partners are committed to working with the Department of Justice to hold businesses accountable when they focus on profits over the well-being of those who honorably serve our nation. “
“This judgment demonstrates the commitment of the CID Special Agents to protect the families of soldiers from deception and fraud, while ensuring the integrity of the military housing privatization initiative, which is to provide safe, secure housing. quality and well-maintained to our military families, ”said Special Agent in Charge Frank Robey of the Major Fraud in Procurement Unit of the Army Criminal Investigation Division (CID). “Throughout this investigation, Army CID special agents worked closely with federal authorities, emphasizing the importance of successful partnerships with other law enforcement agencies. “
“Balfour Beatty’s ploy to delay entering service requests into their electronic tracking system to increase their performance-based attribution violated their contract and wasted taxpayer money,” Special Agent said. in charge of Thomas Cannizzo of the NCIS Southeast Field Office. “NCIS and our partners remain committed to eliminating fraud and corruption that threaten the integrity of the Department of the Navy’s procurement process. “
“The men and women who live in military housing across our country, including those at Fort Stewart and Fort Gordon, deserve prompt and professional housekeeping service from their housing providers,” the US Attorney said. David H. Estes for the Southern District of Georgia. “That the BBC not only fails to provide this service, but also falsifies information to line their pockets is despicable. Our office will work tirelessly with our law enforcement partners and other parts of the Department of Justice, to ensure that those who provide sub-service to the military and lie about it are held accountable. . “
“The Western District of Texas is home to some of the largest military installations in the country and our district works tirelessly to protect and serve our military families,” said United States lawyer Ashley C. Hoff for the Western District of Texas. “The resolution entered with the BBC regarding conduct that impacted military families in our district at Lackland Air Force Base and Fort Bliss Army Base. This resolution is an important step in holding private military housing providers accountable to our military personnel and their families. “
“The greed of the accused has undermined a program designed to protect the homes of the military as they courageously fight to protect our homeland,” said Acting US Attorney Robert J. Troester for the Western District of Oklahoma. “Soldiers and their families deserve better. The U.S. Attorney’s Office is committed to working with our law enforcement partners to protect our military community from fraudulent conduct of all kinds, especially the integrity of DoD housing programs.
This resolution follows the prior entry of guilty pleas by two BBC directors. In April 2021, Stacy Cabrera, a former BBC community manager, pleaded guilty to conspiring to commit wire fraud. In June, Rick Cunefare, a former BBC regional director, pleaded guilty to major fraud against the United States.
Air Force OSI, DCIS, Army-CID, NCIS, and the FBI Field Office in Oklahoma City have investigated the case. The Air Force Audit Agency also provided assistance.
Prosecutors Michael P. McCarthy and Siji Moore of the Fraud Section of the Criminal Division of the Department of Justice continued the case. Trial attorneys Laura E. Hill and Elspeth England of the Civil Division Fraud Section, Assistant United States Attorney Ron Gallegos of the United States Attorney’s Office for the Western District of Oklahoma, Assistant United States Prosecutors Jonathan Porter and Patrick Schwedler of the United States Attorney’s Office for the Southern District of Georgia, and Assistant U.S. Attorneys Mary Kruger and Jacquelyn Christilles of the United States Attorney’s Office for the Western District of Texas handled the civil case.