This just in—some people are just crooked, and all the business conduct policies and ethics awareness programs in the world won’t do a thing to stop these pieces of out-of-spec humanity from their wrongdoing.  Think we exaggerate?  Read on.

• Michael Wheeler, a former Lieutenant Colonel in the U.S. Army Reserve, was sentenced in January 2010 to 42 months in prison for “his participation in a wide-ranging bribery conspiracy involving the U.S. government, the Republic of Iraq and the Coalition Provisional Authority - South Central Region (CPA-SC) in Al-Hillah, Iraq,” according to this press release by the Department of Justice.  According to the DOJ—

Wheeler, along with Whiteford and Harrison, conspired from December 2003 to December 2005 with at least three others—Robert Stein, at the time the comptroller and funding officer for the CPA-SC; Philip H. Bloom, a U.S. citizen who owned and operated several companies in Iraq and Romania; and former U.S. Army Lt. Col. Bruce D. Hopfengardner—to rig the bids on contracts being awarded by the CPA-SC so that more than 20 contracts were awarded to Bloom. In total, Bloom received approximately $8 million in rigged contracts. … Bloom, in return, provided Whiteford, Harrison, Wheeler, Stein, Hopfengardner and others with more than $1 million in cash, SUVs, sports cars, a motorcycle, jewelry, computers, business class airline tickets, liquor, promise of future employment with Bloom and other items of value.  Bloom admitted he laundered more than $2 million in currency that Whiteford, Harrison, Wheeler, Hopfengardner, Stein and others stole from the CPA-SC that had been designated for the reconstruction of Iraq. Bloom then used his foreign bank accounts in Iraq, Romania and Switzerland to send some of the stolen money to Harrison, Stein, Hopfengardner and other Army officials in return for them awarding contracts to Bloom and his companies. … On Jan. 29, 2007, co-conspirator Stein was sentenced to nine years in prison for related charges of conspiracy, bribery and money laundering, as well as weapons possession charges … Stein was also ordered to forfeit $3.6 million … On Feb. 16, 2007, co-conspirator Bloom was sentenced to 46 months in prison for related charges of conspiracy, bribery and money laundering [and] was also ordered to forfeit $3.6 million …  On June 25, 2007, Hopfengardner was sentenced to 21 months in prison for conspiracy and money laundering related to this scheme. Hopfengardner was also ordered to forfeit $144,500.  On Dec. 8, 2009, Whiteford was sentenced to 60 months in prison for conspiring to commit bribery and ITSP [Interstate Transportation of Stolen Property]. He was also ordered to forfeit the things of value he received from Stein and others, including a Breitling watch, a Toshiba laptop computer and $10,000 in cash.  On June 4, 2009, Harrison was sentenced to 30 months in prison and ordered to pay $366,640 in restitution. Harrison pleaded guilty on July 28, 2008, admitting that she took more than $300,000 from the CPA-SC while she was deployed there … Harrison also admitted that she received a Cadillac Escalade from Bloom and that she helped to move unregistered firearms from a hotel in North Carolina to Stein’s home.  On Dec. 10, 2009, Driver was sentenced to six months home confinement and ordered to pay $36,000 in restitution for his role in laundering portions of stolen CPA money brought from Iraq back into the United States by Harrison, his wife.

• Also in January 2010, Ryan Scott McMonigle pleaded guilty to “one count of aiding and abetting the solicitation of a kickback” in connection with the award of subcontracts under a US Agency for International Development (US AID) prime contract to restore infrastructure in Afghanistan, according to this DOJ press release.  The DOJ reported that—

McMonigle admitted that he assisted others in the solicitation of a kickback from a private security vendor in return for favorable treatment for this potential bidder in connection with the award of one or more subcontracts. According to court documents, the subcontracts provided for private security services to protect USAID personnel and contractors in Afghanistan operating under the AIRP contract. The charge of aiding and abetting the solicitation of a kickback carries a maximum penalty of 10 years in prison and a $250,000 fine. 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 of those amounts is greater than the statutory maximum. McMonigle is scheduled to be sentenced on Nov. 5, 2010. Bryan Lee Borrows, who was also employed in Kabul by Civilian Police International, pleaded guilty on Sept. 2, 2009, to conspiring with others to solicit kickbacks from private security vendors in return for favorable treatment for those potential bidders in connection with the award of one or more subcontracts. Burrows was sentenced on Dec. 19, 2009, to 12 months and one day in prison for his role in the scheme. In addition, Scott Anthony Walker, of Australia, pleaded guilty on Nov. 16, 2009, to one count of conspiracy to solicit a kickback, related to his role in the scheme. Walker was arrested in the United States on Nov. 11, 2009, and is scheduled to be sentenced on Feb. 5, 2010.

• Finally, on February 10, 2010, Dongfan “Greg” Chung (age 73) was sentenced to 15 years in Federal prison for “six counts of economic espionage and acting as an unregistered foreign agent of the People’s Republic of China (PRC), for whom the engineer stole Boeing trade secrets related to several aerospace programs, including the Space Shuttle,” according to this article.  Chung was employed by Rockwell International from 1973 until the company was acquired by Boeing in 1996.  He was employed by Boeing until he retired in 2002, but returned as a consultant from 2003 until 2006.  Chung was a naturalized U.S. citizen and held a Secret clearance.  The indictment alleged that, in addition to trying to sell technology related to the Space Shuttle, Chang also tried to sell “trade secrets” related to the C-17 and the Delta IV rocket.  The article stated: “Individuals in the Chinese aviation industry began sending Chung “tasking” letters as early as 1979. Over the years, the letters directed Chung to collect specific technological information, including data related to the Space Shuttle and various military and civilian aircraft. Chung responded in one letter indicating a desire to contribute to the ‘motherland.’” The article reported that: “In various letters to his handlers in the PRC, Chung referenced engineering manuals he had collected and sent to the PRC, including 24 manuals relating to the B-1 Bomber … between 1985 and 2003, Chung made multiple trips to the PRC to deliver lectures on technology involving the Space Shuttle and other programs, and during those trips he met with officials and agents of the PRC government. Chung and PRC officials exchanged letters that discussed cover stories for Chung’s travel to China and recommended methods for passing information….” According to the article, Chung “begged the court for a lenient sentence, stating he had taken the information to write a book.”  The Judge was not impressed and handed out a long sentence to “provide a strong deterrent to the PRC not to send its agents here to steal American military secrets.” 

Most individuals in the defense industry are good people dedicated to doing the right thing at all times, often motivated by patriotism and a sense of public service.  We don’t want to suggest otherwise.  But these three stories, coming essentially on top of one another, and put in context of other articles we’ve posted recently about fraud and corruption, should remind readers that there is enough wrongdoing to justify all the many auditors and law enforcement officials we encounter in this highly regulated industry.