Pentagon Paid $999,798 to Ship Two 19-Cent Washers to Texas

[kang]

http://news.yahoo.com/s/bloomberg/20070816/pl_bloomberg/ajkoyhuchw0m;_ylt=Ar6ILRUZLpTOjwAmfzhfxqoEtbAF

Aug. 16 (Bloomberg) -- A small South Carolina parts supplier collected about $20.5 million over six years from the Pentagon for fraudulent shipping costs, including $998,798 for sending two 19-cent washers to a Texas base, U.S. officials said.

The company also billed and was paid $455,009 to ship three machine screws costing $1.31 each to Marines in Habbaniyah, Iraq, and $293,451 to ship an 89-cent split washer to Patrick Air Force Base in Cape Canaveral, Florida, Pentagon records show.

The owners of C&D Distributors in Lexington, South Carolina -- twin sisters -- exploited a flaw in an automated Defense Department purchasing system: bills for shipping to combat areas or U.S. bases that were labeled ``priority'' were usually paid automatically, said Cynthia Stroot, a Pentagon investigator.

C&D's fraudulent billing started in 2000, Stroot, the Defense Criminal Investigative Service's chief agent in Raleigh, North Carolina, said in an interview. ``As time went on they got more aggressive in the amounts they put in.''

The price the military paid for each item shipped rarely reached $100 and totaled just $68,000 over the six years in contrast to the $20.5 million paid for shipping, she said.

``The majority, if not all of these parts, were going to high-priority, conflict areas -- that's why they got paid,'' Stroot said. If the item was earmarked ``priority,'' destined for the military in Iraq, Afghanistan or certain other locations, ``there was no oversight.''

Scheme Detected

The scheme unraveled in September after a purchasing agent noticed a bill for shipping two more 19-cent washers: $969,000. That order was rejected and a review turned up the $998,798 payment earlier that month for shipping two 19-cent washers to Fort Bliss, Texas, Stroot said.

The Pentagon Defense Logistics Agency orders millions of parts a year. Stroot said the agency and the Defense Finance and Accounting Service, which pays contractors, have made major changes, including thorough evaluations of the priciest shipping charges.

A review of paid shipping invoices showed that fraudulent billing is ``is not a widespread problem,'' she said.

``C&D was a rogue contractor,'' Stroot said. While other questionable billing has been uncovered, nothing came close to C&D's, she said. The next-highest contractor billed $2 million in questionable transport costs, she said.

Guilty Pleas

C&D and two of its officials were barred in December from receiving federal contracts. A federal judge in Columbia, South Carolina, today accepted the guilty plea of the company and one sister, Charlene Corley, to one count of conspiracy to commit wire fraud and one count of conspiracy to launder money, Assistant U.S. Attorney Kevin McDonald said.

Corley, 46, faces a maximum prison sentence of 20 years on each count and will be sentenced in the near future, McDonald said in a telephone interview from Columbia. Stroot said her sibling died last year.

Corley didn't immediately return a phone message left on her answering machine at her office in Lexington. Her attorney, Gregory Harris, didn't immediately a phone call placed to his office in Columbia.

Stroot said the Pentagon hopes to recoup most of the $20.5 million by auctioning homes, beach property, jewelry and ``high- end automobiles'' that the sisters spent the money on.

``They took a lot of vacations,'' she said.

[Superman]

Another Business Hero story in the get-what-you-can, greed-is-good, survival of the fittest economy. Three cheers for the two twins.

[kach22i]

At least they didn't ship the billing services to India and source the parts from China - all American gals.

[frogger]

The one sister was very smart, getting in five years of gorging at the government trough and then dying off before the feds could pinch her.

[TerryBPP]

Imagine how many companies do this with more stealth, for decades. I guarantee if the shipping was only $10-20k it never would have been discovered.

[legion]

Originally Posted by Superman

Another Business Hero story in the get-what-you-can, greed-is-good, survival of the fittest economy. Three cheers for the two twins.

Once again Supe, you have confused competition with fraud.

[the]

Stuporman is one confused dude.

[Rick Lee]

Man, and the Pentagon busted my balls for months when I raised their rates with us 50% from $1000 to $1500 per month, which is about 1/10 of what they'd pay if they were non-gov't.

[Superman]

Originally Posted by the

Stuporman is one confused dude.

Huh?

[FenderGuy]

Those sisters are scape goats, the money's going to fund other things ....

[hardflex]

All of those "emergency war spending" bills, (the ones that if you voted against them you were unpatriotic scum, the last one i think was 150 billion) have no oversight. Think it's not a coincidence that it has become the new way to fund the military? There are lot's more War Profiteers out there, at least these got caught.

[on-ramp]

corporate America is full of criminals it seems. Every week a new CEO is either indicted, goes to jail , or whatever. these are the same people that buy access to "our" government.

[pwd72s]

I smell the skunkworks at work here... How do the costs of top secret projects get covered? Think about it...

[Shaun @ Tru6]

Originally Posted by pwd72s

I smell the skunkworks at work here... How do the costs of top secret projects get covered? Think about it...

Black helicopters just don't sprout like skeleton warriors from Hydra teeth, do they?