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3 former Special Forces soldiers plead guilty in Army fraud case

Dec. 17, 2013 - 08:13PM   |  
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SALT LAKE CITY — Three former Special Forces soldiers have pleaded guilty to charges of using inside bid information to win more than $50 million in Army contracts in Afghanistan in a case that shows how easily contractors can profit from military business.

All three defendants could face prison time, but federal prosecutors say they are recommending leniency because the Army awarded the contracts on short notice with little scrutiny while trying to fight a war.

The case started in Utah as a money-laundering investigation when one of the men was questioned about withdrawing large amounts of cash.

The partners ultimately were paid $54 million to service U.S.-supplied weapons for Afghan troops and provide logistical training for the country’s national army.

The defendants started out by bidding more — not less — than a U.S. competitor they knew the Army would disqualify for not being able to do the work, said Robert Lund, an assistant U.S. attorney in Salt Lake City.

They were so certain of winning the initial contract that they raised their price above an Army estimate, making victims of American taxpayers, Lund said Tuesday.

The Army had no complaints about the service for Afghan troops, but the government says the deal was tainted from the start. One defense lawyer — former U.S. Attorney for Utah Brett Tolman — has said the case proved only how easy it was to win Army contracts in Afghanistan.

“One of the things I will concede to my good friend Brett Tolman is there are mitigating circumstances,” Lund said. “The government is recognizing that.”

Lund said the Army contracts allowed for a roughly 33 percent profit and grew from less than $1 million “into something nobody expected would be this big.”

The latest plea agreement came Friday from former Army Reserve Lt. Col. David Young, who acknowledged he leaked the government’s price estimate and details of the competitor’s bid.

Young, 49, agreed to forfeit millions of dollars in cash and assets, including homes in Florida and New Hampshire that prosecutors say he bought in other people’s names. He agreed to accept up to four years in prison when a judge sentences him in March.

“David Young was a public official working this contract in possession of protected information, and he disclosed it in violation of government law,” Lund said. “How does the government turn its back on that?”

Another defendant, Christopher Harris, said in a government agreement that he pocketed $17 million from the Afghan contracts and shared more than half with Young.

Harris, 49, pleaded guilty Dec. 9 to conspiracy to commit government fraud by paying kickbacks to Young and helping him launder money. He was a manager in Afghanistan for Boston-based American International Security Corp. He will be sentenced in March to as many as four years in prison.

The company’s chief executive, Michael Taylor, pleaded guilty the day after Thanksgiving to wire fraud and violating the U.S. Procurement Integrity Act.

Taylor, 53, was released from a Utah jail Nov. 27 after serving 14 months. He faces up to two years in a federal prison at sentencing, but that could be reduced to several months with credit for time served and good behavior. The sentencing has yet to be scheduled.

The government seized $5.2 million from one of his company’s bank accounts but recently agreed to return $2 million. It also returned a pair of Land Rovers owned by Taylor and $50,000 he set aside for his wife.

Taylor has maintained he prepared a bid on the initial Afghan contract without relying on inside information. Instead, he acknowledged only that there was a “high probability” he received some valuable information through Harris and “deliberately avoided learning the truth” about how the leak originated.

Taylor’s Washington, D.C.-based attorney, Daniel Marino, declined to comment Tuesday.

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