Six indicted on bid rigging at Army hospital - Army News | News from Afghanistan & Iraq - Army Times

Six indicted on bid rigging at Army hospital

SAN ANTONIO — Six men were indicted by a federal grand jury on charges they rigged bids on contracts for $79 million in work for the U.S. Army Medical Command at nearly 20 Army hospitals.

Of the men indicted Thursday, one was a military contracting officer, three were contractors assigned to the command and one was a prominent Hispanic businessman. The sixth was the officer’s son. Prosecutors accuse them of using their positions to steer contracts for computer equipment and technology to companies they controlled or were aligned with.

Several contracts were narrowly tailored so that only a handpicked company could get them, according to court records. In other cases, fake bids were made so that it would appear companies were competing, when they were actually working together so it wouldn’t matter who go the contract.

Most of the contracts were awarded between 2002 and 2005 for work, equipment or services at hospitals including Brooke Army Medical Center at Fort Sam Houston, where the medical command is headquartered, the San Antonio Express-News reported Friday.

The indictment accuses the men of conspiracy to commit bribery, solicit or disclose confidential bid information before contracts were awarded. They are also accused of wire fraud and soliciting or accepting kickbacks in the rigged contract process.

Prosecutors, who largely built their case on 150 conversations secretly recorded for the FBI by a witness, also allege in court records that the money was laundered in real estate, a San Antonio swingers’ club and nightclubs in Panama.

Those indicted include Johnnie Flores, the CEO of Sphinx Consultants & Associates in San Antonio. He was named “Businessman of the Year” in 2003 by the National Republican Congressional Committee Business Advisory Council for growing the company’s revenue from $6,000 in 1998 to $7 million by 2002.

A call to Sphinx seeking comment from Flores was not immediately returned Friday.

Also charged are William J. “Bill” Strout Sr., a retired contracting officer technical representative for the U.S. Army Medical Information Technology Center; Francisco “Frank” Quinata Cruz, a San Antonio contractor/consultant whose business centered on MEDCOM contracts; Strout’s son, William J. “Will” Strout Jr.; Ignacio “Nacho” Ruelas Torres, a private contract employee assigned to the medical command; and Andrew “Andy” Waring II, another civilian contract employee assigned to the military video teleconferencing.

A call to a number listed for the elder Strout in San Antonio and one to the office of Ray Taylor, Torres’ attorney, were not immediately returned Friday.

Bill Strout and Torres have previously denied the accusations.

Cruz’s lawyers, Louis Correa and Robert Featherston, said Cruz believes he’s done nothing wrong and that there were no bribes involved.