Team Infidel
Forum Spin Doctor
San Antonio Express-News
April 18, 2008 By Guillermo Contreras, Express-News
A federal judge Thursday sentenced five men involved in rigging $79 million in Army contracts at Fort Sam Houston to prison sentences of five to seven years, a fraction of what they could have faced. U.S. District Judge Orlando Garcia thought about saddling the men, whom he called "crooks," with longer sentences. He backed down after learning the agents who investigated the case were OK with the plea deals that prosecutors worked out with the defense, and after hearing the circumstances of each defendant.
"There is a crime of need and a crime of greed," Garcia said. "This was pure greed."
The defendants, who pleaded guilty to fraud conspiracy and bribery-related charges, faced sentences closer to 20 years if convicted at trial. The scheme developed at the U.S. Army Information Technology Center, a division of the U.S. Army Medical Command, or MEDCOM, where three of the men had worked.
Criminal investigators with the Army, FBI, Internal Revenue Service and other agencies found three of the MEDCOM insiders used their positions to manipulate and steer contracts for computer equipment and technology for the Army — such as computer cable upgrades — to companies they controlled or contractors with whom they were aligned.
"From tax violations to bribery, these subjects showed complete disregard for our laws," said Marcus Williams, chief of the IRS' local criminal investigators. "Their scheme affected numerous legitimate business owners of our community."
Most of the contracts were awarded between 2002 and '05 for work at nearly 20 Army hospitals, including Brooke Army Medical Center. The men took advantage of laws that give minority-owned and small, disadvantaged businesses a leg up on the competition. Court records name 15 "pass-through" firms, meaning they got a cut of 3 percent to 5 percent to "pass through" work to companies that were aligned with the defendants, investigators found.
The total gain from the scheme was more than $3 million, but because some of the men already had to forfeit land and other property, the government said the net take was $2.7 million.
Garcia sentenced MEDCOM insiders William "Bill" Strout Sr., 58, and Ignacio "Nacho" Ruelas Torres, 54, and contractor Francisco Quinata Cruz, 60, to seven years in prison and ordered them to pay restitution totaling $2.7 million. Contractor Johnnie Flores, 47, also was ordered to help them pay and got five years and two months in prison for allowing his company, Sphinx Consultants & Associates, to be used as a conduit to perpetuate the fraud.
Another MEDCOM insider, Andrew Delancey Waring II, 59, got five years for conspiracy, bribery and failing to file a tax return. He has to pay $265,560 in restitution. All must also serve three years of supervision after prison, and all but Flores were ordered to serve at least 500 hours of community service.
All are former members of the military and apologized for their actions. The judge gave all but Flores six months to report to prison; Flores was given a year.
Strout's son, William "Will" Strout Jr., 37, who acted as a bookkeeper in the scheme, will be sentenced next month.
The Army conducted its own housecleaning in 2005, relieving a colonel who headed the Information Technology Center and reassigning other employees because of the probe and "so many ongoing issues," military records show. The Army's own documents show that for weeks, workers reported inappropriate contracting activity, but the reports were cast aside as coming from employees unhappy with how their own personnel issues were handled.
April 18, 2008 By Guillermo Contreras, Express-News
A federal judge Thursday sentenced five men involved in rigging $79 million in Army contracts at Fort Sam Houston to prison sentences of five to seven years, a fraction of what they could have faced. U.S. District Judge Orlando Garcia thought about saddling the men, whom he called "crooks," with longer sentences. He backed down after learning the agents who investigated the case were OK with the plea deals that prosecutors worked out with the defense, and after hearing the circumstances of each defendant.
"There is a crime of need and a crime of greed," Garcia said. "This was pure greed."
The defendants, who pleaded guilty to fraud conspiracy and bribery-related charges, faced sentences closer to 20 years if convicted at trial. The scheme developed at the U.S. Army Information Technology Center, a division of the U.S. Army Medical Command, or MEDCOM, where three of the men had worked.
Criminal investigators with the Army, FBI, Internal Revenue Service and other agencies found three of the MEDCOM insiders used their positions to manipulate and steer contracts for computer equipment and technology for the Army — such as computer cable upgrades — to companies they controlled or contractors with whom they were aligned.
"From tax violations to bribery, these subjects showed complete disregard for our laws," said Marcus Williams, chief of the IRS' local criminal investigators. "Their scheme affected numerous legitimate business owners of our community."
Most of the contracts were awarded between 2002 and '05 for work at nearly 20 Army hospitals, including Brooke Army Medical Center. The men took advantage of laws that give minority-owned and small, disadvantaged businesses a leg up on the competition. Court records name 15 "pass-through" firms, meaning they got a cut of 3 percent to 5 percent to "pass through" work to companies that were aligned with the defendants, investigators found.
The total gain from the scheme was more than $3 million, but because some of the men already had to forfeit land and other property, the government said the net take was $2.7 million.
Garcia sentenced MEDCOM insiders William "Bill" Strout Sr., 58, and Ignacio "Nacho" Ruelas Torres, 54, and contractor Francisco Quinata Cruz, 60, to seven years in prison and ordered them to pay restitution totaling $2.7 million. Contractor Johnnie Flores, 47, also was ordered to help them pay and got five years and two months in prison for allowing his company, Sphinx Consultants & Associates, to be used as a conduit to perpetuate the fraud.
Another MEDCOM insider, Andrew Delancey Waring II, 59, got five years for conspiracy, bribery and failing to file a tax return. He has to pay $265,560 in restitution. All must also serve three years of supervision after prison, and all but Flores were ordered to serve at least 500 hours of community service.
All are former members of the military and apologized for their actions. The judge gave all but Flores six months to report to prison; Flores was given a year.
Strout's son, William "Will" Strout Jr., 37, who acted as a bookkeeper in the scheme, will be sentenced next month.
The Army conducted its own housecleaning in 2005, relieving a colonel who headed the Information Technology Center and reassigning other employees because of the probe and "so many ongoing issues," military records show. The Army's own documents show that for weeks, workers reported inappropriate contracting activity, but the reports were cast aside as coming from employees unhappy with how their own personnel issues were handled.