Former Army Contractor Pleads Guilty for “No Show” Job Involving Contract at APG

From the U.S. Attorney’s Office in Baltimore:

Eric D. Price, age 58, of Fayetteville, North Carolina pleaded guilty today to a charge of conspiracy to defraud the United States and commit wire fraud, related to payments to him for a “no show” job on a sub-contract under contracts awarded by the U.S. Army Communications-Electronics Command headquartered at Aberdeen Proving Ground (APG), in Harford County, Maryland.

The guilty plea was announced by United States Attorney for the District of Maryland Robert K. Hur; Special Agent in Charge Robert E. Craig, Jr. of the Defense Criminal Investigative Service – Mid-Atlantic Field Office; Special Agent in Charge L. Scott Moreland, Mid-Atlantic Fraud Field Office, Major Procurement Fraud Unit, U.S. Army Criminal Investigation Command; and Special Agent in Charge Gordon B. Johnson of the Federal Bureau of Investigation, Baltimore Field Office.

According to his plea agreement, in March 2006, the U.S. Army Contracting Command at APG awarded a 10-year, $19.2 billion contract to seven prime contractors to provide technology services to support the integrated engineering, business operations, and logistics needs for the Army. Task Orders 11, 77, and 115 were placed against this contract. John Kays had a leadership position as a civilian employee of the Army related to these task orders.

Matthew Barrow was the president and owner of MJ-6, LLC, a company which he and his wife formed in Ohio in 2008 to obtain military subcontracts. John Kays steered business on Task Orders 77, 11, and 115 to MJ-6.

According to Price’s plea agreement, Kays and Barrow agreed that Price would be added to the MJ-6 payroll. Price’s job was purportedly to directly support Kays. Price purportedly worked remotely at Fayetteville, North Carolina while Kays worked at APG. From February 2010 through February 2012, Price fraudulently received more than $100,000 in salary payments for a “no show” job at MJ-6 for which MJ-6 billed over $400,000 to the prime contractor, which was passed through to the United States Army. Kays certified and approved MJ-6’s work, including Price’s “no show” job. To facilitate the “no show” job, Price submitted false and fictitious status reports and invoices through MJ-6 to the prime contractor.

In all, MJ-6 paid Price $105,556.17 for his “no show” job during the period from May 2010 through February 2012. Barrow, through MJ-6, billed the prime contractor, who in turn billed the Army, $422,704 for Price’s purported work, which was certified by Kays. Price was unaware of the amount of mark-up to his salary by MJ-6.

As part of his plea agreement, Price will be required to pay restitution to the government of $105,556.17.

Price faces a maximum sentence of five years in prison for the conspiracy. U.S. District Judge George L. Russell, III has scheduled sentencing for September 28, 2018 at 2:30 p.m.

In connection with a larger bribery scheme involving John Kays, age 44, his wife Danielle Kays, age 43, both of Bel Air, Maryland, and Matthew Barrow, age 44, of Toledo, Ohio, Barrow pleaded guilty to paying bribes of approximately $800,000, including $500,000 in cash, to John Kays and Danielle Kays, who was also a government official. John Kays pleaded guilty to receiving bribes of approximately $800,000 from Barrow and was sentenced to six years in prison. Danielle Kays is presently serving an 18-month sentence for conspiracy to defraud the United States and bribery. Matthew Barrow is awaiting sentencing. John Kays, Danielle Kays, and Matthew Barrow all graduated from West Point where they were classmates.

The National Procurement Fraud Task Force was formed in October 2006 to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs. The Task Force includes the United States Attorney’s Offices, the FBI, the U.S. Inspectors General community, and a number of other federal law enforcement agencies. This case, as well as other cases brought by members of the Task Force, demonstrates the Department of Justice’s commitment to helping ensure the integrity of the government procurement process.

United States Attorney Robert K. Hur commended the DCIS, the Army Criminal Investigation Command, and the FBI for their work in the investigation. Mr. Hur thanked Assistant U.S. Attorneys Joyce K. McDonald and Harry M. Gruber, who are prosecuting the case.