Clearing munitions in Iraq and keeping them out of enemy hands is very challenging work. The Project Manager and Deputy Project Manager of an international government contractor made that work even more challenging by taking kickbacks from a subcontractor.
The Parsons Company, an international construction and engineering firm, had a contract with the Army Corps of Engineers Coalition Munitions Clearance Program to clear Iraq of enemy and other munitions. Gaines Newell was the Project Manager, and Billy Joe Hunt was the Deputy Project Manager for the contract. According to the Criminal Information filed against Newell and Hunt, they were part of a conspiracy involving $1 million in kickbacks from a subcontractor, Ahmed Kazzaz, and his business, Leadstay Company. The Information stated that Newell and Hunt offered improper assistance and favorable treatment to Leadstay by providing confidential bidding information, preparing bids, invoices, and other documents relating to the subcontracts, recommending and vouching for Leadstay, and “causing the award of subcontracts to [Leadstay], knowing that other subcontractors were better able to perform the work required.” The Information also stated that Newell and Hunt received a negotiated 13% kickback from Leadstay, and structured the scheme using foreign bank accounts, cash deposits and withdrawals under $10,000 to avoid currency reporting requirements, and in some cases, wiring money directly to creditors of the defendants. Newell also had a kickback arrangement with a different subcontractor.
Newell and Hunt pled guilty to conspiracy and filing false tax returns (not claiming the kickback money on their tax returns) in federal court in the Northern District of Alabama. See United States v. Gaines R. Newell, Jr., 11-CR-00383 (N.D.Ala.) and United States v. Billy Joe Hunt, 11-CR-00382 (N.D.Ala.). Kazzaz also pled guilty and faces sentencing on October 29, 2012.
Hunt provided information to the Government regarding his conduct and the conduct of Newell and Kazzaz. Hunt also agreed to secretly record conversations with Newell, which was dangerous for Hunt because Newell was a former member of the military who owned a gun and who previously told Hunt that he “would kill himself before giving the government the satisfaction of convicting him.” Hunt’s information led to Newell’s guilty plea, and Newell’s cooperation regarding Kazzaz. This cooperation led to Kazzaz’s arrest and guilty plea, which was important to the Government because “the prosecution of kickback payors in Iraq and Afghanistan is very difficult and logistically complicated.” Based on Newell’s and Hunt’s cooperation, their sentences were significantly reduced.
The Army Corps of Engineers wrote a letter to the Court, stating the impact of the crime. The letter stated that “their self-serving actions erode the very foundation of the US contracting process,” and “they have harmed the very country that provided the opportunity to businesses such as theirs in the competitive bidding and contracting process.”
Hunt received 15 months in prison, three years of supervised release, $66,212 in restitution to the IRS, and forfeiture of $236,472. Newell received 27 months in prison, three years of supervised release, $1,102,115 in restitution to the IRS and the Army Corps of Engineers, and forfeiture of $861,027. Hopefully, these sentences will deter other individuals from engaging in similar conduct and thereby promote the integrity of the contracting process in war zones and elsewhere.
Brian Stolarz is the attorney responsible for the content of this article.