Cases of selling bad parts to military are growing
By KATHY LYNN GRAY | The Columbus Dispatch | Published: December 16, 2012
A former Columbus man has been charged with selling the U.S. military thousands of counterfeit nuts, bolts and screws in one of several military-parts cases before the U.S. District Court in Columbus.
Martin Dale Geyer, owner of Wellworth Fastener Products in Georgia, was indicted by a federal grand jury late last month on seven charges of fraud and false claims. He’s awaiting arraignment.
“The problem is persistent and ongoing,” said Assistant U.S. Attorney J. Michael Marous, who’s prosecuting Geyer. “We have had a continuous flow of these cases for 15 years.”
Geyer, 48, now of Wentworth, Ga., lived in Norwich Township in 2010 when federal agents searched his house as part of the bogus-parts investigation. He ran the company out of that house in northwestern Franklin County.A large number of counterfeit-parts cases are prosecuted in Columbus because contractors are paid through the Defense Finance and Accounting Service office here. The Defense Criminal Investigative Service, which has civilian law-enforcement offices funded by the Department of Defense, investigates contract fraud. Agents in its Columbus office handle local cases.
On Dec. 7, Jerome Rabinowitz of Great Neck, N.Y., was sentenced in Columbus to four years in prison for selling the Navy thousands of nonconforming electronic parts for nuclear equipment. Rather than sending the Navy modern parts that met government specifications, Rabinowitz supplied surplus parts, some of which were decades old.
Penalties for contractors who supply bad parts range from probation to 20 years in prison, depending on the charges. Defendants often are charged with mail fraud because they ship the parts, or with wire fraud because defense payments are wired to them. One of the charges against Rabinowitz involved making false claims because he provided the government with bogus documents that indicated the parts came from a legitimate source when they did not.
Companies across the country bid on military contracts for replacement parts, mostly through an online process. Those with the lowest bids generally are selected to provide the parts.
Online information outlines part specifications, sometimes requiring parts produced by a specific manufacturer. The information also notes whether the parts are “critical application items,” which means their failure could lead to injury or death to members of the military, according to Navy Cmdr. Kevin Cheshure, who testified in the Rabinowitz case.
Some of the nonconforming parts that Geyer is accused of providing were considered critical, according to the indictment against him.
The Defense Acquisition University, which provides training for defense workers in the acquisition field, concludes in a report that “counterfeit products are a pandemic crisis, growing annually.” The training center report says that while the problem is difficult to contain, efforts to control it are increasing, both in the military and in industry.
Edward Hintz, chief counsel for the Defense Logistics Agency Land and Maritime, said that while the overwhelming majority of military contractors are honest, some are unscrupulous.
The agency, formerly known as the Defense Supply Center Columbus, procures parts for the military.
He said about 200 cases a year are investigated for possible fraud, and about 10 a year are turned over for prosecution.
“I think it deters others,” Hintz said. “It points out we’re being vigilant.”
Another defendant that Marous prosecuted is scheduled to be sentenced in federal court in Columbus on Wednesday.
Shane M.S. Sarnac of Morenci, Mich., pleaded guilty in January to selling $3.9 million in bad parts to the military in 2007 and 2008 through his company, Roth Fabricating Inc. The parts included defective seat assemblies used on military vehicles and tanks that represented a safety risk, according to Defense Department engineers.
In court documents, Sarnac’s attorney wrote that his client was inexperienced, overwhelmed and received bad advice from a government-contracting consultant. Sarnac, 49, has signed a plea agreement that would send him to prison for two years and require him to pay restitution of $825,000.
A third contractor recently pleaded guilty in federal court in Columbus to providing bad automotive parts, mostly for Humvees.
Billy Joe Ward, 57, of Lemoyne, Pa., signed a plea agreement setting the restitution he’ll pay at a minimum of $230,846. He’s charged with one count of wire fraud and faces a sentence of as long as 20 years in prison and a fine of as much as $250,000.