NORFOLK, Va. – A Richmond-area ship parts salesman was sentenced to six months in prison Monday for defrauding Newport News Shipbuilding and the Navy.
Gregory Kirk Walsh, 37, worked at Richmond-based Anixter Shipboard Group, and in late July he pleaded guilty to a single charge of wire fraud for arranging a series of fake transactions that added $83,000 to the cost of cable sold to Newport News Shipbuilding over the better part of three years.
The scheme led to the shipyard overcharging the U.S. Navy for nuclear-powered aircraft carriers and submarines.
Leading up to the sentencing hearing, Assistant U.S. Attorney Stephen W. Haynie and an attorney for Walsh filed motions with the court arguing that Walsh should be sentenced to supervised probation, despite federal guidelines that call for sentences of a year to 18 months for defendants found guilty of similar charges.
U.S. District Judge Raymond Jackson saw it differently, according to court documents.
He sentenced Walsh to six months in prison starting Dec. 15, as well as three years of probation upon completion of the sentence. Walsh was also ordered to pay a $3,000 court fine.
Walsh's attorney, John S. West, wrote in his appeal for leniency that his client takes care of his aging parents, paid restitution to his former company and was an Eagle Scout.
West also argued that Walsh was not motivated by greed "but rather that he set up the straw purchases to show Anixter was involving small, family-owned businesses in the fulfillment of its contract," which in turn "enhance(d) the appearance of his employer's performance."
The case against Walsh relied in part on evidence in an email he sent to Greg Anixter, one of the owners of Arizona-based small business Trillium. According to court records, Walsh wrote to Anixter, "I have a 15K deal that I can put $1500 in you[r] pocket. Let me know yay or nay."
Court records show Walsh purchased cable for nearly $15,000, sold it to Trillium for about $16,700, then bought it back for the inflated price of about $18,300. He eventually sold it to the shipyard for $19,572 — nearly a $4,900, or 33 percent, mark-up.
All told, a court documents estimates, Walsh received about $2,500 in extra commissions as a result of the mark-ups.
West noted that imprisonment would cost Walsh a job he was able to line up after being fired by the ship parts company, impeding "his efforts to reestablish himself as a contributing member to his community."
West said his client is "fortunate to have been given a second chance at employment," and "if he is incarcerated, Mr. Walsh will certainly lose this job."