Contractors who sold bad body armor to government are found guilty of fraud
By RACHEL WEINER | The Washington Post | Published: February 8, 2019
ALEXANDRIA, Va. — A pair of Florida contractors defrauded the United States by selling old, cheap body armor to the federal government, a jury in federal court concluded Thursday.
Dan Lounsbury and Andres Lopez-Munoz's company, Tactical Products Group, sold 10 sets of hard body armor to the government through a bigger contractor back in 2012. Years later, a warehouse worker realized the labels on the armor were peeling off, revealing it was not the high-end product requested but cheaper and out-of-date plates.
"There's no way they would accept plates like these," Assistant U.S. Attorney Raj Parekh said in closing arguments.
The contractors argued unsuccessfully that their six-person, veteran-owned company simply bungled one of their first forays into government contracting. A federal court jury in Alexandria, Virginia, found them both guilty of wire fraud, conspiracy and making false claims to the government, crimes that carry up to 20 years in prison.
"We remain confident that the mistakes that were made with regard to this important, but very small, $3,500 procurement were unintentional," Lounsbury's defense attorneys Timothy Belevetz and John Brownlee said in a statement. Their client, the owner and founder of TPG, may appeal.
The armor the government wanted, witnesses testified, had gone through advanced testing on foreign rounds of ammunition and in harsh environmental conditions. The details of the body armor's use remain classified, and the agency that procured it was referred to in court only as "the federal entity."
Triple Canopy, the contractor that dealt with the government, emphasized in its emails to TPG that because of the client "there are NO SUBSTITUTIONS ALLOWED." While the government itself asked for a different product halfway through the process, Lopez-Munoz accepted the change and said TPG could get the new plates for the same price.
In fact, TPG used the same body armor they had already bought from a dealer for only $80 a pair. In an email, Lopez-Munoz directed an employee to label the plates with the new specifications.
Employee KC Maltais testified that he thought it was "odd" when Lopez-Munoz asked him to "make the 'plate stickers' match the requested specifications." Defense attorneys said it was Maltais who misinterpreted the email and that he was supposed to label the plates "TPG," for the company's own in-house gear brand.
The two contractors maintained they were able to purchase each plate for only $40 not because they were low quality but because the company that manufactured them was going out of business. They emphasized that different companies market the same armor under different names.
"In this body armor world, nothing is what it seems," defense attorney Stuart Sears told jurors. "Honestly, it needs some regulation; it's crazy."
Emails suggested the contractors were themselves confused about which company sold what. TPG had only six employees and was just starting to get into the world of government contracting. Their invoice to Triple Canopy used a different company name then the ones on the plates, which were not all the same size or shape. At one point Lopez-Munoz asked a dealer to sell him plates for the contract that would have cost more than the government was willing to pay.
The plates the agency ultimately ordered retail for $2,400 a set and can only be sold directly to the government, according to trial testimony — yet the government went through a contractor and estimated the cost would be $350 a pair. TPG was ultimately paid $3,500 for the body armor, making a $1,200 profit.
Months after TPG shipped the plates, the government was still debating internally whether to actually use that body armor, according to emails shown in court.
"When someone says they want a Mercedes but at the price of a Honda, you try to get them the best Honda you can," Sears told jurors in closing arguments.
But body armor manufacturers testified that there is proper protocol for product rebranding, none of which was followed here. Prosecutors countered that if the cost of the contract did not make sense, Lounsbury and Lopez-Munoz should have said so instead of selling the government a cheaper product.
"Nobody forced them to falsely label body armor," Parekh said. "They could have just walked away."