Court records indicate defense contractor victimized by massive employee-education scam
By KEVIN LEININGER | The News-Sentinel (Fort Wayne, Ind.) | Published: January 20, 2018
As a maker of aviation technology and military products, BAE Systems knows the importance of security. But according to a criminal case quietly unfolding in U.S. District Court in Fort Wayne, the British company's local plant has been the victim of a widespread and very expensive scam perpetrated by its own employees.
Acting on a tip, I've poured through court records and learned that at least nine former Fort Wayne BAE employees have been indicted for allegedly defrauding the company of a total of $265,773 in tuition reimbursement for classes they never attended. But the scheme may prove to much larger because Nikos Nakos, a Fort Wayne attorney representing some of the defendants, said between 45 and 50 BAE employees were terminated in April 2016 in connection with the case.
That means a lot of additional indictments are possible, potentially swelling the financial impact from six figures to seven.
Federal court officials won't comment, and the indictments themselves say only that a "company" had been victimized. But Nakos confirmed BAE's involvement, and so did Brian Roehrkasse, the company's vice president for communications.
Because the case is pending in court, Roehrkasse would provide few details except to say that "when BAE Systems learned in 2016 that a group of employees had been abusing the tuition assistance program for financial gain, we referred the matter to the appropriate authorities and have continued to support the investigation. Because these actions are inconsistent with the behaviors and the high ethical standards our employees uphold in fulfilling their strong dedication and commitment to our customers, we terminated the employment of those individuals involved . . . The company also made changes to the tuition reimbursement procedures to ensure stronger governance for this important employee education and development tool."
A wise move, because the indictments indicate the employees exploited the company's previous policy, which beginning in 2013 provided "payment for the cost of the courses up front instead of waiting to reimburse the employee after the course was completed."
The scam worked this way, the indictments allege:
The employees were required to provide proof of course registration and a tuition bill, and the company would then provide the funds needed to pay for the courses. Employees were also required to provide a completion certificate at the end of the course and meet certain grade requirements. If those requirements were not met, the employee would have to reimburse the company. The employees used proprietary company software to submit fraudulent documentation to BAE computers in New Hampshire.
Employees indicted to date and the amount of their alleged fraud include Demarcus Benson ($24,000); Tennille Bright ($24,525); Keyana Brooks ($36,000); Damon Bryant ($18,750); Jason Butz ($30,750); Andre Hollis ($55,056); Dawaun Jackson ($22,692); Frank Martin III ($18,750); and Leamon Perry ($35,250).
So far as I can tell, the alleged ringleaders have not yet been indicted, which could mean some of the people already charged will be pressed to provide evidence against them.
For BAE, the case continues the up-and-down nature of its past few years in Fort Wayne. As I first reported in September 2013, the company was exploring relocating its 1,000 local employees because of concerns about its World War II-era facility in a former GE plant at 2000 Taylor St. Local officials worked hard to keep BAE, though, and with the help of $2 million from the city's Redevelopment Commission and $2.5 million Capital Improvement Board, the company moved into a new $39 million, 334,000-square-foot plant on Airport Expressway two years later. At the time, about 20 percent of the plant's products were military related, including circuit cards for the Air Force's F-22 fighter.
In January 2016, however, BAE said it would lay off about 100 Fort Wayne employees because of "less-than-anticipated workload levels." Mass firings having nothing to do with workload followed three months later.
This column is the commentary of the writer and does not necessarily reflect the views or opinions of The News-Sentinel.
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