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Two former employees of a private company that manages military family housing pleaded guilty to major fraud and conspiracy for lying to the Air Force about maintenance performed in on-base housing to receive $3.5 million in unearned financial incentives, the Justice Department announced Wednesday.

Rick Cunefare, 61, of Glendale, Ariz., and Stacy M. Cabrera, 47, of Converse, Texas, worked as managers for Balfour Beatty Communities and pleaded guilty for actions between 2013 and 2016. The Justice Department did not name Balfour Beatty in its announcement, but the company confirmed it employed the two.

Both were part of a scheme to alter maintenance records to appear as though Balfour Beatty was meeting goals required for financial bonuses from the Air Force when it was not, according to court records.

“The defendants defrauded the U.S. Air Force and put corporate profits ahead of the well-being of service members and their families,” said Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division. “The department is committed to protecting our military families from deceit and mistreatment and ensuring the integrity of Department of Defense programs.”

Sens. Jim Inhofe, R-Okla., and Jack Reed, D-R.I., who lead the Senate Armed Services Committee, said Wednesday that they were “outraged” by the case but glad to see justice served.

“When we first heard reports of alleged falsified records back in July 2019, we were disturbed,” the two said in a joint statement. “We will be keeping a close eye on the results of this case, which remains ongoing as we do not know how high up this conspiracy may go.”

Over the past two years, reports of dangerous in conditions in military family housing have made headlines and led Congress to pass reforms to improve homes. There have also been about a dozen lawsuits filed against private housing companies, including Balfour Beatty, that allege the companies were slow to perform maintenance, which exacerbated conditions including water leaks, sewage issues and exposure to lead paint, asbestos and pest infestations.

“Military housing companies must take every step to regain the trust of our military families,” Inhofe and Reed said. “After hearing countless complaints from military families starting over two years ago, we led the charge to address widespread problems with military housing, and we are determined to see this through on behalf of those brave families.”

Cunefare, who pleaded guilty to major fraud against the United States on June 9, was a regional manager who directly supervised community managers for military family housing at Lackland Air Force Base, Texas; Travis and Vandenberg Air Force bases in California; Tinker Air Force Base, Okla.; and Fairchild Air Force Base, Wash., according to the department. He reviewed and approved quarterly maintenance reports and ensured that the data in the reports were submitted to the Air Force with performance incentive fee request letters.

As outlined in Balfour Beatty’s contract with the Air Force, revenue for management of the housing is based, in part, on meeting performance maintenance goals. If the company completed 95% of routine maintenance requests within three business days on a quarterly basis, it was eligible for a performance incentive fee, according to court documents.

Cunefare and others conspired to manipulate and falsify information in maintenance reports from 2013 to 2015 so that the reports falsely reflected the company had met maintenance goals, when it had not, according to court documents. The documents did not name the other conspirators but stated that Cunefare gave written and oral instructions to community managers and others.

This allowed Balfour Beatty, “acting through the co-conspirators,” to submit requests to the Air Force for payment of about $2.5 million in fees to which it was not entitled, the Justice Department said.

“Cunefare admitted that the false information deceived the U.S. Air Force into believing that [the company] was properly maintaining the housing communities, when in reality [it] was unable to keep up with maintenance issues at many of the military housing communities, parts of which had fallen into disrepair,” according to the Justice Department.

Cabrera acted on instructions from Cunefare and others to commit similar fraud between 2013 to 2016, while serving as Balfour Beatty’s community manager at Lackland Air Force Base. She pleaded guilty to conspiracy April 21.

She personally, and through subordinates acting on her instructions, falsified maintenance records to generate quarterly maintenance reports to reflect that the company had met maintenance-related performance goals, according to court documents. Those false reports moved on to other managers, who then knowingly used them to substantiate Balfour Beatty’s bonus requests.

Balfour Beatty fraudulently obtained about $1 million in performance bonuses because of Cabrera’s conduct, according to court documents.

Both await sentencing in federal district court. Cunefare faces a maximum penalty of 10 years in prison and a $250,000 fine. Cabrera faces up to five years in prison and a $250,000 fine.

The Defense Department Inspector General Office’s Defense Criminal Investigative Service and the Air Force Office of Special Investigations assisted in the investigation.

“Balfour Beatty Communities notes that two former employees have pleaded guilty in connection with the Department of Justice’s investigation into alleged irregularities related to certain incentive fee claims,” said a spokesman for the company. “When concerns about the matter were raised, the company engaged external counsel to investigate, and proactively contacted the Department of Justice. Balfour Beatty Communities is committed to conducting its business legally, decently, and honestly and is dismayed that the actions of certain individuals reflect poorly on the efforts of hundreds of dedicated employees. The company is continuing to work with the Department of Justice to resolve the matter.”

Balfour Beatty manages family housing at 21 Air Force bases and 34 Army and Navy bases throughout the United States.

thayer.rose@stripes.com

Twitter: @Rose_Lori

(Carlos Bongioanni/Stars and Stripes)

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