WTF? U.S Paid $1Million To Ship 2 $0.19 Washers

WASHINGTON (Reuters) - The U.S. Defense Department said on Thursday that a flawed system designed to rush supplies to troops in Iraq and Afghanistan let a small-parts supplier improperly collect $998,798.38 to ship two 19-cent washers.

Loopholes in the automated purchasing system have been fixed and the ill-gotten gains were being returned to the U.S. Treasury, said Army Lt. Col. Brian Maka, a Pentagon spokesman.

The lock-washer incident was the last in a series of abuses by twin sisters running a South Carolina company that bilked the Pentagon out of about $20.5 million in fraudulent shipping costs, federal prosecutors said after obtaining guilty pleas earlier in the day.

The owners of C&D Distributors of Lexington, South Carolina, submitted online bids to the Defense Department to supply hardware components, plumbing fixtures, electronic equipment and other items, according to court papers.

Related shipping claims were processed automatically "to streamline the resupply of items to combat troops in Iraq and Afghanistan," said a statement by Reginald Lloyd, U.S. attorney for the district of South Carolina.

Lloyd said C&D fabricated shipping costs into the hundreds of thousands of dollars, as in the case of the washers, although the value of the items purchased rarely topped $100.

Lock washers place tension against a nut after tightening, to help prevent the nut from loosening.

Maka said the Defense Criminal Investigative Service launched an investigation last September into invoices submitted to the Defense Finance and Accounting Service, or

DFAS.

"DFAS has put in place the internal controls necessary to make sure that something like this doesn't happen again," Maka said of the shipping fraud. "The money that they stole will be returned to the U.S. Treasury."

Charlene Corley, 47, of Lexington, South Carolina, as well as her company, C&D Distributors LLC, pleaded guilty to wire-fraud and money-laundering conspiracy charges in federal court in Columbia, South Carolina.

Darlene Wooten, Corley's twin and co-owner of C&D Distributors, committed suicide at her lake house last October after being contacted by federal investigators about the fraud, Lloyd said.

The improperly collected funds were used to buy beach houses, luxury cars, boats, jewelry and vacations among other things, prosecutors said.

Conspiracy to commit wire fraud is punishable by up to 20 years' imprisonment and a $250,000 fine. Conspiracy to commit money laundering carries up to 20 years and a fine of $500,000, or twice the value of the property involved in the laundering transactions, whichever is greater.

http://news.yahoo.com/s/nm/20070817/...WBf2k1HXOek3QF

Thats some crazy shit, no wonder we have a huge fucking deficit in this country :eek:

I wonder how many other companies have or currently are abusing this 'automated' system.

Regards,

Lee

Another thing the contractors are doing is sub-contracting the work out to Iraqi companies and pocketing the difference. I recall reading about one contractor who received $300,000 and then found an Iraqi company to do the work for him for only $10,000.

Quote:

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Originally Posted by Matt 26z

I recall reading about one contractor who received $300,000 and then found an Iraqi company to do the work for him for only $10,000.

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Theres nothing wrong with that, its called smart business.

If someone is going to pay me $10k to do some programming work after thats what i quote them for the job, then i find someone who is going to charge me $5k to do the job, im gonna pay them $5k to do the work for me.

I dont think there is anyone in the world who wouldnt do the same thing.

Regards,

Lee

Quote:

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Originally Posted by Lee

Theres nothing wrong with that, its called smart business.

If someone is going to pay me $10k to do some programming work after thats what i quote them for the job, then i find someone who is going to charge me $5k to do the job, im gonna pay them $5k to do the work for me.

I dont think there is anyone in the world who wouldnt do the same thing.

Regards,

Lee

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Actually there is something wrong with that. It's illegal.

Government contracts work differently than contracts between private parties. If you were to contract a programmer to do your work, they could very well turn around and farm your project out to an offshore subcontractor to do the job and turn a tidy profit for themselves (unless your contract were to specifically forbid that, which they rarely if ever do in these kinds of cases).

But when it comes to government contracts, be it DoD contracts or USAID or any of the various agencies/departments involved in Iraq reconstructions, the contracts specifically forbid that kind of overcharging and shenanigans.

That's why Halliburton (the most visible case) and countless other contractors have gotten in trouble over there in recent years.

There are all kinds of messed up things taking place with contractors/subcontractors in Iraq. Bribery, slavery and indentured servitude (seriously!), fraud, corruption, and on and on and on.

In that case of the company charging the government 300k for a job they farmed out for 10k, they'd have to present their overseeing contracting officers with verifiable proof that 300k was warranted. Invoices, explanations, and such. Theoretically, the illegalities and violations would likely take place during that stage in the process when they would inevitably be unable to rightfully explain just why it was they needed that extra 290k. They'd have to fudge the books to an extent that'd certainly be illegal. Further, they'd have to explain just why it was they bid 300k on a job that'd only cost 10k.

Despite what some might believe, the way most all these contracts work is you do not get the money upfront. You bid, win the contract, and then are paid out over time and conditional to progress as you invoice and explain what's been spent on what. Halliburton as an example again, their payments were withheld when it was revealed they were overcharging the government for meals (saying they served troops meals they never actually served them).

A lot of people are making a lot of money from this war.... :anger: