Forfeiture Hangs Over Military Subcontractor
(CN) - An Afghanistan-based contractor accused of using bribes to win inflated transportation contracts must face a $63 million forfeiture action, a federal judge ruled.
At the root of the case is NATO's October 2007 contract with TOIFOR Global Life Support Systems, a Hungarian firm at Kandahar Airfield in Afghanistan, to resupply military forces in Afghanistan.
The Justice Department claimed in a 2012 complaint that Hikmat Shadman Logistics Services Co. executives bribed at least two people to win the subcontract from TOIFOR.
These alleged bribes and kickbacks passed from Hikmatullah Shadman, the subcontractor's principal, to Henry Omonobi-Newton, the TOIFOR operations manager at the airfield, and his successor, Paul Hele, according to the complaint in Washington.
Trying to scale back the $77.9 million it ultimately paid Hikmat Shadman under the contract, the government initially purported to have found two accounts where $70.9 million of those funds were deposited.
It has so far restrained $63 million in three banks - Bank Alfalah, Emirates NBD Bank and Afghanistan International Bank - under various court-issued seizure warrants upon a probable cause finding.
After refusing to grant Hikmat Shadman an injunction in December 2013, Chief U.S. District Judge Richard Roberts dealt it another blow Tuesday in refusing to dismiss the action.
"Taking all inferences in light most favorable to the government, these allegations are more than just consistent with liability, but rather support an inference of criminal activity," Roberts wrote.
In one specific example of bribery that the government has cited, it described an incident where Shadman had a confidential source deliver hundreds of dollars in an envelope to Newton and "to show the envelope to no one but Newton," according to the ruling.
The government has also claimed that another informant saw a bank transfer receipt for $10,000 from an account at Afghanistan International Bank to Hele's personal account at the same bank.
In support of claims that the scheme inflated the price of the contracts, the government said Hele made Hikmat Shadman's bid appear reasonable by soliciting a bid from another individual "more than three times higher" than originally proposed.
"Here, the government has alleged sufficient details to infer the contours of the scheme, and [Hikmat Shadman] is implicated by more than 'association only,'" Roberts wrote.
The government also sufficiently showed that the scheme involved the wire, and that it was a conspiracy involving multiple people and an intent to defraud, the court found.
Roberts also refused to dismiss on the basis that the government is seeking the proceeds of "illegal services," instead of the proceeds of "lawful services" that were "performed in an allegedly 'illegal manner,'" as might be the case.
Even if the latter definition of proceeds is applicable, "that does not militate in favor of granting the motion to dismiss because the government has provided sufficient evidence that the defendant assets are subject to forfeiture as the proceeds of a wire fraud conspiracy," Roberts wrote.
A forfeiture order has not yet even been ordered and determining the appropriate amount of the forfeiture at this stage would be premature, the court found.