A multi-agency probe of an Afghan contractor charged criminally with inflating prices for U.S. military supplies resulted in a $25 million civil forfeiture, the Justice Department announced on Wednesday.
The combined settlement in U.S. District Court for the District of Columbia resolves a criminal case brought under the False Claims Act. The scheme was originally uncovered by the Special Inspector General for Afghanistan Reconstruction.
“This case involved fraud and corruption that exploited subcontracts designed to support American troops in a conflict zone,” Special Inspector General John Sopko said. “I’m proud of the tenacity displayed by SIGAR special agents.”
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Robert Higdon Jr., U.S. attorney for the Eastern District of North Carolina, added: “The success of our overseas war and reconstruction efforts is tied directly to the trust and respect established with the local populace. Corruption in our military operations undermines those efforts and cannot be tolerated.”
From 2007-2012, the U.S. efforts to resupply military forces operating in Afghanistan tapped local Afghan-owned businesses as subcontractors to transport fuel and other supplies by truck to locations around the war-torn country.
One was Hikmatullah Shadman, a young Afghan national who operated several companies, including Hikmat Shadman Logistics Services Company. According to court documents, from November 2010 to March 2012 Shadman charged the United States more than $77 million for delivering supplies to U.S. service members.
The civil forfeiture case, initially filed on Nov. 20, 2012, focused on Shadman’s fraudulent receipt of a disproportionate number of subcontracts for the transport of military supplies in Afghanistan, as well as his inflated prices. The result of his actions, Justice said in a release, was that the government “often paid Shadman for work that was never performed and for work other than that described in the documentation submitted. Through his companies, Shadman also charged the United States rates which were well above the average rate of his competitors,” as determined by forensic analysis.
In addition to the civil and False Claims Act charges, Justice also prosecuted Shadman’s primary company, HSLSC. On Jan. 3, HSLSC pleaded guilty to a criminal information and one count of conspiracy to influence the award of the contract, by paying gratuities to two U.S. service members in Afghanistan. In this criminal case, HSLSC was sentenced to pay an $810,000 fine and forfeit $190,000, plus five years of probation.
The agencies involved in the complex investigation coordinated by SIGAR included the Justice Department’s Criminal and Civil divisions, and the Money Laundering and Asset Recovery Section of its Kleptocracy Asset Recovery Initiative. Also contributing were the Army’s Criminal Investigation Command’s Major Procurement Fraud Unit, the Defense Criminal Investigative Service Mid-Atlantic Field Office, FBI Special Agent in Charge John Strong of the North Carolina Field Office, and the Air Force Office of Special Investigations.
“DCIS will aggressively investigate complex fraud and corruption that undermines the integrity of the Department of Defense no matter where it happens or how long it takes,” DCIS Special Agent in Charge Robert Craig Jr. said. “We hope that this case demonstrates the commitment of DCIS and our law enforcement partners to use every available option to protect valuable DoD resources around the world and better enable our warfighters to accomplish our critical global missions.”