March 23 2012 Copyright (c) 2012 Business Research Services Inc. 301-229-5561 All rights reserved.

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  • Another Guilty Plea in Corps Contracting Scandal

    A former executive of an Alaska 8(a) company has admitted his role in a $28 million kickback scandal. Harold F. Babb, who was contracts director of Eyak Technology, pleaded guilty to federal charges of bribery and unlawful kickbacks in connection with Army Corps of Engineers contracts.

    Babb is the third major conspirator to plead guilty and cooperate with investigators in what the FBI called “one of the largest procurement fraud cases in history.” Charges are pending against the alleged recipient of most of the bribe money, former Corps program manager Kerry Khan, and his son Lee Khan.

    Babb’s plea agreement, filed in U.S. District Court in Washington, reveals additional details of the scheme, which went on for three years until authorities discovered it during an unrelated investigation.

    In 2008, Babb said, Kerry Khan introduced him to Alex Cho, chief technology officer of another 8(a) company, Nova Datacom. Babb steered subcontracts to Nova, and Cho rewarded him with more than $1 million in cash and other gifts, including a promise of a job. Cho has pleaded guilty and secretly recorded conversations with his alleged co-conspirators.

    A federal grand jury charged that Kerry Khan received more than $18 million in payments and gifts to himself and family members. He has pleaded not guilty and is awaiting trial. He and his son have been in jail since they were arrested in October.

    Babb also revealed that he and his alleged co-conspirators had enlisted another Corps contracting officer to rig the award of a contract to Nova Datacom. Babb acted as go-between and offered bribes to the unnamed contracting officer. Prosecutors said that plan was foiled when Babb and his alleged co-conspirators were arrested.

    Babb’s statement implicated three other subcontractors: Alpha Technology Group, Big Surf Construction Management and Ananke LLC, a company controlled by Kerry Khan. Robert L. McKinney, the owner of Alpha Technology, has pleaded guilty to bribery. The U.S. attorney for the District of Columbia said Big Surf’s owner, James Edward Miller, is awaiting trial on charges of conspiracy to commit money laundering.

    Another conspirator, former Corps program manager Michael Alexander, pleaded guilty last month to charges of bribery and conspiracy to commit money laundering.

    Federal prosecutors originally said the case involved $20 million in bribes, but they have since discovered an additional $8 million. The government has already recovered more than $7 million and has asked the court to order Babb to forfeit $689,000 and a 2007 Porsche.

    Babb faces up to 25 years in prison, but will likely receive less under federal guidelines. No sentencing date has been set.


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