“Brazen” Kickback Scheme Snares Alaska 8(a) Firm An executive of an Alaska Native company is among four men indicted in what a federal prosecutor called “one of the most brazen federal procurement scandals in our nation’s history.” The conspirators allegedly split $20 million in kickbacks on Army Corps of Engineers contracts. A fifth conspirator may have turned on the others, according to information in an indictment handed up by a federal grand jury in Washington. Harold F. Babb, director of contracts for Eyak Technology LLC, an 8(a) subsidiary of Alaska Native Corporation Eyak, was charged along with Kerry F. Khan, a program manager at Corps headquarters in Washington; Michael A. Alexander, a Corps program director; and Lee A. Khan, a son of Kerry Khan. The four allegedly received kickbacks from a Chantilly, VA, information assurance and security services contractor identified only as Company A. The grand jury listed Company A’s chief technology officer as an unindicted co-conspirator. The CTO was not named. This procedure often indicates that the individual is a cooperating witness. The indictment includes transcripts of alleged conversations between the CTO and some of the defendants. EyakTek was the prime contractor on the Corps’ TIGER contract, an IDIQ contract with a ceiling of $1 billion. The indictment alleges that Kerry Khan, Alexander and Babb steered subcontracts to Company A. Company A’s chief technology officer submitted inflated invoices, referred to as “overhead,” and Kerry Khan approved the payments. EyakTek took a cut and sent the rest of the money to Company A. Company A’s CTO then kicked back a portion of the “overhead” to Kerry Khan, Alexander and Babb. The grand jury said Company A submitted invoices totaling $45 million since 2007, and $20 million was kicked back to the conspirators. The indictment says the defendants laundered the money through multiple bank accounts, shell corporations and real estate transactions. Kerry Khan allegedly received more than $18 million in payments to himself and family members, including cash, home improvements, luxury cars, Rolex watches, first-class air and hotel accommodations, and expensive liquor. The Khans allegedly paid off another family member, who was in jail on unrelated charges, to keep him from talking about the scheme. Alexander allegedly received more than $1 million and Babb more than $700,000 as well as a promise of a job with Company A. Rod Worl, CEO of Eyaktek’s parent, Eyak Corp., said Babb had been fired and the company was cooperating with the investigation. An Eyaktek subsidiary, EG Solutions, has been suspended from federal contracting since last November after it was found to be serving as a pass-through for a large subcontractor. That case came to light as a result of the temporary suspension of GTSI Corp, which then owned part of Eyaktek. “This indictment alleges one of the most brazen corruption schemes in the history of federal contracting,” U.S. Attorney Ronald Machen of the District of Columbia said at an Oct. 4 news conference. He added, “This scheme was staggering in scope.” The defendants are charged with bribery, conspiracy, wire fraud and unlawful kickbacks. If convicted, they face maximum sentences of 25 to 40 years in prison. They were held in jail pending a later bail hearing. At the time of their arrest Oct. 4, the grand jury said three of the defendants were scheming to ensure that Company A would be awarded the Corps’ Contingency Operations Readiness Engineering & Support (CORES) contract, a $780 million 8(a) set-aside that was in the planning stages. According to the indictment, Babb told the CTO of Company A, “I’m trying to stack it in our favor.” He allegedly asked for $350,000 in return for his efforts.