Alan Hayward James, a former U.S. Air Force master sergeant from Texas, has pleaded guilty to defrauding the military branch out of $37 million by inflating the cost of IT contracts and diverting funds, including payments to an individual he referred to as "Godfather."
James, 51, entered his guilty plea on Wednesday to charges of conspiracy to commit wire fraud, bribery, and conspiracy to rig bids tied to U.S. Pacific Air Forces based in Hawaii. In a plea agreement, he admitted to working with multiple competitors to manipulate bidding processes for IT contracts with the U.S. Department of Defense.
According to the Justice Department, James "knowingly conspired" with co-conspirators and companies in a scheme that "falsely inflated" the value of contracts. As part of the operation, he reportedly directed some companies to overbid while instructing others to submit artificially low bids to ensure predetermined winners.
In one instance, James told a company to submit a bid for an IT contract that was "low and stupid," effectively enabling a co-conspirator firm to secure the contract at an inflated price.
"Through this bid-rigging scheme, the defendant not only stole from American taxpayers and harmed companies seeking to compete honestly for government contracts, he also ultimately harmed essential military services designed to keep our nation safe by diverting resources away from other services," said the US attorney for Hawaii, Ken Sorenson.
"Bid-rigging and anti-competitive behavior in government contracts erodes trust in our institutions, harms taxpayers, and will not be tolerated. We will continue to investigate and prosecute any and all who would seek to manipulate markets and undermine fair competition for their own personal gain."
Authorities said funds from the scheme were funneled through shell companies and disguised as false salaries, including payments to family members of co-conspirators. A ledger obtained by the Justice Department documented payments to an individual labeled "Godfather," likely a reference to the movie of the same name. Additional entries included payments to James's parents, whom he referred to as "Capone M" and "Capone D," while he named himself after the infamous real-life mobster.
Reinforcing the government's stance, Sorenson warned that any individuals who seek to "manipulate markets and undermine fair competition for their personal gain," will be investigated and prosecuted.
James now faces up to 20 years in prison along with a $250,000 fine. He has also agreed to pay restitution of at least $1,451,656.80 to the U.S. government, according to CBS News.