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themillenne ws .com
The Millen News
Page 9 - Wednesday, December 29, 2021
Housing
Balfour Beatty Communi
ties LLC (BBC), one of the
nation’s largest providers of
privatized military housing to
the U.S. Armed Forces, pled
guilty to defrauding the U.S.
Army, the U.S. Air Force, and
the U.S. Navy, in connection
with a fraudulent scheme to
obtain performance bonuses by
submitting false information to
the U.S. military.
BBC entered the plea, pursu
ant to plea agreement with the
United States, before U.S. Dis
trict Judge Emmet G. Sullivan
in the District of Columbia on
Wednesday. Under the terms
of the plea agreement, BBC
agreed to pay more than $33.6
million in criminal fines and
over $31.8 million in restitution
to the U.S. military, serve three
years of probation, and engage
an independent compliance
monitor for a period of three
years.
“Instead of promptly repair
ing housing for U.S. service-
members as required, BBC
lied about the repairs to pocket
millions of dollars in perfor
mance bonuses,” said Deputy
Attorney General Lisa O.
Monaco. “This pervasive fraud
was a consequence of BBC’s
broken corporate culture, which
valued profit over the welfare
of servicemembers. Today’s
global resolution sends a clear
message to companies that if
they do not maintain adequate
compliance programs, volun
tarily self-disclose misconduct,
and fully cooperate with the
government, they will pay a
price that outweighs the profits
they once reaped.”
Separately, BBC entered into a
False Claims Act (FCA) settle
ment under which it is obligat
ed to pay approximately $35.2
million in civil restitution and
penalties to the United States,
which the Justice Department
credited against BBC’s criminal
restitution and fine. Law en
forcement within the Southern
District of Georgia assisted in
reaching this settlement by in
vestigating BBC’s misconduct
at Fort Stewart/Hunter Army
Airfield in Savannah, and Fort
Gordon in Augusta.
“The men and women who
live in our nation’s military
housing, including those at Fort
Stewart and Fort Gordon, de
serve prompt and professional
maintenance service from their
housing providers,” said David
H. Estes, U.S. Attorney for the
Southern District of Georgia.
“That BBC would not only fail
to deliver this service, but also
falsify infomiation to line their
own pockets is despicable. Our
office will work tirelessly with
our law enforcement partners,
and other components of the
Department of Justice, to make
sure those who provide subpar
service to the military and lie
about it are held accountable.”
According to court documents,
BBC was a diversified real
estate services company, head
quartered in Malvern, Pennsyl
vania, that operated privatized
military housing communities
contractor found guilty of defrauding military
at 21 U.S. Air Force, 16 U.S.
Army, and 18 U.S. Navy bases
across the United States, in
which tens of thousands of ser
vice members and their families
lived. BBC earned fees for the
various phases of development
and management of each hous
ing community, from design
and construction to ongoing
community management and
maintenance, and service mem
bers paid their living allowance,
known as Basic Allowance for
Housing, in the form of rest to
BBC to live
in the com
munities.
BBC’s fees
for the ongo
ing property
management
and main
tenance of
its military
housing
communities
generally
consisted of
(1) a base
fee, paid to
BBC month
ly and (2)
performance
incentive
fees, paid to
BBC quarterly or semi-annual
ly. Perfomiance Incentive Fees
were payable only upon the
approval of the relevant service
branch. To obtain the incen
tive fees, BBC was required to
submit to the service branches
proof that it had satisfied writ
ten performance objectives
related to, among other things,
maintenance of the housing
communities and resident sat
isfaction. The service branches
relied on BBC’s submissions in
deciding whether to approve the
payment of relevant perfor
mance incentive fees.
According to court documents,
from around 2013 to around
2019, BBC employees falsi
fied information so that BBC’s
incentive fee requests falsely
reflected that BBC had met
performance objectives. In real
ity, BBC did not legitimately
meet those objectives in many
of the quarters during that time,
primarily the objectives related
to maintenance and resident
satisfaction, at various military
housing projects. Specifically,
BBC employees altered or
manipulated data in property
management software and de
stroyed and falsified resident
comment cards to falsely inflate
these metrics and, ultimately, to
fraudulently induce the service
branches to pay performance
incentive fees which BBC had
not earned.
As a result, according to
court documents, there were
lengthy and unnecessary delays
in the resolution of mainte
nance issues to the detriment
of residents. In addition, the
military service branches had
an inaccurate view of the state
of BBC’s military housing com
munities and were unable to
assess, and potentially correct,
BBC’s performance.
A number of relevant con
siderations contributed to the
department’s criminal resolu
tion with BBC, including the
nature and seriousness of the
offense, the pervasiveness of
the misconduct among BBC’s
employees and at multiple mili
tary installations, and the state
of BBC’s compliance program
and the progress of its reme
diation, including the fact that
BBC’s compliance program and
internal controls have not been
fully implemented or tested to
demonstrate that they would
prevent and detect similar mis
conduct in the future.
As part of BBC’s plea agree
ment, BBC agreed to cooperate
fully with the United States in
all matters relating to the con
duct covered by the plea agree
ment and other conduct under
investigation by the United
States, to self-report violations
of U.S. federal criminal law,
and to continue to implement a
compliance and ethics program
designed to effectively detect
and deter violations of U.S.
anti-fraud laws throughout its
operations.
“In defrauding our country's
military services, BBC took ad
vantage of their unique position
as a military housing provider
and put greed and personal
profit above our servicemem
bers,” said FBI Deputy Director
Paul M. Abbate. “Today's guilty
plea reaffirms the FBI, along
with our partners, are commit
ted to preventing such dis
graceful crimes and will work
tirelessly to bring those who
engage in this type of crime to
justice.”
“The Air Force Office of Spe
cial Investigations is committed
to protecting the integrity of the
Department of the Air Force’s
procurement process,” said
Special Agent Paul Wachsmuth,
Director AFOSI Office of Pro
curement Fraud Investigations.
“The extensive and dedicated
collaborative efforts between
AFOSI, the Air Force Audit
Agency, Defense Criminal
Investigative Service, and the
Department of Justice in this
investigation was paramount in
ensuring the safety and well
being of our warfighters and
their families.”
“The health and safety of ser
vice members and their families
remains of critical importance
to the DoD Office of Inspector
Balfour
Beatty
General's Defense Criminal
Investigative Service (DCIS),”
said Principal Deputy Director
James R. Ives of DCIS. “DCIS
and our law enforcement part
ners are committed to working
with the Department of Justice
to hold companies accountable
when they emphasize profits
over the well-being of those
who honorably serve our na
tion.”
“This judgment demonstrates
the commitment CID Special
Agents have to protect soldiers’
families against deceitfulness
and fraud, while also ensur
ing the integrity of the military
privatization housing initiative,
which is to provide safe, qual
ity, well-maintained housing
for our military families,” said
Special Agent in Charge Frank
Robey of the Army Criminal
Investigation Division’s (CID)
Major Procurement Fraud Unit.
“Throughout this investiga
tion, Army CID special agents
worked closely with federal
authorities emphasizing the im
portance of successful partner
ships with other law enforce
ment agencies.”
“Balfour Beatty’s scheme to de
lay service request entries into
their electronic tracking system
for housing aboard Naval Air
Station Key West to increase
their performance-based award
violated their contract and wast
ed valuable taxpayer money,”
said Special Agent in Charge
Thomas Cannizzo of the NCIS
Southeast Field Office. “NCIS
and our partners remain com
mitted to rooting out fraud and
corruption that threatens the in
tegrity of the Department of the
Navy’s procurement process.”
“The Western District of Texas
is home to some of the larg
est military installations in the
country and our district works
tirelessly to protect and serve
our military families,” said U.S.
Attorney Ashley C. Hoff for the
Western District of Texas. “The
resolution entered with BBC
concerns conduct that impacted
military families in our district
at Lackland Air Force Base
and Fort Bliss Army Base.
This resolution is an important
step in holding private military
housing providers accountable
to our servicemembers and their
families.”
“The defendants’ greed under
mined a program designed to
protect servicemembers’ homes
while they courageously fight
to protect our homeland,” said
Acting U.S. Attorney Robert J.
Troester for the Western District
of Oklahoma. “Servicemembers
and their families deserve bet
ter. The U.S. Attorney’s Office
is committed to working with
our law enforcement partners to
protect our military community
from fraudulent conduct of all
kinds, particularly the integrity
of DoD housing programs.”
This resolution follows the
prior entry of guilty pleas by
two BBC managers. In April
2021, Stacy Cabrera, a former
community manager of BBC,
pleaded guilty to conspiracy
to commit wire fraud. In June
2021, Rick Cunefare, a former
regional manager of BBC,
pleaded guilty to major fraud
against the United States.
Air Force OSI, DCIS, Army-
CID, NCIS, and the FBI’s
Oklahoma City Field Office
investigated the case. The Air
Force Audit Agency also pro
vided assistance.
Trial Attorneys Michael P.
McCarthy and Siji Moore of
the Justice Department’s Fraud
Section prosecuted the case.
Trials Attorneys Laura E. Hill
and Elspeth England of the
Civil Division’s Fraud Sec
tion, Assistant U.S. Attorneys
Patrick Schwedler and Jonathan
Porter of the U.S. Attorney’s
Office for the Southern District
of Georgia, Assistant U.S. At
torney Ron Gallegos of the U.S.
Attorney’s Office for the West
ern District of Oklahoma, and
Assistant U.S. Attorneys Mary
Kruger and Jacquelyn Chris-
tilles of the U.S. Attorney’s Of
fice for the Western District of
Texas represented the govern
ment in the civil case.
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