Tag Archives: Bribery Scheme

Fraud News From World

McKinsey Africa Pays $122 Million to Resolve Bribery Scheme in South Africa

Leave a comment

Consulting giant implicated in widespread corruption, highlighting the need for greater transparency and accountability.

Johannesburg, South Africa – McKinsey & Company Africa (Pty) Ltd finds itself at the center of a massive corruption scandal in South Africa, agreeing to pay over $122 million to resolve a U.S. Justice Department investigation. This case, deeply intertwined with the country’s “state capture” scandal, reveals the extent to which bribery and undue influence infiltrated state-owned enterprises.

Unraveling the State Capture Web

The “state capture” scandal refers to a period in South Africa where private interests, often through corrupt means, exerted undue influence over government officials and state-owned entities. McKinsey’s involvement with Transnet and Eskom, two critical state-owned companies, played a significant role in this web of corruption.

McKinsey’s Role:

  • Bribery and Procurement: McKinsey, through a senior partner and in collaboration with local consulting firms, paid bribes to secure lucrative contracts with Transnet and Eskom. These contracts, often awarded without proper due process, involved inflated fees and kickbacks to corrupt officials.
  • Strategic Positioning: McKinsey’s influence extended beyond individual contracts. The firm’s consultants were embedded within these state-owned entities, advising on key decisions and influencing strategic direction. This access provided opportunities for manipulation and furthered the interests of those involved in the state capture scheme.

Impact on South Africa:

  • Financial Losses: The corrupt practices associated with state capture, including McKinsey’s involvement, resulted in significant financial losses for South Africa. Mismanagement and inflated contracts drained resources from essential public services.
  • Erosion of Trust: The scandal severely eroded public trust in government institutions and major corporations. It exposed the vulnerability of state-owned entities to corruption and highlighted the urgent need for reform.

Global Implications:

  • FCPA Enforcement: This case demonstrates the U.S. Justice Department’s commitment to enforcing the Foreign Corrupt Practices Act, even in complex international cases. It sends a strong message that companies engaging in corrupt practices abroad will be held accountable.
  • Corporate Responsibility: McKinsey’s involvement in the state capture scandal raises questions about the ethical responsibilities of global consulting firms operating in developing countries. It highlights the need for greater transparency and accountability in the consulting industry.

Looking Ahead:

While the $122 million penalty is a significant step towards justice, the repercussions of the state capture scandal will continue to be felt in South Africa. This case serves as a stark reminder of the devastating consequences of corruption and the importance of upholding ethical standards in business and government.

This article is for informational purposes only and should not be considered legal advice.

More Info …

Fraud News From World

Cracks in the Foundation: NYCHA Scandal Exposes Rot at the Heart of Affordable Housing

Leave a comment

70 Current And Former NYCHA Employees Charged With Bribery And Extortion Offenses

The news last week of 70 current and former New York City Housing Authority (NYCHA) employees charged with bribery and extortion sent shockwaves through the city and beyond. In what the Department of Justice called the largest single-day takedown of its kind, a damning picture emerged of corruption, greed, and systemic failures at the heart of an agency responsible for housing over 400,000 New Yorkers, many of them among the most vulnerable. This scandal goes far beyond individual wrongdoing; it exposes deep cracks in the foundation of affordable housing, raising urgent questions about accountability, oversight, and the very purpose of public housing authorities.

In the Largest Number of Federal Bribery Charges on a Single Day in DOJ History, 70 Current and Former Employees of the NYCHA Have Been Charged with Allegedly Accepting Cash Payments from Contractors in Exchange for Awarding NYCHA Contracts

From Original Article

A Bribe for a Broken Pipe: The Allegations and Their Impact

The charges paint a disturbing portrait of a pay-to-play culture festering within NYCHA. Contractors allegedly offered employees cash, gift cards, and other perks in exchange for preferential treatment, including no-bid contracts, overlooking shoddy work, and expediting payments. This alleged web of deceit not only resulted in millions of dollars in losses for NYCHA, but also had tangible consequences for its residents. Substandard repairs, delayed maintenance, and ignored safety concerns became the grim reality for those living in public housing, putting their health and well-being at risk.

One resident, Maria Sanchez, shared her frustration: “My apartment has been leaking for months, and every time I complain, they send someone who patches it up with bubble gum and calls it a day. Now I hear this was all because someone was lining their pockets? It’s disgusting.”

Beyond Bribery: A Culture of Neglect and Disenfranchisement

The bribery scandal, however, is only the tip of the iceberg. It shines a spotlight on systemic issues plaguing NYCHA for years: chronic underfunding, mismanagement, and a disconnect between the agency and the residents it serves. Decades of budget cuts have left NYCHA’s infrastructure crumbling, with over 173,000 repairs backlogged. Residents often face long wait times for basic services, grappling with mold, lead paint, and inadequate heating systems.

Worse still, the alleged bribery scheme suggests a deliberate disregard for the very people NYCHA is supposed to help. It speaks to a culture where residents are viewed not as individuals deserving decent housing, but as mere sources of rent and potential opportunities for exploitation. This breeds a sense of powerlessness and disenfranchisement among residents, who often feel unheard and ignored.

Restoring Trust: The Road to Reform

The NYCHA scandal demands a swift and comprehensive response. Holding those responsible accountable is crucial, but it’s only the first step. A thorough investigation is needed to uncover the full extent of the corruption and identify any systemic vulnerabilities that allowed it to flourish.

Beyond individual culpability, the scandal necessitates a deeper examination of NYCHA’s governance and management structure. Are there adequate checks and balances in place to prevent future abuses? How can transparency and accountability be strengthened? How can residents be empowered to have a say in the decisions that affect their lives?

Furthermore, addressing the chronic underfunding of NYCHA is essential. Public housing cannot be treated as a burden, but as a vital investment in our communities and the well-being of our most vulnerable citizens. Increased funding coupled with responsible management practices are crucial to ensure safe, decent, and affordable housing for all.

A National Reckoning: Beyond NYCHA, Rethinking Affordable Housing

The NYCHA scandal is not an isolated incident. It reflects a broader national crisis of affordable housing. Across the country, millions struggle to find decent housing they can afford, facing rising rents, limited options, and inadequate support. The NYCHA scandal serves as a stark reminder of the human cost of neglect and exploitation in the affordable housing sector.

It compels us to ask: What does it say about our values as a nation that we allow such conditions to exist, especially for those who need it most? How can we build a housing system that truly prioritizes the well-being of all our citizens?

The NYCHA scandal is a wake-up call. It demands not just action to address the immediate crisis, but a fundamental rethinking of how we approach affordable housing in America. We need a system built on transparency, accountability, and respect for the dignity of all residents. Only then can we ensure that everyone has the opportunity to live in a safe, decent, and affordable home, free from the shadows of corruption and neglect.

This extended article adds depth and analysis to the initial news report, addressing the human impact, historical context, systemic issues, and broader national implications of the NYCHA scandal. It is important to note that this is just one perspective, and further discussion and engagement are crucial to developing solutions that address the complex challenges facing affordable housing in America.

Attachment

NYCHA Complaints.pdf [PDF, 12 MB]

Fraud News From World

Financial Fraud: Edward And Linda Mangano Guilty On Multiple Counts Of Accepting Bribes And Kickbacks in Exchange For Official Government Action

Leave a comment

Former Nassau County Executive Edward Mangano and His Wife Linda Mangano Convicted of Corruption and Related Charges by a Federal Jury

Earlier today, following a seven-week trial, a federal jury in Central Islip, New York, returned guilty verdicts against former Nassau County Executive Edward Mangano on multiple counts of accepting bribes and kickbacks in exchange for official government action, and for conspiracy to obstruct justice. Linda Mangano, the wife of Edward Mangano, was also convicted of conspiracy to obstruct justice, obstruction of justice and making false statements to Federal Bureau of Investigation (FBI) agents in connection with her employment by Long Island restaurateur Harendra Singh.

When they are sentenced by United States District Judge Joan M. Azrack, Edward Mangano faces up to 20 years’ imprisonment on honest services wire fraud charges and conspiracy to commit honest services wire fraud, up to 10 years’ imprisonment for federal program bribery, and up to five years’ imprisonment for conspiracy to commit federal program bribery. Edward Mangano and Linda Mangano each face up to 20 years’ imprisonment for each obstruction of justice charge, and up to five years’ imprisonment for each false statement charge.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, FBI, New York Field Office, and Jonathan D. Larsen, Acting Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation, New York (IRS-CI), announced the verdict.

“As found by the jury, Edward Mangano abused his power as a public official by taking bribes and kickbacks from a businessman in exchange for helping him obtain loans worth millions of taxpayer dollars,” stated U.S. Attorney Donoghue. “Among the personal benefits received was a lucrative no-show job for Linda Mangano. The defendants tried and failed to cover up their crimes by lying to the FBI and federal prosecutors, and will now be held responsible for these crimes. No one is above the law. The Eastern District and the FBI will be relentless in our efforts to root out corruption at all levels of government in New York.”

“In a quid-pro-quo wheeling and dealing, Edward Mangano effectively opened the door that unjustly benefitted restaurateur Harendra Singh, sat idly by while public funds were exchanged for favors, and waited patiently in the wings to accept a payout for the plan he put in motion,” stated FBI Assistant Director-in-Charge Sweeney. “In Linda Mangano’s case, she kept up the ruse with a bogus job as food taster and menu planner at one of Singh’s restaurants. Whether they believe it or not, today we’ve proven they bit off more than they could chew.”

“Serving the public is an honor, especially when that position is the result of being elected by the people,” stated IRS-Criminal Investigation Acting Special Agent-in-Charge Larsen. “Mr. Mangano abused his elected office and the trust of his constituents. Our agents from IRS-CI diligently utilized their investigative expertise to prove these complex financial transactions.”

The evidence at trial established that between January 2010 and February 2015, Edward Mangano engaged in schemes to solicit and receive bribes and kickbacks from Singh. In return for the cash and personal benefits he received, Mangano, who served as Nassau County Executive from January 2010 to December 2017, performed official actions to benefit Singh in connection with his businesses.

The TOB Loan Scheme

Several weeks after Edward Mangano took office as Nassau County Executive in January 2010, he urged the TOB Supervisor to help Singh obtain financing in order to make required capital improvements at TOBAY Beach and The Woodlands at the TOB golf course, by authorizing the TOB to indirectly guarantee four bank loans totaling approximately $20 million. Mangano used his official position to ensure that the TOB backed the loans. In April 2010, Singh hired Linda Mangano for a sham job as the purported Director of Marketing for Singh’s businesses. On June 8, 2010, the TOB board voted to authorize the town to back Singh’s personal loans for the beach and the golf course. Singh paid for five vacations, hardwood flooring, a custom-made office chair, a massage chair and a watch for the Manganos, as well as over $450,000 in total for Linda Mangano’s no-show job.

Obstruction of Justice

Edward and Linda Mangano conspired to obstruct a federal grand jury investigation when they schemed with Singh to fabricate examples of work never performed by Linda Mangano’s at the Water’s Edge, in an attempt to thwart a grand jury investigation. On May 20, 2015 and May 22, 2015, Linda Mangano made false statements to the FBI and federal prosecutors about the work she claimed to have performed for Singh.

The government’s case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorneys Catherine M. Mirabile, Lara Treinis Gatz and Christopher Caffarone are in charge of the prosecution. Assistant United States Attorney Madeline O’Connor of the Office’s Civil Division is responsible for the forfeiture of assets.

The Defendants:

EDWARD MANGANO
Age: 56
Bethpage, New York

LINDA MANGANO
Age: 56
Bethpage, New York

E.D.N.Y. Docket No. 16-CR-540 (S-2) (JMA)

Fraud News From World

Financial Fraud: James King Sentenced For Million Bribery Scheme

Leave a comment

Department of Veterans Affairs Official Sentenced to 11 Years in Prison for $2 Million Bribery Scheme Involving Program for Disabled Military Veterans

A former U.S. Department of Veterans Affairs (VA) official was sentenced today for demanding and receiving bribes from three for-profit schools in exchange for enrolling disabled military veterans in those schools and facilitating over $2 million in payments from the VA using the veterans’ federal benefits.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Jessie K. Liu for the District of Columbia, Special Agent in Charge Matthew J. DeSarno of the FBI’s Washington Field Office’s Criminal Division and Special Agent in Charge Kim Lampkins of the VA Office of Inspector General (OIG), Mid-Atlantic Field Office made the announcement.

James King, 63, of Baltimore, Maryland, previously pleaded guilty to an Information alleging one count of honest services and money/property wire fraud, one count of bribery of a public official, and one count of falsifying records to obstruct an investigation. King was sentenced by U.S. District Judge John D. Bates of the District of Columbia to serve 132 months in prison to be followed by three years of supervised release, and to pay $155,000 in restitution to the VA. Earlier this week, Judge Bates sentenced three school owners and employees who admitted to bribing King. Albert Poawui, the owner of Atius Technology Institute, was sentenced to serve 70 months in prison and ordered to pay $1.5 million in restitution. Sombo Kanneh, Poawui’s employee, was sentenced to serve 20 months in prison and ordered to pay $113,000 in restitution. Michelle Stevens, the owner of Eelon Training Academy, was sentenced to serve 30 months in prison and ordered to pay $83,000 in restitution.

“James King and his associates exploited an important VA program that provides valuable services to our disabled military veterans,” said Assistant Attorney General Benczkowski. “This prosecution once again demonstrates the Justice Department’s commitment to hold accountable those who seek to defraud government programs for their own personal enrichment.”

“James King blatantly betrayed his responsibility with the VA to provide job and educational counseling to disabled military veterans who turned to him for help,” said U.S. Attorney Liu. “Instead of helping our veterans, he lined his own pockets by taking bribes to send them to three sham schools that brought them only pain and frustration. Today’s sentencing holds him accountable for this breach of trust and this waste of taxpayer money.”

“King tried to use his position to enrich himself at the expense of veterans who have honorably served our country,” said FBI Special Agent in Charge DeSarno. “Today’s sentencing makes it clear that such activity by anyone affiliated with the U.S. government will not be tolerated. The FBI will work closely with our partners to continue to aggressively investigate allegations of corruption.”

“We are pleased to see Mr. King, a person who abused his position of trust and the veterans he was supposed to serve, sentenced today,” said VA OIG Special Agent in Charge Lampkins. “This sentence sends a clear message that VA OIG is dedicated to prosecuting those that take advantage of VA programs that are intended to help our veterans and their families.”

According to King’s admissions made in connection with his plea, the Vocational Rehabilitation and Employment (VR&E) provides disabled U.S. military veterans with education and employment-related services. VR&E program counselors advise veterans under their supervision which schools to attend and facilitate payments to those schools for veterans’ tuition and necessary supplies.

From 2015 through 2017, King, using his position as a VR&E program counselor, demanded and received cash bribes from the owners of Atius Technology Institute (Atius), Eelon Training Academy (Eelon), and School A, a school purporting to specialize in physical security classes. King facilitated over $2 million in payments to Atius, over $83,000 to Eelon, and over $340,000 to School A, all in furtherance of King’s separate agreements with the respective school owners to commit bribery and defraud the VA. King agreed with Poawui and Stevens that they would each pay him, in cash, seven percent of the money they received from the VA in exchange for King steering veterans to their schools and facilitating VA payments. King similarly accepted cash payments from the owner of School A, who is identified as Person A in the Information, in exchange for the same official acts.

In order to maximize the profits from their fraud, all three school owners sent King and other VA officials false information about the education being provided to veterans, and King facilitated payments to all three schools knowing this information was false. King also admitted to repeatedly lying to veterans under his supervision in order to convince them to attend Atius, Eelon, or School A. For example, King falsely instructed one veteran that, unless he attended School A, his VR&E program benefits would “lapse.” King insisted that this veteran enroll in School A despite the veteran’s protests that he could not engage in physical security work due to a physical disability, and despite the fact that the veteran had enrolled in the VR&E program to pursue his dream of becoming a baker.

In early 2017, the VA initiated a fact-finding inquiry into Atius based on complaints by students as to the quality of education at the school. In August 2017, after King became aware of the inquiry, he created a falsified site visit report and instructed Poawui to send it to another VA official, all in an effort to obstruct the VA’s inquiry into Atius. In January 2018, King attempted to convince Poawui to lie to the grand jury about the purpose of the bribe payments.

King’s plea is the result of an ongoing investigation by the FBI’s Washington Field Office and the VA Office of Inspector General. Trial Attorney Simon J. Cataldo of the Criminal Division’s Public Integrity Section, former Assistant U.S. Attorney and current Fraud Section Trial Attorney Sonali D. Patel and Assistant U.S. Attorney David Misler of the U.S. Attorney’s Office for the District of Columbia are prosecuting the case.

Fraud, Fraud News From World

Richard Hirsch and James McClung Was Sentenced In Foreign Bribery Scheme

Leave a comment

Two Former Executives Of Louis Berger International Sentenced In Foreign Bribery Scheme

TRENTON, N.J. – Two former executives of Louis Berger International (LBI), a New Jersey-based construction management company, have been sentenced in connection with a long-running bribery scheme to secure government construction management contracts by bribing officials in India, Indonesia, Vietnam and Kuwait.

U.S. Attorney Paul J. Fishman of the District of New Jersey, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, and Special Agent in Charge Timothy Gallagher of the FBI’s Newark Division made the announcement today.

Richard Hirsch, 62, of Makaati, Philippines, was sentenced by U.S. District Judge Mary L. Cooper to two years of probation and fined $10,000.  Hirsch previously served as the senior vice president responsible for the company’s operations in Indonesia, Thailand, the Philippines and Vietnam. James McClung, 60, of Dubai, United Arab Emirates, was sentenced by Judge Cooper on July 7, 2016, to one year plus one day in jail.  McClung previously served as the senior vice president responsible for the company’s operations in India and Vietnam. On July 17, 2015, McClung and Hirsch each pleaded guilty before Judge Cooper in Trenton federal court to one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and one substantive count of violating the FCPA.

According to documents filed in this case and statements made in court:

From 1998 through 2010, LBI and its employees, including Hirsch and McClung, orchestrated $3.9 million in bribe payments to foreign officials in various countries in order to secure government contracts.  To conceal the payments, the conspirators made payments under the guise of “commitment fees,” “counterpart per diems” and other payments to third-party vendors.  In reality, the payments were intended to fund bribes to foreign officials who had awarded contracts to LBI or who supervised LBI’s work on contracts, the defendants admitted.

McClung cooperated with the government’s investigation by identifying other executives at LBI who had knowledge of bribery. Some of the information provided by McClung was also helpful to the government’s successful prosecution of LBI’s former CEO, Derrish Wolff, who pleaded guilty to accounting fraud in December 2014.

On July 17, 2015, LBI entered into a deferred prosecution agreement and admitted its own criminal conduct, including its participation in a conspiracy to violate the anti-bribery provisions of the FCPA.  Pursuant to the DPA, LBI agreed to pay a $17.1 million criminal penalty, to implement rigorous internal controls, to continue to cooperate fully with the department and to retain a compliance monitor for at least three years.

This case was investigated by the FBI’s Newark Division under the direction of Special Agent in Charge Gallagher. The government is represented by Assistant U.S. Attorney Thomas J. Eicher, chief of the Criminal Division for the U.S. Attorney’s Office, District of New Jersey, and Trial Attorney John W. Borchert of the Criminal Division’s Fraud Section.  The Criminal Division’s Office of International Affairs also provided assistance.

Defense counsel:

Hirsch: William G. Sullivan Esq., Chicago, Illinois

McClung: Kelly B. Kramer Esq., Washington, D.C.