Allegations of Defense Fraud and Illegal Kickbacks Result in $10M Scheme Targeting US Navy
Posted by Stephanie R. on Monday, May 20th, 2013
According to a recently unsealed whistleblower lawsuit, several people are accused of orchestrating an illegal kickback and bribery scheme that defrauded the United States Navy of $10 million. Among those facing charges are Ralph M. Mariano, a civilian engineer who previously worked for the Naval Sea Systems Command, and his father, Ralph Mariano Jr. The father and son duo were indicted after three others implicated in the scheme elected to plead guilty to charges and agreed to cooperate with the Department of Justice (DOJ).
Ralph Mariano is currently facing charges of conspiracy, theft of government funds, extortion, wire fraud and tax evasion. His father, Ralph Mariano Jr., also faces multiple counts of tax evasion.
According to federal authorities, the illegal kickback scheme dates back to 1996. Whistleblowers provided inside information about a plot to defraud the US Navy, which was allegedly hatched by Ralph Mariano and Anjan Dutta-Gupta. Both Mariano and Duttp-Gupta were the co-owners of a company known as Advanced Solutions for Tomorrow (ASFT), which held over $120 million in Navy defense contracts. ASFT was a computer-related defense contract operation which had offices located in Georgia and Rhode Island.
In 2011, Mariano and Dutta-Gupta were arrested and criminally charged for their roles in the fraudulent scheme. Dutta-Gupta later admitted to paying illegal kickbacks and plead guilty to conspiracy to commit bribery. Federal authorities additionally filed charges against ASFT officers, including one attorney, and several others connected to the illegal defense fraud scheme.
Dutta-Gupta allegedly used subcontractors to transfer approximately $10 million to Mariano and his co-conspirators for over a decade. These illegal kickbacks were provided as a bribe to secure over $120 million in Navy Contracts.
Immediately following Dutta-Gupta’s arrest, ASFT was forced to lay off its entire staff in both locations. Workers were notified of the mass termination via email. The company also had its assets frozen and could not secure financing. ASFT closed its doors for good shortly afterward.
Allegations of Illegal Kickbacks and Fraudulent Activity
According to official court documents, from approximately 1996 to January 2011, ASFT paid at least $8,000,000 to Mariano via the company’s subcontractors. In addition to funneling money to Mariano, a civilian program manager and senior systems engineer with the United States Navy’s Naval Sea Systems Command (NAVSEA), illegal kickback funds were also sent to Mariano’s family members, a senior vice president and the director of strategic planning at ASFT.
In exchange for Dutta-Gupta and ASFT’s illegal kickbacks, Mariano made sure that ASFT received payment for the invoices that were submitted. Mariano also ensured that ASFT received additional funding for their existing Navy contracts as Dutta-Gupta requested. Working as a program manager for the Naval Undersea Warfare Center, Mariano allegedly ordered Navy contracting officers to add funding to ASFT contracts and delivery orders on a regular basis. In order to cover his tracks, Mariano allegedly forged multiple funding certification forms when adding fraudulent funds to the ASFT contracts.
The List of Co-Conspirators
Federal authorities also alleged that illegal kickbacks were provided to Mariano through businesses that were owned by Russell Spencer. As a sub-contractor, Spencer submitted false and fraudulent claims to ASFT for work that was allegedly never completed. After receiving payment for the bogus invoices, Spencer then passed the money along to Mariano through various other individuals and companies, including Mariano’s father, Ralph Mariano Jr. Spencer allegedly received a portion of the payments as his “salary.”
In June 2011, Spencer plead guilty to conspiracy to commit bribery. As part of the plea agreement, Spencer will pay back more than $330,000 of the proceeds he garnered in the illegal kickback scheme.
Another co-conspirator, Mary O’Rourke, also faces charges in the defense fraud case. O’Rourke is a lawyer and had served as senior vice president at ASFT since 1998. According to the DOJ, O’Rourke was allegedly paid hundreds of thousands of dollars for doing little to no work for ASFT. Coincidentally, O’Rourke is also the girlfriend of Ralph Mariano. She entered a not guilty plea and will face a judge later this year. O’Rourke faces charges of conspiracy, theft of government property and wire fraud.
Patrick Nagle, the former senior vice president and director of contracts for ASFT, was also charged in connection with the case. Nagle allegedly okayed false and inflated invoices submitted to his firm by ASFT subcontractors from 1999 to June 2010. He approved the bogus invoices even though he was aware most of the work had not been done. Nagle agreed to plead guilty to charges of conspiracy to commit bribery and will be sentenced in July.
If you have discovered evidence of government fraud, contact an experienced False Claims Act attorney before blowing the whistle. You may be entitled to a substantial reward and the legal protections afforded to whistleblowers under state and federal laws. The attorneys of Berger & Montague are nationally recognized experts in Whistleblower/Qui Tam actions with over a decade of experience pursuing these complex fraud cases. For more information or to schedule your confidential consultation, contact us online or call us at 1-800-424-6690.