Ex-Army Corps of Engineers manager pleads guilty in contracting scam

February 13, 2012

A former Army Corps of Engineers employee admitted in court Monday that he participated in a $20 million bribery and kickback scam authorities have called one of the largest in the history of federal contracting.

Michael Alexander, 55, of Woodbridge pleaded guilty in the District’s federal court to charges of bribery and conspiracy to commit money laundering. He faces at least nine years in prison under federal guidelines, although that number may drop depending on his cooperation with authorities. A sentencing date has not been set.

Alexander is the first to plead guilty of four men arrested in October on charges that they conspired to fleece taxpayers out of millions by inflating invoices and collecting what they termed “overhead.” The former Army Corps program manager admitted that he received $1.25 million in kickbacks on such inflated bills.

Among the other D.C. area residents charged are Kerry Khan, 45, also a former Army Corps program manager; Khan’s son, Lee Khan, 31; and Harold F. Babb, 60, a former contracting director at a Dulles-based company, Eyak Technology, also known as EyakTek.

The four men have been detained since their arrests in October.

A fifth man, Young N. Cho, 40, the former chief technology officer of Nova Datacom, pleaded guilty to conspiracy to commit bribery, money laundering and wire fraud; Cho, who goes by Alex and lives in Great Falls, played a key role in the investigation as an undercover informant, court records show. He has been detained since late last year.

Federal prosecutors have said the scam worked this way: Khan and Alexander directed contractors to submit inflated invoices for equipment and services to the Army Corps. Khan ensured that the Army Corps paid those inflated bills, and the contractors would funnel money back to Khan and Alexander, prosecutors said.

Khan and Alexander received the vast majority of the proceeds through Cho’s company, which inflated $25 million in work by $20 million from 2007 through last year, prosecutors have said.

Assistant U.S. Attorney Michael Atkinson declined to comment after the plea hearing. Christopher Davis, Alexander’s attorney, also declined to comment.

Also on Monday, another man pleaded guilty in the investigation. Robert McKinney, 51, president of Waldorf-based Alpha Technology Group, admitted that in 2007 and 2008, he inflated invoices to the Army Corps by more than $850,000, most of which was passed on to Khan and Alexander, prosecutors said.

Alexander admitted to receiving about $90,000.

In a statement, U.S. Attorney Ronald C. Machen Jr. said the guilty pleas show that authorities must remain “vigilant in the pursuit of those both inside and outside of the government who attempt to cheat the system and loot the public treasury.”

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