By Jennifer Buske and Josh White
Washington Post Staff Writers
Wednesday, June 3, 2009
As Maneesh Gupta and John Roessler worked together in Prince William County's information technology department in 2004, they realized the county's increasing spending in their field could present a financial opportunity. Together, they started Praetorian Systems, a company designed to bid for contracts from the office where the two were already employed.
Almost immediately, Praetorian Systems became a preferred county vendor and started winning millions of dollars in contracts, contracts that Gupta oversaw from the inside as the office's deputy director, according to police and prosecutors. Authorities said yesterday that Gupta, Roessler and two others conspired to rig the county's contracting system to send $9 million in work to Praetorian and shell companies Gupta and Roessler created, with about $4 million of that taxpayer money going straight into their pockets.
In one of the largest embezzlement cases in county history, prosecutors secured indictments Monday on 153 charges against Gupta, 45, of Woodbridge; Roessler, 50, of Woodbridge; Roessler's brother Vernon, 42, of Dale City; and Richard Billingsley, 41, of Springfield. Charges include racketeering, bid rigging, forgery, obtaining money by false pretenses and money laundering over a five-year period.
Law enforcement sources close to the investigation said yesterday that Gupta and Roessler set up the company and arranged for it to win lucrative bids with the IT office. Two sources, both of whom spoke anonymously because of the ongoing probe, said the scheme involved submitting fake bids in the names of legitimate county contractors so that Praetorian could then compete with and undercut those bids.
Gupta was able to hide his actions because he was in charge of the process, authorities said. Officials said yesterday that there were 26 cases in which the men gave themselves contracts and made up bids from other companies.
Michael C. Sprano, a Fairfax lawyer who represents Roessler, said Gupta and his client came up with the idea to launch Praetorian while working in the county office, which maintains and supports the county's network of computers, databases and telephones.
Roessler wanted to start his own business but did not think it could support his family, Sprano said. Instead, he double-dipped, working for Prince William and Praetorian until January 2008, when he left his county job, he said.
"It was never his intent to steal from the county," Sprano said. "His intent was that the county would always be charged a fair price, he would do good work and they would get what they paid for."
Sprano said his client knew the scheme was wrong, but that once he was caught up in it, it was hard to stop.
"Looking back now, he said he wishes he never would have done it," Sprano said. "He wishes it was done in a legitimate way."
Gupta's attorney, Robert Trout, said last week that Gupta has been cooperating with the investigation. Trout declined to comment yesterday.
Praetorian also inflated work hours to collect additional county payments, according to county officials.
Authorities said it is unclear how much of the work was actually done, though Praetorian did provide some services, including technology projects with the county's police department and circuit courts. The company's Web site also touts contract work with Fauquier and Loudoun counties.
The alleged co-conspirators hid their connections to the companies, at one point listing an associate of Roessler's as president of Praetorian, paying him $500 a month to keep his name on the company, sources said. Billingsley became director of Praetorian in March 2006.
One of the scheme's alleged shell companies, Sun Solution Services, also received contracts worth nearly $1 million in 2008.
Police Chief Charlie T. Deane said the FBI got involved in the investigation because $500,000 in federal grant money was tied to the scheme. Deane said that because Gupta worked for the county and was involved in the contracting process, the bid rigging was hard to detect.
"They had an inside person," Deane said. "It was done very professionally."
The suspects doctored bid documents, in some cases using legitimate companies' letterhead to make the bids seem real. Officials from those companies later said they were unaware that bids were being submitted in their names.
Commonwealth's Attorney Paul B. Ebert said investigators are trying to track down embezzled money they believe was sent to India, where Gupta has family.
County Executive Craig S. Gerhart said there are strong internal control policies in place, which are meant to ensure that no employee has sole control over several departmental procedures.
"This is an embarrassment to the county, and the board will want answers as to why the internal controls in place the past five years were so weak and so easily bypassed," said Board of County Supervisors Chairman Corey A. Stewart.
Gerhart said the county's action against the individuals involved will send a "strong" message, deterring others from violating policies. The county will implement an Internal Control Council, which will work to reduce the risk of county loss and monitor compliance with regulations, Gerhart said.
"All of those efforts will not necessarily ever fully prevent someone who is intent on committing a criminal act from committing that criminal act," Gerhart said.
Gerhart said the money lost in the scheme will not affect the county's budget. Prince William will have a balanced fiscal 2010 budget of $2.2 billion.
Staff researcher Meg Smith contributed to this report.