07/22/2010

News / Former Department of State Employee Charged with Defrauding the United States and Iraq in Connection with a $147,000 Fraud Scheme

WASHINGTON — A former Department of State employee has been charged for his alleged role in a $147,000 wire fraud scheme involving the conversion of government-owned property for the employee’s use, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.

Robert D. Hearn, 55, was charged in a five-count indictment in the Southern District of Texas with wire fraud and conversion stemming from a scheme to defraud the United States and Iraq. Hearn was arrested this morning in Temple, Texas, and will make his initial appearance in court today. According to the indictment, from April 2005 to September 2006, Hearn worked for the Department of State’s Iraq Reconstruction Management Office (IRMO) and was responsible for providing advice to the director of the port at Umm Qasr, in Basra, Iraq. The port director was an official with the Iraqi Ministry of Transportation.

The indictment alleges that, in late 2005 and early 2006, Hearn orchestrated the transfer of approximately 60 accommodations caravans and other equipment from the site of a U.S.-funded power plant project in Khor Az Zubair, Iraq, to the port, purportedly on behalf of IRMO. These caravans served as living and office accommodations for government and private personnel, but since construction of the power plant was winding down, the caravans were no longer needed at that location.

According to the indictment, Hearn had no authority or authorization to negotiate the transfer of any equipment or to sign paperwork on behalf of IRMO to accept such equipment, which he allegedly did on Dec. 11, 2005. When U.S. officials notified Hearn that IRMO did not have the necessary property-management structure and therefore could not take control of the equipment, the indictment alleges that Hearn directed an Iraqi employee of the Ministry of Transportation to sign for and accept the equipment on behalf of the Iraqi government.

According to the indictment, the individual who signed for the equipment also was employed by Bawabet Al Amer Company (BAC), a private Iraqi company operating at the port. BAC provided security, through subcontractors, as well as lodging, office space and dining services for government and private personnel. The indictment alleges that from the summer of 2005 to the fall of 2006, Hearn controlled the day-to-day operations of BAC, and on behalf of BAC and a silent investor, negotiated business contracts, provided input in BAC’s hiring decisions and directed the work of BAC employees.

According to the indictment, Hearn signed a three-year lease agreement on Jan. 1, 2006, on behalf of IRMO, permitting BAC to use a portion of the port, which during Hearn’s tenure became known as "Bob’s Camp." Hearn allegedly had no authority to enter into this agreement in his official capacity with IRMO and did not discuss it with his supervisors. A portion of the transferred accommodations caravans was installed by BAC employees in "Bob’s Camp."

On Sept. 14, 2006, the day before Hearn was scheduled to be reassigned to IRMO’s Baghdad office, he allegedly negotiated a rental agreement on behalf of BAC involving several of the transferred accommodations caravans. According to the indictment, Hearn directed that rental payments be wired to a bank account in Conroe, Texas, which he controlled. In this manner, Hearn allegedly received $147,000 from the lessee business, which he used for personal and business expenses.

The indictment alleges Hearn’s planned reassignment was based in part on his failure to carry out his function of advising the port director. Hearn eventually resigned from the State Department.

If convicted, Hearn faces 20 years in prison and a $250,000 fine on each of the four wire fraud counts. If convicted on the conversion charge, he faces a maximum of 10 years in prison and a $250,000 fine.

An indictment is merely an allegation, and every defendant is presumed innocent until proven guilty beyond a reasonable doubt.

The case is being prosecuted by Eric G. Olshan of the Criminal Division’s Public Integrity Section and Trial Attorney Catherine Votaw, who is detailed from the Special Inspector General for Iraq Reconstruction (SIGIR) to the Criminal Division’s Fraud Section as part of a joint Department of Justice and SIGIR prosecutorial initiative.

The case was investigated by SIGIR, the Defense Criminal Investigative Service, the FBI, the U.S. State Department Office of Inspector General , and members of the National Procurement Fraud Task Force (NPFTF) and the International Contract Corruption Task Force (ICCTF).

The NPFTF, created in October 2006 by the Department of Justice, was designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs. The ICCTF is a joint law enforcement agency task force that seeks to detect, investigate, and dismantle corruption and contract fraud resulting from U.S. Overseas Contingency Operations worldwide, including in Kuwait, Afghanistan and Iraq.

http://www.justice.gov/opa/pr/2010/July/10-crm-844.html

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