01/08/2010

News / Former Military Official Sentenced to Three Years in Prison for Participation in Bribery Conspiracy Involving $206 Million Telecommunications Contract in Korea

A former Army and Air Force Exchange Service (AAFES) official was sentenced today in U.S. District Court in Columbus, Ga., to three years in prison for his role in a bribery conspiracy involving a multi-million dollar telecommunications contract, and for not reporting the bribes he accepted on his income tax returns.

In addition to the prison term, U.S. District Judge Clay D. Land also ordered Henry Lee Holloway to pay a $5,000 fine and to forfeit $70,000 as the proceeds of Holloway’s involvement in the conspiracy. Holloway pleaded guilty on April 21, 2009, to a two-count information, charging him with one count of conspiracy and one count of making a false statement on a federal income tax return.

According to court documents, Holloway, 42, of Hamilton, Ga., worked as an AAFES general store manager at the Central Exchange in the Republic of Korea from 2003 through 2007. The Department of Defense provides billions of dollars worth of merchandise and services annually through AAFES to military personnel by operating base and post exchanges worldwide.

From May 2003 to April 2005, Holloway admitted to conspiring with, among others, Gi-Hwan Jeong, the chief executive officer of Samsung Rental Company Ltd (SSRT), to use Holloway’s official position to maintain SSRT’s $206 million contract with AAFES to provide telecommunications services to U.S. Armed Forces installations in the Republic of Korea. Holloway admitted that in exchange for at least $70,000 worth of stock, entertainment, travel expenses, cash and other things of value from Jeong, he took official action to protect SSRT and further its interests, despite Holloway’s knowledge and belief that SSRT was underperforming and violating the terms of its contract with AAFES. According to court documents, prior to Jeong’s payments to Holloway, and as a result of SSRT’s failures to perform under the contractual relationship with AAFES, Holloway sought termination of the contract between AAFES and SSRT. Holloway admitted that after the payments from Jeong to Holloway began, and as a result of those payments, he used official acts and influence to support and expand that contractual relationship.

On June 11, 2009, Jeong pleaded guilty in the U.S. District Court in Dallas to a five-count superseding indictment, charging him with two counts of bribery, two counts of honest services wire fraud and one count of conspiracy. On Nov. 10, 2009, U.S. District Court Judge Ed Kinkeade sentenced Jeong to five years in prison and a $50,000 fine.

This case is being prosecuted by Senior Trial Attorney Richard C. Pilger and Trial Attorney Eric G. Olshan of the Criminal Division’s Public Integrity Section. The case was investigated by the Air Force Office of Special Investigations, the FBI’s Dallas Field Office and the Internal Revenue Service Criminal Investigation.

http://www.justice.gov/opa/pr/2010/January/10-crm-010.html

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