– Domani Spero
In May and September 2013 we blogged about this case (See State Dept Contract Employee/Husband Indicted For Alleged Secret Scheme to Steer More Than $60 Million Contracts to Their Company and Ex-State Dept Contract Employee And Husband Plead Guilty To $53 Million Fraud. The Daily Caller broke this story in July 19, 2013. The contractor, Kathleen McGrade was reportedly fired the day after.
Last week, the same couple at the center of this contracting fraud was sentenced by U.S. District Judge Liam O’Grady in the Eastern District of Virginia. Kathleen D. McGrade, age 64, and Brian C. Collinsworth, age 47, of Stafford, Va., were sentenced to 24 and 18 months incarceration, respectively. Given that each defendant faced a maximum penalty of 360 months or 30 years imprisonment, the 18-24 months incarceration is a bargain.
WaPo reports additional details during the sentencing:
In a lengthy speech before she was sentenced, McGrade offered various explanations for her misdeeds and told a federal judge in Alexandria that she was in court only because she had “been told that somehow the procurements that took place were illegal.”
As O’Grady handed down the two-year sentence — far short of the five years and 10 months that federal sentencing guidelines had called for as a minimum — he said McGrade had nearly persuaded him to impose a stiffer penalty.
“That was almost a delusional recitation of what has occurred here,” O’Grady said. “To convince yourself that it’s everybody else’s fault is astonishing, given the facts of this case.”
Former State Department Contract Employee And Husband Sentenced For $53 Million Fraud | December 6, 2013
ALEXANDRIA, Va. – Kathleen D. McGrade, age 64, and Brian C. Collinsworth, age 47, of Stafford, Va., were sentenced today to 24 and 18 months incarceration, respectively, by U.S. District Judge Liam O’Grady in the Eastern District of Virginia for committing major fraud against the government, conspiracy to launder monetary instruments, and engaging in unlawful monetary transactions.
Dana J. Boente, Acting United States Attorney for the Eastern District of Virginia; Steve A. Linick, Inspector General for the Department of State; and Thomas J. Kelly, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Section, Washington, D.C. Field Office, made the announcement following the sentencing hearing.
According to Court records, McGrade and Collinsworth admitted that McGrade was a contract employee for the Department of State and performed the role of a contract specialist for an office that awarded construction contracts for work done at U.S. embassies worldwide. Collinsworth worked at one of the companies that received contracts. In 2006, the defendants married, but did not tell others at the Department of State. The defendants started a company, the Sterling Royale Group, or SRG, with McGrade being the president and Collinsworth the vice-president and project manager.
In late 2007, McGrade caused a State Department contracting officer to sign a contract between the Department of State and SRG, when McGrade failed to disclose her role in SRG, her marriage, or that proper contracting competitive procedures had not been followed. The contract made SRG eligible to receive task orders for work to be done at embassies and McGrade began steering work to the company. She acted as the contract negotiator between the Department of State engineers responsible for getting the jobs done, on the one hand, and Collinsworth, who was acting on behalf of SRG and the subcontractors, on the other. Between 2008 and 2011, McGrade caused Department of State contracting officers to sign 17 task orders awarding work worth almost $53 million. In 2010, the defendants also lied about their marriage to investigators conducting McGrade’s background investigation regarding renewal of her security clearance.
In the summer of 2011 a news article disclosed the defendants’ marriage, and the Department of State terminated her employment. The Department of State, however, had paid SRG about $39 million, and after the defendants had paid their subcontractors, they still had millions of dollars. Among other things, they bought houses, a condominium, a yacht, a Lexus automobile, jewelry, and a Steinway piano with the fraudulently obtained money. The defendants were ordered to forfeit all of those items in the amount of $7,864,795.
This case was investigated by the Department of State, Office of Inspector General, and the Global Illicit Financial Team, a task force led by the Criminal Investigation Section of the Internal Revenue Service. Assistant United States Attorneys Jack Hanly and Mark D. Lytle are prosecuting the case on behalf of the United States.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on https://pcl.uscourts.gov.
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