State/OIG Reports to Congress: Investigations Into Mrs P’s Travels, Ambassadors, Senior Advisors, FSOs and More

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On June 1, 2021, State/OIG published online its Semiannual Report to the Congress (October 1, 2020 to March 31, 2021).
On  accountability and independence, the OIG reports:
“OIG did not encounter any attempts to interfere with Inspector General independence—whether through budgetary constraints designed to limit its capabilities, resistance or objection to oversight activities, or restrictions on or significant delays in access to information—for the reporting period from October 1, 2020, through March 31, 2021.
OIG encountered a three-month delay in scheduling an interview with Secretary Michael Pompeo as part of its review of allegations of misuse of Department resources. OIG initially requested an interview on September 11, 2020, but then-Secretary Pompeo did not agree to the interview (which was scheduled for December 23, 2020) until December 16, 2020.
During a mandated review of the Bureau of International Narcotics and Law Enforcement Affairs’ (INL) reporting related to National Drug Control Program activities, INL was not sufficiently responsive to OIG’s requests for information. At the conclusion of fieldwork, OIG determined that it could not complete its review because it did not have sufficient, appropriate evidence to be able to draw a conclusion about whether the Department’s management assertions in its Accounting and Authentication of FY 2020 Drug Control Funds and Related Performance Report were fairly stated.”
The Office of Evaluations and Special Projects (ESP):
“From October 1, 2020, to March 31, 2021, ESP issued one unclassified report on Department programs and operations. Management Assistance Report: Representational Travel by the Spouse of the Secretary of State (ESP-21-01, 12/2020) In 2019, OIG received a whistleblower complaint related to travel by the spouse of the Secretary of State that the Department considered official travel. To investigate this complaint, OIG requested and reviewed documentation related to official representational family travel by Susan Pompeo from April 2018 to April 2020. Generally, Department policy permits such travel by relatives of Department officials for appropriate representational purposes. However, both Department guidance and principles of internal control require documentation of both the official purpose and the approval of the travel. The Secretary’s spouse took eight trips that were declared official from April 2018 to April 2020. Of the eight trips, OIG found documentation of an authorized purpose for all eight trips, but only found written approval for two of the trips.
OIG recommended that the Office of the Secretary seek and gain written approval for all representational travel, and that the Under Secretary for Management or other authorizing official document in writing the approval for all representational trips by any family members. The Department concurred with these recommendations.”
ESP Substantiation of Allegations of Non-Criminal Misconduct Involving Senior Government Employees, 10/1/2020–3/31/2021
— A case closed in January 2021 involved a U.S. Ambassador. “OIG found that the official committed several violations of Department policy, including involving a household member in official duties, using personal social media accounts for official activities, and failing to comply with 3 FAM 1214.1 “Leadership and Management Principles for Department Employees” and “The Standards of Ethical Conduct for Employees of the Executive Branch,” issued by the U.S. Office of Government Ethics. OIG referred its findings to the Under Secretary for Political Affairs and the Bureau of African Affairs. Shortly after OIG issued its findings, the Ambassador left office as part of the presidential transition.”
— A case closed in March 2021 involved a USAGM Senior Advisor.  “OIG found that the official violated Federal recordkeeping regulations by instructing employees to communicate with her on official matters using a mobile messaging application and then deleting the messages without properly preserving them in agency recordkeeping systems. OIG referred its findings to USAGM, which reviewed the matter and notified the National Archives and Records Administration of the improper disposal of Federal records.”
The Office of Investigations conducts worldwide investigations of criminal, civil, and administrative misconduct related to programs and operations of the Department. During the reporting period, OIG conducted a number of investigations involving senior Government employees.
Investigations Involving Senior Government Employees Where Allegations Were Substantiated, 10/1/2020–3/31/2021
— On June 12, 2015, OIG opened an investigation based on information that a senior Administrative Officer and two of her subordinates violated procurement rules and regulations related to the use of U.S. Government purchase cards. The investigation substantiated the allegation and revealed the officer instructed her employees to engage in the practice of split purchasing. As there was no violation of criminal law, the case was not referred to DOJ. However, the officer resigned from the Department while under investigation. The case was closed in January 2021.
— On October 28, 2019, OIG opened an investigation based on information that the senior advisor to a U.S. Ambassador serving overseas may have received supplemental compensation from a private company while serving as a U.S. Government employee. The investigation revealed the advisor transmitted Sensitive But Unclassified information to non-U.S. Government personnel and received gifts of airfare and a gift card valued over $8,000 from a private business entity. As there was no violation of criminal law, the case was not referred to DOJ. However, the officer resigned from the Department while under investigation. The case was closed in February 2021.
— On May 29, 2019, OIG opened an investigation regarding multiple allegations of misconduct by a U.S. Ambassador. The investigation revealed the Ambassador inappropriately used his position to try to influence the move of a professional sporting event to a different venue. He also knowingly allowed his special assistant to conduct personal matters that fell outside of her scope of official duties, and while using non-Department email accounts, he did not courtesy copy or forward to his official Department email account at least 62 official emails in the span of approximately 6 months.As there was no violation of criminal law, the case was not referred to DOJ. However, the Ambassador resigned from the Department while under investigation. The case was closed in February 2021.
Under notable resolutions, State/OIG/INV’s list includes the following:
— In March 2021,  two Foreign Service Officers agreed to pay more than $13,033 to the U.S. Government to resolve issues related to fraud allegations regarding Department travel vouchers. OIG special agents determined that the married couple engaged in a scheme to defraud the Department by filing four travel vouchers that claimed lodging expenses they were not entitled to under Federal Travel Regulations. The fraud was committed from approximately September 2014 through April 2019. OIG’s Office of General Counsel coordinated the Program Fraud Civil Remedies Act action that resulted in the settlement.
–In October 2020, three individuals were indicted for using a business email compromise scheme, or BEC, to defraud the Department. OIG and Federal Bureau of Investigation (FBI) special agents determined the individuals tricked the Department and a nonprofit agency into wiring at least $575,000 into bank accounts they controlled for the purpose of enriching themselves and their co-conspirators.
Under employee misconduct:
— In November 2020, former Seabee Martin Huizar was sentenced to 109 months’ incarceration and ordered to pay $40,100 in fines and $10,000 in restitution, along with serving a 10-year term of supervised release, for transportation of images of child sexual abuse on his phones and tablet computer. The OIG Special Assistant United States Attorney assigned to the Eastern District of Virginia prosecuted the case.
 

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SDNY Charges @StateDept Contractor in Multimillion-Dollar Fraud Schemes, Then There’s “Insider-1” at OBO

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On May 28, 2021, USDOJ/Southern District of New York announced the arrest of SINA MOAYEDI, the owner of a construction company on charges of wire fraud, conspiracy to commit wire fraud, and one count of bribery of a public official. According to the announcement, “Sina Moayedi allegedly paid lucrative bribes to a State Department insider in exchange for confidential bidding information, and fraudulently induced the State Department to pay his company approximately $100 million.” Excerpt from the announcement:

Manhattan U.S. Attorney Audrey Strauss said:  “As alleged, Sina Moayedi made misrepresentations about his employees’ qualifications and his company’s ownership in order to induce the State Department into awarding approximately $100 million in lucrative construction contracts to Moayedi’s company, Montage, Inc.  Moayedi also allegedly cultivated a State Department insider, and paid the insider lucrative bribes in exchange for confidential State Department bidding information.  Moayedi must now be held accountable for his alleged brazen fraud on the government.”

Special Agent in Charge Michael Speckhardt said:  “As alleged, the defendant’s scheme to undermine the Department’s procurement process for personal gain caught up with him today and he will now be held accountable.  His alleged actions not only hurt other legitimate businesses competing for awards, but also damage the public’s trust in the effective and efficient utilization of taxpayer money.”

According to allegations in the Complaint[1]:

Montage, Inc. (“Montage”) is a U.S.-based business that is primarily involved in worldwide Government construction projects, including embassies, military posts, consulates, and similar overseas properties owned and operated by the United States Government.  Montage has performed over $220 million in contracting work for the U.S. Government, including for the Department of Defense, the Department of Justice/Federal Bureau of Investigation, the State Department, the Department of the Interior, the Department of Agriculture, the National Aeronautics and Space Administration (“NASA”), the Equal Employment Opportunity Commission (“EEOC”), and the Department of Veterans Affairs.  Since 2014, Montage appears to have focused primarily on competing for and obtaining contracts with the State Department.  During that period, the State Department has awarded Montage approximately six overseas U.S. Embassy/Consulate construction project contracts totaling $100 million, in locales such as Ecuador, Spain, Sudan, the Czech Republic, and Bermuda.  The founder of Montage is SINA MOAYEDI.

Montage engaged in at least two fraud schemes.  The first scheme alleges that, from approximately 2014 to September 2020, MOAYEDI and Montage lied that it was a female-owned business in order to secure unmerited advantages in the bidding process.  By way of context, it is advantageous to a company, when bidding for federal government contracts, to be majority-owned by an individual from a socially or economically disadvantaged community.  In fact, certain contracts (or portions of contracts) are “set aside” for – i.e., only available to – such companies.  MOAYEDI and Montage repeatedly represented falsely in submissions to the State Department that Montage was female-owned, or female-owned and minority-owned, in order falsely to induce the State Department to award Montage lucrative construction contracts.  In actuality, MOAYEDI repeatedly lied about Montage being a female-owned business, and indeed, MOAYEDI controls Montage and makes all material decisions on Montage’s behalf.  As MOAYEDI revealed to a bank that inquired about Montage’s ownership status, “I am the sole owner and president of Montage and have always been.”  Montage and MOAYEDI also repeatedly misrepresented, and significantly overstated, the qualifications of Montage employees.  MOAYEDI made these misrepresentations in order to, among other things, meet State Department and contractual requirements for minimum experience in certain key positions.

The second scheme charged in the Complaint is a bribery scheme during at least 2016 and 2017.  Insider-1 is employed in the State Department’s Overseas Building Operations (“OBO”), which, according to OBO’s website, “directs the worldwide overseas building program for the Department of State and the U.S. Government community serving abroad.”  Specifically, Insider-1 works for the State Department’s OBO Project Development and Coordination Division, European division.  
[…]
MOAYEDI, 66, of Chevy Chase, Maryland, is charged with one count of wire fraud, and one count of conspiracy to commit wire fraud, each of which carries a maximum potential prison sentence of 20 years, and one count of bribery of a public official, which carries a maximum potential prison sentence of 15 years.  
[…]
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth below constitute only allegations, and every fact described should be treated as an allegation.

Download U.S. v Sina Moayedi complaint (21 mag 5598).pdf
Excerpt from complaint:

15. Based on my review of State Department records, I am aware that between approximately 2014 and 2017, Montage was awarded six U.S. embassy/consulate construction projects with the State Department, worth a total of approximately $100 million.
[…]
26. Based on information derived from witness interviews, I reviewed resumes submitted by Montage for various State Department projects. Department requirements referenced in the contract specify certain levels of experience in order to serve as “key personnel” (i.e., personnel whom the State Department has deemed critical to the safe, successful, and timely completion of a project).
[…]
In the course of my review, I identified numerous deficiencies regarding the resumes of key personnel submitted to the State Department for the Guayaquil, Ecuador project.

a. For example, Montage submitted an individual for the key role of Project Controls Engineer and Site Health Project Manager. In the claimed experience for this individual, it stated that he was employed at Montage since 2008 and had “inspected emergency egress and life/safety issues” and conducted “inspections of asbestos containment.” In fact, this individual had only been employed at Montage for approximately one year, and served in an office staff capacity, performing none of those duties.
[…]
[O]ne Montage employee’s resume claimed that he had earned a bachelor’s Degree in Civil Engineering and also claimed years of full-time complex work in the construction field in various capacities over several years. Neither representation was true. In fact, this individual testified at a deposition that they did not graduate; and this individual’s SF-86 security clearance application noted that this individual had actually sold meat as a door-to-door salesman, was a landscaper, and built swimming pools for several years during the period that they had claimed years of full-time complex work in the construction field.
[…]
39. I am aware, from my personal participation, that a judicially authorized search warrant was executed at the residence of Insider-1, on or about May 20, 2021. On that date, Insider-1 was informed, in substance, that she was not in custody, she was free to go, and she was not required to speak with law enforcement agents. She then participated in a voluntary interview with myself and an SDNY Special Agent on her back porch, and she made the following statements, in substance and part:

a. At first, Insider-1 claimed to have sold a large green rug to SINA MOAYEDI, the defendant, for about $60,000, but she said that the payment for the rug came from MOAYEDI’s friend.

Read more here.
The Daily Beast has identified the OBO insider in their May 27 report as well as provided the link to the Salehi Search Warrant; she has not been charged.
The document is 145 pages, the allegations spans many years and the government appears to be looking at multiple embassy projects.  The project in Guayaquil, Ecuador gets top mention. The search warrant executed includes “Records and information relating to forged submittals for the Guayaquil Consulate Project in Ecuador, and other State Department or other Government construction projects” and “Records and information that constitute evidence concerning persons who either (i) collaborated, conspired, or assisted (knowingly or unknowingly) the commission of the criminal activity under investigation; or (ii) communicated with MOAYEDI or other MONTAGE employees about matters relating to the criminal activity under investigation, including records that help reveal their whereabouts.”

Related news:

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State/OIG: Accountability of Official and Diplomatic Passports Needs Improvement

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State/OIG issued its Management Assistance Report: Accountability of Official and Diplomatic Passports of Separating Employees Needs Improvement this week.
According to the OIG, in December 2020, after it announced an audit of official and diplomatic passport records, the Office of Inspector General (OIG) was alerted that a former Department of State employee, a political appointee, allegedly kept their diplomatic passport after separating from the Department and wanted to use it in their new role with another U.S. Government organization.

Specifically: “A politically appointed Senior Advisor separated from the Department in November 2019. In 2020, President Trump appointed the former advisor to a role with another U.S. government organization. A representative from the new organization contacted the appointee’s former Department bureau because the political appointee was in possession of a diplomatic passport. The representative wanted to know whether the appointee could travel on behalf of the new organization using this diplomatic passport. The representative was informed by a bureau official that the appointee should not use the diplomatic passport.”

Excerpt from the MAR:

(U) During an audit of CA’s official and diplomatic passport records, OIG was alerted that a former Department employee had allegedly not surrendered their diplomatic passport upon separation from the Department and wanted to use it in a new role with another U.S. Government organization.24 According to the FAM, entitlement to an official or diplomatic passport ends when the employee separates from the Department, and the passport must be surrendered for cancellation.25

U) OIG found that the former employee’s diplomatic passport was listed as “issued” in ACRQ and had not been electronically cancelled by SIA. Based on that information, OIG performed additional steps to determine whether SIA had cancelled other employees’ official and diplomatic passports once separated from the Department. Specifically, OIG selected a sample of 134 official and diplomatic passports issued to employees who subsequently separated from the Department between November 2017 and September 2020. OIG found that 57 of 134 (43 percent) passports had not been electronically cancelled by SIA after the employee separated. Moreover, of the 57 that had not been electronically cancelled, 47 (82 percent) of the passports had not expired as of February 1, 2021, meaning they could still be valid.

(U) One reason for the deficiencies identified is that Department bureaus and offices did not always maintain proper accountability of passports and could not confirm whether separating employees had surrendered their passports for cancellation. When an employee’s entitlement to an official or diplomatic passport ends, but the passport is not surrendered or cancelled, the individual could misuse the passport, such as misrepresenting themselves as a representative of the U.S. Government. Doing so is a criminal offense.26

(U) Separated Employees’ Official and Diplomatic Passports

(U) Based upon a Bureau of Global Talent Management list of employees who had separated from the Department between November 2017 and September 2020, OIG identified 4,714 official and diplomatic passports associated with those employees. OIG selected a sample of 134 passports to test. 27 OIG found that 57 of 134 (43 percent) passports had not been electronically cancelled by SIA. In addition, of those 57 passports, 47 (82 percent) had not expired, as of February 1, 2021, meaning they could stil l be valid. 28 For example, one employee separated from the Department in December 2017, but the employee’s diplomatic passport was not scheduled to expire until April 2022- more than 4 years after separating from the Department.

OIG apparently followed up with 3 bureaus and 1 office to determine whether 17 former Department employees had surrendered their passport(s) and whether the bureaus or office had requested that SIA cancel the passports in accordance with the FAM. The follow-up revealed the following:

Two former CA employees:  “OIG identified two former CA employees who had diplomatic passports listed as “issued” in ACRQ. According to CA’s employee check-out list, employees are required to return special-issuance passports to SIA that were issued to them and to their family members upon separation and obtain the signature of an SIA staff member. SIA has no record of either of these two passports being returned for cancellation after the employees separated.”

Two former Office of the Secretary employees: “OIG identified two former Office of the Secretary employees who had diplomatic passports listed as “issued” in ACRQ. These two individuals had four passports issued to them. The Office of the Secretary’s employee check-out form requires departing employees to return their special-issuance passports and have the form initialed by the Office of the Secretary’s budget and travel office staff. An Office of the Secretary official stated that the office would have been in possession of three of the identified passports because the office maintains the diplomatic passports of people who travel with the Secretary of State. Because the three passports could not be found in the office, the official assumed that they were physically cancelled and returned to the individual. The Office of the Secretary could not provide information on the fourth passport. The Office of the Secretary official stated that a memorandum would have accompanied each passport to SIA for cancellation, but copies of the memoranda were not maintained .”(what the what? italics added).

Eleven former DS employees:  “OIG identified 11 former Bureau of Diplomatic Security (DS) employees who had diplomatic passports listed as “issued” in ACRQ. These 11 individuals had 16 passports issued to them, including 2 that were issued to a former Assistant Secretary. DS’s employee check-out form requires employees to return to the Employee Services Center or contact SIA about special-issuance passports that were issued to them and to their family members upon separation. A DS official stated that the two passports issued to the former Assistant Secretary were collected before he separated from the Department, but DS had not returned them to SIA. The DS official stated that a former employee, who returned as a PSC, claimed to have lost one passport but there was no comment on her second passport and another employee’s passport had been returned to CA. Three former DS employees had returned four passports in total to their DS offices; however, DS could not locate an additional passport for one of these individuals and an additional two passports for another of these individuals. The DS official further stated that DS did not have records for two of the people associated with two passports. DS may have facilitated the issuance of these passports, but they were not DS employees. DS did not provide information on the remaining 2 of 16 passports.”

OIG recommends that the Bureau of Consular Affairs “improve accountability over special-issuance passports by updating the Foreign Affairs Manual and any other relevant policy documents to require that (a) all Department of State bureaus and offices that participate in the Special Issuance Passport Program either (1) physically cancel special-issuance passports (including secondary passports) issued to a separating employee and email the Special Issuance Agency (SIA) a copy of the physically cancelled data page requesting that the passport(s) be electronically cancelled (along with returning the passport to SIA for destruction if not returned to the separating employee) or (2) if appropriate, file the special-issuance passport with SIA and (b) the Special Issuance Agency confirm that all special-issuance passports issued to the separating employee have been included in the cancellation request and electronically cancel all additional passport(s) as appropriate.”
Consular Affairs concurred with the recommendation, stating that it “will propose updates to the FAM and to the Special Issuance Passport Program.”  The bureau will also “update SIA’s cancellation and destruction SOP to confirm that all special-issuance passports issued to a separating employee have been included in the cancellation request and electronically cancel all additional passports as appropriate.”

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Indictments For Alleged Large-Scale Visa Fraud Employment Scheme

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On April 20, USDOJ announced the indictment of two businesses and nine of their officers and managers for an alleged large-scale visa fraud employment scheme. Excerpt from the announcement:

An indictment returned by a federal grand jury in the Southern District of Georgia has been unsealed charging two businesses and nine of their officers and managers located across the country for their roles in an alleged conspiracy to defraud the U.S. government and commit various fraud and criminal immigration offenses for profit.

According to court documents, Regal Hospitality Solutions, LLC; Educational World, Inc.; Karen Makaryan, 42, Sargis Makaryan, 42, and Samvel Nikoghosyan, 40, of Destrehan, La.; Artur Grigoryan, 38, of Biloxi, Miss.; Armen Ayrapetyan, 37, of Duluth, Ga.; Jason Hill, 28, of Virginia Beach, Va.; Fremie Balbastro, 49, of Myrtle Beach, S.C.; and Larisa Khariton, 73, and Jon Clark, 71, of North Port, Fla., were charged in a 36-count indictment returned by a federal grand jury on April 8. Each defendant was charged with one count of conspiracy to defraud and commit offenses against the United States, including encouraging and inducing an alien to reside in the United States, alien harboring, transporting aliens, and visa fraud.  Each defendant also was charged with substantive counts of encouraging and inducing an alien to reside in the United States, alien harboring, and transportation of aliens. In addition, Regal Hospitality Solutions, LLC; Karen Makaryan; Sargis Makaryan; Samvel Nikoghosyan; Artur Grigoryan; Armen Ayrapetyan; Fremie Balbastro; and Jason Hill were also charged with one count of conspiracy to commit wire fraud and 10 counts of wire fraud.

“The defendants in this case allegedly engaged in an expansive conspiracy to enrich themselves by exploiting both the immigration system and noncitizen workers,” said Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division. “Systemic fraud and abuse of U.S. visa programs and processes designed to protect American workers and businesses will not be tolerated, and offenders will be held accountable.”
[…]
“The Department’s Bureau of Educational and Cultural Affairs aims to increase mutual understanding between the people of the United States and the people of other countries by means of educational and cultural exchange,” said Acting Assistant Inspector General for Investigations Robert Smolich of the U.S. Department of State, Office of Inspector General, Office of Investigations. “When bad actors corrupt these programs for personal gain, it not only diminishes an important tool of diplomacy, it harms the thousands of individuals who participate in these programs hoping to gain skills and experience to make a better life. Today we took a step forward in restoring integrity back to those programs.”

“These defendants’ alleged scheme to game the immigration system and defraud the government has backfired and they will now be held accountable,” said Special Agent in Charge Katrina W. Berger of Homeland Security Investigations (HSI), Georgia and Alabama. “Schemes like this not only exploit the noncitizen workers involved, they also damage the other legitimate businesses in the community. Protecting the integrity of the visa program and immigration system is vital to the security of our nation.”
[…]
Individual defendants have made their initial court appearances and the arraignment of all defendants will be scheduled before U.S. Magistrate Judge Benjamin W. Cheesbro of the U.S. District Court for the Southern District of Georgia. If convicted, the individual defendants face maximum potential statutory penalties of five years in prison on the count of conspiracy to defraud and commit offenses against the United States; 10 years in prison on the counts of encouraging and inducing an alien to reside in the United States, alien harboring, and transportation of aliens; and 20 years in prison on the counts of wire fraud conspiracy and substantive wire fraud. The organizational defendants are subject to a maximum fine on each count of conviction of $500,000 or twice the gross amount of gain or loss resulting from the offense. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The U.S. Department of State Office of Inspector General is investigating the case with assistance provided by HSI and U.S. Citizenship and Immigration Services.

Trial Attorneys Frank Rangoussis and John-Alex Romano of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Alejandro V. Pascual IV of the Southern District of Georgia are prosecuting the case.

An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Read the full announcement here.

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Foggy Bottom’s Humongous Professional Ethos Poster Board Deserves a New Life

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State/OIG Releases Report on Pompeos Personal Use of USG Resources During Foggy Bottom Tenure

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It’s a wonder they did not create an Office of the First Lady of the State Department in Foggy Bottom.

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Ex-FSO Indicted For Concealing Information in Background Investigation

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On April 2, the Department of Justice announced the indictment of a former State Department employee, a Foreign Service officer for “intentionally concealing information on his SF-86 background investigation questionnaires and in interviews with State Department background investigators.”
Congressional record indicates that a Paul M. Guertin of RI was confirmed by the U.S. Senate by voice vote on October 21, 2011  for his appointment as Foreign Service Officer of Class Four, Consular Officer and Secretary in the Diplomatic Service of the United States of America.
 Via USDOJ: Former State Department Employee Indicted for Concealing Information in Background Investigation

Paul Michael Guertin (“Guertin”), 40, of Arizona and former resident of Washington, DC, was indicted on March 29, 2021 by a federal grand jury in the District of Columbia for wire fraud and obstructing an official proceeding. The indictment was announced by Acting U.S. Attorney Channing D. Phillips and Special Agent in Charge Elisabeth Heller, of the U.S. Department of State, Office of Inspector General.

Guertin was a Foreign Service Officer who served on multiple State Department assignments, including overseas postings to U.S. diplomatic missions in Shanghai, China and Islamabad, Pakistan, and a posting to the Bureau of Intelligence and Research at State Department headquarters in Washington, DC. As a condition of his employment, Guertin was required to apply for and maintain a Top Secret security clearance.  According to the indictment, Guertin intentionally concealed information on his SF-86 background investigation questionnaires and in interviews with State Department background investigators. He withheld information about several categories of conduct, including an undisclosed sexual relationship with a Chinese national, whose U.S. visa application was adjudicated by Guertin while he was serving as a consular officer in Shanghai, China; undisclosed gambling debts; and an undisclosed $225,000 loan from two Chinese nationals, who were directed by Guertin to provide $45,000 of the initial disbursement in the form of cash in $100 bills.

An indictment is a formal accusation of criminal conduct, not evidence of guilt.  A defendant is presumed innocent unless proven guilty.

This matter was investigated by the U.S. Department of State, Office of Inspector General and is being prosecuted by Assistant U.S. Attorneys Christopher Brown and Thomas Gillice, with assistance from Paralegal Specialist Chad Byron.

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SF-86 form clearly states under Penalties for Inaccurate or False Statements that “the U.S. Criminal Code (title 18, section 1001) provides that knowingly falsifying or concealing a material fact is a felony which may result in fines and/or up to five (5) years imprisonment.”
According to the indictment, the Grand Jury was sworn in on January 28, 2021. The indictment includes two offenses: Count One: 18 U.S.C. § 1343: (Wire fraud); Count Two: 18 U.S.C. § 1512(c)(2) (Obstructing an official proceeding) plus Forfeiture: 18 U.S.C. § 981(a)(1)(C); 28 U.S.C. § 2461(c); 21 U.S.C. § 853(p) according to the court filing. Grand juries are composed of 16 to 23 citizens, who hear a wide range of criminal cases and decide whether there is evidence to justify indictments sought by federal prosecutors. To return an indictment, a minimum of 12 members of a grand jury must find probable cause.
Excerpts below from the indictment filed in the U.S. District Court for the District of Columbia:

3. During his tenure as a Foreign Service Officer, GUERTIN served on multiple State Department assignments abroad, including postings to diplomatic missions in Shanghai, China and Islamabad, Pakistan. GUERTIN also served at State Department headquarters in the District of
Columbia in the Bureau of Intelligence & Research (“INR”), the State Department’s intelligence office. GUERTIN was later assigned to language training in Taipei, Taiwan.

9. In connection with his initial employment with the State Department and periodic re-investigations, GUERTIN signed and submitted SF-86 forms on or about September 27, 2005; November 19, 2010; and April 3, 2016.

The indictment cites Guertin’s “undisclosed conduct” that includes Undisclosed Romantic Relationship with Chinese National Whose U.S. Visa Application GUERTIN Adjudicated; Undisclosed Financial Problems Due to Gambling; and Undisclosed $225,000 Loan Agreement with Two Chinese Nationals, Collateralized by GUERTIN’s House. The indictment also cites some electronic communication.

15. In or about June 2008, GUERTIN conducted a visa application interview with CHINESE NATIONAL 1 in his capacity as a consular officer at the U.S. Consulate in Shanghai, China. On or about June 11, 2008, GUERTIN favorably adjudicated CHINESE NATIONAL 1’s application for a U.S. visa.

16. Two days later, on or about June 13, 2008, GUERTIN sent CHINESE NATIONAL1 an e-mail stating: “I gave you an interview a few days ago here in Shanghai, and thought you were very cute and interesting! 🙂 Was wondering if you’d be interested in going out for dinner or a bite to eat sometime.” GUERTIN initiated a personal and sexual relationship with CHINESE NATIONAL 1 that lasted through at least in or about July 2009.

26. On or about July 13, 2015, GUERTIN sent an e-mail to an associate requesting an emergency loan of $10,000 in order to pay down his gambling debts in advance of his security clearance re-investigation. GUERTIN stated: “I desperately need 10 dimes to get my [stuff] in order and pass a security clearance review to hold onto my job.” GUERTIN further explained: “Every 5 years the State Dept. does a security clearance re-investigation, and mine is coming up in 3 months, and they’re for sure going to see that my credit score dropped hard from the last time they checked. That will cause them to get suspicious, and then they’ll search my bank account transactions and find all the gambling related [stuff]. . . . [t]hey’1l send me home from Taiwan and if they revoke my security clearance I’Il lose my job within 6 months.”

30. On or about April 15, 2015, GUERTIN directed CHINESE NATIONAL 2 and CHINESE NATIONAL 3 to meet him at a location in the District of Columbia for the purpose of withdrawing $45,000 in cash from their bank account for a further disbursement of the $225,000 loan. GUERTIN instructed them: “Also please ask the bank manager to give you as much as possible of the money in $100 bills so it’s not so ridiculously bulky to carry around and deposit, thx!”

The indictment does not indicate what happened in August 2017 when his employment apparently ended. It is also not clear when and for how long was he posted at INR.
The indictment does not explain Guertin’s relationship with the two Chinese nationals only referred to as Chinese National 2 and Chinese National 3.  Guertin was posted in Shanghai in 2008 which would have been a two-year tour. The loan agreement with the two Chinese nationals allegedly occurred in April 2015. We should learn more if  this case progresses in court.
USA v. Guertin was assigned to Judge Trevor N. McFadden in the U.S. District Court for the District of Columbia. As this article notes, an indictment is not a statement of guilt — it is only a determination that enough evidence exists to move forward with charges. The defendant will have an opportunity to enter a plea. As of this writing, no initial appearance has been noted in court, and no plea has been entered.

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WhatTheWhat? State/OIG Reviewed But Did Not/Not Evaluate @StateDept’s COVID-19 Response

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“The scope of this review was the Department’s response to the global COVID-19 pandemic and its plans and procedures for returning employees to offices. As part of this review, OIG did not evaluate whether the Department’s implementation of its plans and procedures effectively safeguarded Department personnel health and safety. In addition, OIG did not include the Department’s COVID-19 vaccine distribution or new policies, such as President Biden’s executive order on required mask wearing, as these occurred subsequent to fieldwork completion. OIG completed this review in Washington, DC, and virtually with officials from U.S. Embassy Baghdad, Iraq; U.S. Embassy Kabul, Afghanistan; and Consulate General Frankfurt, Germany. These posts were selected due to OIG’s onsite presence at each post, as well as the varying local responses to the global COVID-19 pandemic, which influenced how the Department’s reopening plans were executed by post management.”

 


 

 

GAP and VOA Whistleblowers Call For Investigation of Ex-USAGM Chief Michael Pack

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On March 18, Government Accountability Project on behalf of federal whistleblowers called for an investigation of the former head of the U.S. Agency for Global Media (USAGM) Michael Pack who reportedly spent nearly $2 million in federal funds investigating Voice of America employees. Excerpt below:
…On behalf of anonymous whistleblowers, alerted Congress and federal whistleblower agencies to new details about sole source, no bid contracts awarded to two law firms by Michael Pack to investigate the employees at the agency he headed, the U.S. Agency for Global Media (USAGM). USAGM is the parent agency of Voice of America (VOA). Until ordered to resign by President Biden on Inauguration Day, Mr. Pack—a Trump administration political appointee—was Chief Executive Officer (CEO) of USAGM.
[…]
After alerting the Congress and the federal whistleblower agencies (the U.S. Office of Special Counsel (OSC) and the State Department Office of Inspector General (OIG) to Mr. Pack’s misconduct, Government Accountability Project used the Freedom of Information Act (FOIA) to obtain additional details about the sole source, no-bid law firm contracts.
GAP provided a link to USAGM materials released via the latter’s FOIA, available here. Government Accountability Project also sent a supplemental analysis to Congress, OSC, and State/OIG.
Cited among its findings:
  • The total value of all services rendered by McGuireWoods and Caplin & Drysdale (billed and unbilled) was approximately $1.776 million.
  • Over four months, McGuireWoods billed approximately $1.625 million in fees and disbursements based on 5,093 billable hours, an average of approximately $320 for each billable hour.
  • The three activities responsible for over 90 percent of McGuireWoods’ billable hours were: “Document Production” (2,998.10 hours); “Analysis/Strategy” (1,053.40 hours); and “Fact Investigation/Development” (655.80 hours).
  • Over four months, Caplin & Drysdale billed approximately $66,000 in fees and disbursements based on 84.4 billable hours, an average of over $780 for each billable hour.
GAP urge the Foreign Affairs and Appropriations Committees in the House and the Senate, State/OIG and the Office of Special Counsel “to specifically investigate the authority invoked and the representations made by Mr. Pack and others in order to pay these law firms, and any other contractors Mr. Pack hired during his brief and controversial tenure.”
The letter is available to read here.


 

 

 

US Embassy Iraq Contractor Gets $62 Million in @StateDept Contract Dispute Settlement

Updated 10/19/20 4:12 pm PST with the potential value for the design build construction contracts in Thailand and in Namibia. See below.

In October 2009, State/OIG issued its Audit of the Design and Construction of the New Embassy Compound in Baghdad, Iraq (PDF):

“…[W]e found that although the construction of the approximately $600 million NEC in a war zone in 34 months was a significant accomplishment, consid­erable construction deficiencies remained because designs for the facilities had not been completed and approved and quality control and commissioning procedures were inadequate.
[…]
We recommend the Department attempt to recover an estimated $43.2 million from First Kuwaiti to bring construction deficiencies to contract standards.
[…]
we estimated that approximately $33 million should attempt to be recovered from First Kuwaiti for incomplete and undocumented design work. Also, we identified that as a result of First Kuwaiti’s inadequate quality control program, it should be held accountable for additional maintenance charges of approximately $38 million that could carry over into future years. Further, we estimated recovering ap­proximately $3.8 million from First Kuwaiti because commissioning activities either were not performed or were performed incorrectly.

In it’s response, the State Department’s Bureau of Administration said:

“The Contracting Officer will prepare a letter to the Contractor, detailing each of [the OIG] recommendations and request consideration from the Contractor in each amount recommended by the OIG.” The A Bureau requested that OIG provide the Contracting Officer infor­mation detailing the basis for computing the $132 million in costs recommended for recovery from First Kuwaiti. The A Bureau also stated, “The formal process to recover any funds from the contractor will be assessed in terms of overall benefit to the government.”

At that time, State/OIG said:

“The A Bureau’s response meets the intent of OIG’s recommendations to recover $132 million from the contractor attributable to construction deficiencies; incom­plete and undocumented work; additional maintenance charges incurred because of inadequate quality control and commissioning procedures; and contract noncompli­ance, including liquidated damages and interest for an unauthorized advance. OIG and USACE will provide the contracting officer the requested support for the $132 million in questioned contract costs.”

We don’t know what happened to that recommendation for recovery of funds in 2009.
Fast forward to April 23, 2013, the Civilian Board of Contract Appeals (CBCA) issued a decision in First Kuwaiti Trading & Contracting W.L.L. v. Department of State contract dispute (CBCA 3069):
“Appellant, First Kuwaiti Trading & Contracting W.L.L. (First Kuwaiti), filed the instant appeal from a decision of a Department of State (State) contracting officer dated August 10, 2012, denying a claim by First Kuwaiti relating to two unpaid invoices for work performed for State under two contracts at the United States New Embassy Compound in Baghdad, Iraq, contract number SALMEC-06-0049, and its modifications, and contract number SALMEC-05-0020, and its modifications. The parties entered into a settlement agreement with respect to the appeal and filed with the Board a stipulation of settlement, reflecting their amicable resolution of the issues that are the subject of the appeal. The parties have jointly moved the Board to issue a judgment in favor of First Kuwaiti in the amount of $2,547,745.20, to be paid from the permanent indefinite judgment fund, 31 U.S.C. § 1304 (2006). Under their settlement agreement and stipulation, they have agreed that Contract Disputes Act (CDA) interest shall accrue on said judgment amount, beginning on March 23, 2012, and continuing until payment of the judgment is made, and that such interest shall be paid to First Kuwaiti together with payment of the judgment amount.
First Kuwaiti has waived any other claim to interest and/or for any attorney fees and expenses incurred in connection with the appeal. The parties, in their joint motion and under the terms of the stipulation, have agreed that neither party will seek reconsideration of, or relief from, this Board’s decision under Board Rules 26 and 27, respectively, and that neither party will appeal this Board’s decision.”
See the April 23, 2013 full decision (CBCA 3069) here.
Below are the New Embassy Compound Baghdad Contracts that the OIG audited in 2009. Note that the contract numbers cited by the CBCA decision are SALMEC-06-0049 and SALMEC-05-0020 for the New Embassy Compound in Baghdad. In the 2009 OIG audit, the two contracts are listed as SALMEC-06-C0049 and SALMEC-05-C0020; we note the appearance of the letter “C” in the two contracts listed in the 2009 OIG audit  of the New Embassy Compound in Baghdad. (If you know what that means, do let us know).
So that was 2013. For more litigative payments, see @StateDept’s Litigative Payments FY2018-FY2020 Via Judgment Fund-$72,634,701.57.
Five years later, on December 3, 2018, the CBCA issued a “Motion for Partial Summary Judgment Granted In Part” in the First Kuwaiti Trading & Contracting, W.L.L. v. Department of State new contract disputes  marked “CBCA 3506, 6167”:

“First Kuwaiti Trading & Contracting, W.L.L. (FKTC) appealed the denial of its claims by the Department of State (DOS) arising from the construction of the embassy compound in Baghdad, Iraq. FKTC presented approximately 200 cost claims that totaled $270 million. DOS moved for summary judgment on thirteen of those cost claims, challenging FKTC’s reliance upon the War Risks clause, the superior knowledge doctrine, the Changes clause, and the implied duty of good faith and fair dealing as the basis for these claims. DOS also asserts that actions underlying FKTC’s changes claims constitute sovereign acts, precluding liability pursuant to the sovereign acts doctrine.

We grant DOS’s motion regarding the scope of the War Risks clause and superior knowledge doctrine, thereby denying seven of FKTC’s claims that are premised solely upon these bases. We deny DOS’s motion regarding the claims that are also based upon the Changes clause or the implied duty of good faith and fair dealing, finding that there are disputed issues of fact. We also deny DOS’s motion regarding the sovereign acts doctrine, finding that DOS has not established the applicability of that doctrine on the current record. Six of the thirteen claims subject to the motion survive DOS’s challenge on this basis.”

The “Statement of Facts” include:
  • A. Contract Price and Provisions Allowing for Adjustment of Contract Price
  • B. War Risks Clause
  • C. Security Requirements and Warnings
II. FKTC’s Claims Challenged by DOS (it’s quite a read):
  • A. Duck and Cover Alarms
  • B. Rocket Attacks—Three claims
  • C. Equipment Repositioning
  • D. Extra Security
  • E. Retention Bonuses and Danger Pay
  • F. Air Transport—Labor Hours
  • G. Sand and Gravel Double-Handling
  • H. Truck Convoy Delays, Truck and Driver Protection Requirements, and Truck Convoy Support Requirements
  • I. Superior Knowledge Claims
The CBCA’s discussion includes:
  • I. War Risks Clause Does Not Provide for Recovery on the Thirteen Challenged Claims
  • II. FKTC Has Failed To Identify a Sufficient Basis for Its Superior Knowledge Claim
  • III. Disputed Issues of Fact Preclude Summary Judgment on FKTC’s Changes Claims

A. FKTC Has Shown Disputed Issues of Fact with Regard to Changes Clause on Six Claims

B. DOS Has Not Provided Evidence to Support a Sovereign Acts Defense

  • IV. Disputed Issues of Fact Preclude Summary Judgment on FKTC’s Implied Duty of Good Faith and Fair Dealing Claim
  • V. Purported Lack of Contemporaneous Documentation is not Grounds for Summary Judgment
The Board’s decision is that “Respondent’s motion for partial summary judgment is GRANTED IN PART. Appellant’s claims based solely upon the War Risks clause and the superior knowledge doctrine challenged by Respondent are denied. The hearing in this matter will commence on January 22, 2019.”
See the December 3, 2018 decision (CBCA 3506, 6167 ) here.
HOLD ON. We’re just getting to the best part.
On Monday, April 1, 2019. the Civilian Board of Contract Appeals issued “GRANTED IN PART: April 1, 2019” judgement in First Kuwaiti Trading & Contracting, W.L.L. v. Department of State (CBCA 3506, 6167) dispute:

“On March 28, 2019, the parties submitted to the Board a joint motion for judgment on a stipulated settlement. The parties requested that the Board enter judgment in the amount of $62,500,000, with payment to be made through the permanent indefinite judgment fund in accordance with 31 U.S.C. § 1304 (2012). The amount includes all the interest to which appellant is entitled under the Contract Disputes Act. 41 U.S.C. § 7109. The parties have agreed that they will not seek appeal of, reconsideration of, or relief from the Board’s decision.

Decision: The Board GRANTS IN PART these appeals. In accordance with the parties’ joint motion, the Board awards appellant, First Kuwaiti Trading & Contracting W.L.L., the stipulated judgment amount of $62,500,000.”

See the April 1, 2019 decision (CBCA 3506, 6167) here.
So the CBCA document says the contractor presented approximately 200 cost claims that totaled $270 million. It got $62,500,000.
We’re sure the government would argue that this is a win, yeah? On the other hand, $62.5 million is more than the expected US investment in the local economy for the construction of US Consulate General Chiang Mai in Thailand at $45 million plus change. Or three times the USG investment in the local economy for the construction of the US Embassy in Namibia at $17 million.
(Correction: The US Embassy Namibia design build construction contract has a potential value of $173.4million; the New Consulate Compound (NCC) design build construction contract in Chiang Mai, Thailand has a potential value of $156.8 million. Thanks A!).
Oh … what’s that?