California Executive Pleads Guilty to Fraud in Connection with Sales of Parts from China
December 24, 2008 // Published as a news service by IHS
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The president of a Southern California company pleaded guilty to engaging in a conspiracy to commit honest services wire fraud by depriving a manufacturing company of the honest services of its employee, the U.S. Department of Justice (DOJ) announced.
Yong Zhu, the president of an importing and exporting company that supplies Chinese parts to U.S. companies, including parts used in items destined for military restraints for the U.S., pleaded guilty in the U.S. District Court in Islip, N.Y., to one count of conspiracy to commit honest services wire fraud.
Zhu pleaded guilty to participating in a wire fraud scheme between 2002 and 2004. The conspiracy was carried out by telephone and in face-to-face meetings.
During the time of the conspiracy, Zhu paid the employee of a manufacturing company approximately $10,000. In return, the employee provided Zhu with sensitive pricing information that ensured Zhu's company would receive subcontracting awards from the manufacturing company.
Under the plea agreement, Zhu agreed to cooperate with the department's ongoing investigation. The terms of the plea agreement are subject to court approval.
"Today's charge demonstrates our ongoing commitment to prosecute fraud that corrupts the competitive process," said Deborah A. Garza, acting assistant attorney general in charge of the DOJ's antitrust division.
This is the tenth plea agreement to arise from an ongoing investigation into the military restraints industry. Military restraints are used to secure vehicles, aircraft, munitions, shipping containers and other specialized military cargo requirement for land, sea and air transportation.
Thomas Cunningham and Richard Barko, executives of a Pennsylvania supplier of military goods, pleaded guilty to rigging bids on U.S. Navy contracts for metal sling hoist assemblies. In September 2008, they were sentenced to pay criminal fines of $10,000 each.
In August 2008, Peck & Hale, a Long Island defense firm, was sentenced to pay a $275,000 criminal fine for bid rigging. In June 2008, Frank Granizo, the former president of a freight forwarding company, pleaded guilty to honest services wire fraud. Granizo is scheduled to be sentenced on Jan. 9, 2009. Three Peck & Hale employees also pleaded guilty in this matter.
Certified Slings & Supply Inc., a Florida defense firm, pleaded guilty to one count of bid rigging and was sentenced in May 2008 to pay a $150,000 criminal fine. Roger Jacobi, the owner and president of a New York supplier of military goods, also pleaded guilty to one count of bid rigging and in April 2008 was sentenced to pay a $20,000 criminal fine.
Zhu is charged with conspiracy to commit wire fraud, which carries a maximum sentence of 20 years of imprisonment and a fine of $250,000. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Source: U.S. Department of Justice (DOJ).