19 cents of washers sold to US gov't for $999,798

[Ardentfrost]

Pentagon Paid $999,798 to Ship Two 19-Cent Washers to Texas - Yahoo! News

Pentagon Paid $999,798 to Ship Two 19-Cent Washers to Texas

Aug. 16 (Bloomberg) -- A small South Carolina parts supplier collected about $20.5 million over six years from the Pentagon for fraudulent shipping costs, including $998,798 for sending two 19-cent washers to a Texas base, U.S. officials said.
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The company also billed and was paid $455,009 to ship three machine screws costing $1.31 each to Marines in Habbaniyah, Iraq, and $293,451 to ship an 89-cent split washer to Patrick Air Force Base in Cape Canaveral, Florida, Pentagon records show.

The owners of C&D Distributors in Lexington, South Carolina -- twin sisters -- exploited a flaw in an automated Defense Department purchasing system: bills for shipping to combat areas or U.S. bases that were labeled ``priority'' were usually paid automatically, said Cynthia Stroot, a Pentagon investigator.

C&D's fraudulent billing started in 2000, Stroot, the Defense Criminal Investigative Service's chief agent in Raleigh, North Carolina, said in an interview. ``As time went on they got more aggressive in the amounts they put in.''

The price the military paid for each item shipped rarely reached $100 and totaled just $68,000 over the six years in contrast to the $20.5 million paid for shipping, she said.

``The majority, if not all of these parts, were going to high-priority, conflict areas -- that's why they got paid,'' Stroot said. If the item was earmarked ``priority,'' destined for the military in Iraq, Afghanistan or certain other locations, ``there was no oversight.''

Scheme Detected

The scheme unraveled in September after a purchasing agent noticed a bill for shipping two more 19-cent washers: $969,000. That order was rejected and a review turned up the $998,798 payment earlier that month for shipping two 19-cent washers to Fort Bliss, Texas, Stroot said.

The Pentagon Defense Logistics Agency orders millions of parts a year. Stroot said the agency and the Defense Finance and Accounting Service, which pays contractors, have made major changes, including thorough evaluations of the priciest shipping charges.

A review of paid shipping invoices showed that fraudulent billing is ``is not a widespread problem,'' she said.

``C&D was a rogue contractor,'' Stroot said. While other questionable billing has been uncovered, nothing came close to C&D's, she said. The next-highest contractor billed $2 million in questionable transport costs, she said.

Guilty Pleas

C&D and two of its officials were barred in December from receiving federal contracts. A federal judge in Columbia, South Carolina, today accepted the guilty plea of the company and one sister, Charlene Corley, to one count of conspiracy to commit wire fraud and one count of conspiracy to launder money, Assistant U.S. Attorney Kevin McDonald said.

Corley, 46, faces a maximum prison sentence of 20 years on each count and will be sentenced in the near future, McDonald said in a telephone interview from Columbia. Stroot said her sibling died last year.

Corley didn't immediately return a phone message left on her answering machine at her office in Lexington. Her attorney, Gregory Harris, didn't immediately a phone call placed to his office in Columbia.

Stroot said the Pentagon hopes to recoup most of the $20.5 million by auctioning homes, beach property, jewelry and ``high- end automobiles'' that the sisters spent the money on.

``They took a lot of vacations,'' she said.

Holy shit! They've awarded themselves over $20 million over the past 7 years completely unchecked?!?!

I wonder how much of this goes on without ever being caught.

[Darko]

Not even the tip of the iceberg on the shit that goes through I'm sure.

[Thomas Crown]

Does not surprise me in the least.

Realistically, I wonder how hard it would be to give oversight to EVERYTHING with our government being so big.

[AVengeance]

THIS is why we need less government. I know people want to save the babies and all, but imagine how many starving babies could have been fed with the donations that AREN'T THERE because we all had to pay taxes for this bullshit to take place. And now that they've caught it, anyone think they'll find the money and give it back to the taxpayers, or build a new inner-city school with it? Naaaahhhh...

[RMNIXON]

Originally Posted by AVengeance

THIS is why we need less government. I know people want to save the babies and all, but imagine how many starving babies could have been fed with the donations that AREN'T THERE because we all had to pay taxes for this bullshit to take place. And now that they've caught it, anyone think they'll find the money and give it back to the taxpayers, or build a new inner-city school with it? Naaaahhhh...

The bigger the bureaucracy the more this shit goes on undetected everyday. That is why huge Central Government systems don't work well and shoud do as little as possible. Only what can be done exclusively at the Federal level shoud be funded from Washington. The incentive of any government entity is to express a constant need for higher budgets and more spending! The reverse of the Private Sector economy.

[Nonphixion]

Reminds me of Halliburton, blowing up big rigs with grenades and high explosives in Iraq when they just need an oil change or a tire fixed.

Then we, the taxpayers, get billed for a brand new 18-wheeler at 4x the market cost.

[6SpeedTA95]

Ridiculous, I hope they go to prison.

The government is full of this kinda of shit and there is plenty of room to cut the fat by improving our automated systems or hiring a couple of IT professionals to oversee the systems in place.

Obviously it would take more than a couple of professionals but millions of dollars per year are lost like this. It would be good if the government made some reasonable attempt to cut the fat instead of raise my taxes.

[DosEquis]

Its military spending, so its ok. Support the troops sir.

[Donkey®]

If you hate the way the government is conducting the war, you hate the troops. Get out of the country.

[RMNIXON]

Originally Posted by DosEquis

Its military spending, so its ok. Support the troops sir.

I don't like this shit. But we should be glad we have money to waste. Compare that to the rationing of WWII. This generation does not know shit about sacrifice. Take away their Ipods, cell phones, and their 24/7 Internet and they will cry like babies.

[hsmith]

Originally Posted by RMNIXON

I don't like this shit. But we should be glad we have money to waste. Compare that to the rationing of WWII. This generation does not know shit about sacrifice. Take away their Ipods, cell phones, and their 24/7 Internet and they will cry like babies.

We DON'T have the money to waste

[DosEquis]

Originally Posted by hsmith

We DON'T have the money to waste

Yes we do, the deficit is only -250 to -350 billion and we only have 8.7 trillion in debt. Compared that with the GDP..pffft.. we should open another credit card!

[Stylerod]

Expect the same if the government takes over health care.

[motivez]

extra extra, US Government first organization in history to make a mistake costing lots of money, read all about it!

Obviously it's a ridiculous amount of money and it should have been caught earlier, but using this as justification for some larger attack on government waste is rather unfounded.. it'd be like someone using this to point to why the unregulated greed of the market shouldn't be relied upon

A review of paid shipping invoices showed that fraudulent billing is ``is not a widespread problem,'' she said.

At least we have that.

[Stylerod]

Originally Posted by motivez

extra extra, US Government first organization in history to make a mistake costing lots of money, read all about it!

Obviously it's a ridiculous amount of money and it should have been caught earlier, but using this as justification for some larger attack on government waste is rather unfounded.. it'd be like someone using this to point to why the unregulated greed of the market shouldn't be relied upon



At least we have that.

This is just another example of how a super huge bureaucracy is horrible at controlling costs. We all remember the examples of the $20k hammer and the $15k toilet seat from years ago. We have Halliburton over charging for plenty. And now a small company did the same thing and got away with it for years. Image the shit that is being over charged that is maybe only marked up 200-500% and is never caught because it's not in the 10's or 100's of thousands of dollars.

[7th Ninjai]

This is why I don't get upset when I read stories about people not paying their income tax. Hell, when I read a story like this it makes me not want to do it.