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May 20, 2022 - A federal grand jury in the Eastern District of Texas returned an indictment charging a military contractor for rigging bids on public military contracts in Texas and Michigan and US DOJdefrauding the United States.

According to the indictment, from at least as early as May 2013 through at least April 2018, Aaron Stephens52formed agreements with multiple co-conspirators to rig bids on certain government contracts in order to give the false impression of competition and secure government payments, and to defraud the United States.  As a part of two different schemes, Stephens and his co-conspirators allegedly rigged eight military contracts and received more than $15 million from the government for those contracts. The contracts included work performed for the Red River Army Depot in Texarkana, Texas; the U.S. Army Contracting Command in Warren, Michigan; and the Sierra Army Depot in Herlong, California.

“U.S. taxpayers deserve to know that the government contracting process is not subverted through collusion,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “Bid rigging undermines the competitive process, wastes taxpayer dollars and deprives businesses that follow the rules of fair competition. Investigating and prosecuting this case and others involving government contracting is a top priority for the Department of Justice and all members of the Procurement Collusion Strike Force.”

“Protecting U.S. tax dollars and the government contracting process is very important,” said U.S. Attorney Brit Featherston for the Eastern District of Texas. “The government provides significant economic opportunities for businesses, and the bidding process must be fair for qualified applicants. Any action taken to thwart this fair process will be investigated and prosecuted.”

“This indictment reflects the unrelenting approach and tenacity we employ daily in pursuing individuals who dare to attempt to defraud the federal government and the U.S. Army,” said Special Agent in Charge L. Scott Moreland of the U.S. Army Criminal Investigation Division's Major Procurement Fraud Field Office. “When it comes to government contracting and purchasing, the superbly skilled and highly-trained special agents in our fraud unit use their finely honed investigation skills to combat and uncover fraud, deception, bribery and other criminal acts.”

“Bid rigging subverts the government contracting process and defrauds the American taxpayer,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “The FBI and our law enforcement partners are committed to investigating those who conspire to undermine the principles of fair and free competition.”  

Stephens was charged in the U.S. District Court for the Eastern District of Texas with one count of bid rigging in violation of the Sherman Act and two counts of conspiracy to defraud the United States.

The maximum penalty for conspiracy to restrain trade under the Sherman Act is 10 years in prison and a criminal fine of $ 1 million. 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 amount is greater than the statutory maximum fine. The maximum penalty for conspiracy to defraud the United States is five years in prison and a fine of twice the amount of the gain or loss associated with the offense. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other relevant factors.

The Antitrust Division’s Washington Criminal II Section is prosecuting the case, which was investigated with the assistance of the U.S. Attorney’s Office for the Eastern District of Texas, the U.S. Army Criminal Investigation Division’s Dallas Fraud Resident Agency, and the FBI’s Dallas Field Office. 

Anyone with information in connection with this investigation should contact the Antitrust Division’s Complaint Center at 888-647-3258, or visit http://www.justice.gov/atr/report-violations.

In November 2019, the Department of Justice created the Procurement Collusion Strike Force (PCSF), a joint law enforcement effort to combat antitrust crimes and related fraudulent schemes that impact government procurement, grant and program funding at all levels of government – federal, state and local. To learn more about the PCSF, or to report information on market allocation, price fixing, bid rigging and other anticompetitive conduct related to defense-related spending, go to https://www.justice.gov/procurement-collusion-strike-force.

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

Source: DOJ Release