Watchdog: Follow the Money

Virginia businessman gets prison for role in historic bid-rigging scheme

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Watchdog,Corruption,Waste and Fraud,Follow the Money,Justice Department,Government Contractors,Bribery,Logan Porter

A Virginia businessman has been sentenced to almost four years in federal prison and ordered to pay more than $2 million for his part in what the Justice Department called "the largest domestic bribery and bid-rigging scheme in the history of federal contracting."

Oh Sung Kwon of Vienna, Va., the co-founder and former chief financial officer of defense contractor Avenciatech, is one of 17 people who have pleaded guilty in the scheme.

He pleaded guilty in September 2012 in the U.S. District Court for the District of Columbia to bribery, conspiracy to commit bank fraud and willful failure to file a tax return.

The Annandale-based contractor discovered the bid-rigging scheme through Alex N. Cho, chief technology officer of Nova Datacom, and another unnamed Nova Datacom employee.

The Datacom employees secured U.S. Army Corps of Engineers contracts by paying hundreds of thousands of dollars to Kerry F. Khan, a program manager for the Corps.

Kwon learned of a similar scheme from another former Nova Datacom employee, Nick Park, then president of Unisource Enterprise Inc.

Park paid bribes for contracts to a person identified in court documents as "Public Official C," an assistant project manager for the U.S. Army who was based in Seoul, South Korea.

Kwon met with “Public Official C” in 2009, flying to South Korea to arrange for Army subcontracts in return for partial ownership of Avenciatech. The official was to be granted 40 percent ownership in the company.

A few months after this meeting, Avenciatech was awarded an Army subcontract for $366,844, which was quickly increased to $1.9 million. A $551,093 award made in February 2011 was soon increased to $1.1 million.

In exchange, Kwon's bribes to the secretive official included a resort stay in the Bahamas, cash, payments for a 2010 Lexus and arranging a down payment for a house in Fairfax Station, Va.

Kwon had Avenciatech employee Helen Woo write a “gift letter” posing as the official’s cousin, with a $230,000 down payment enclosed, to keep suspicion away from Public Official C's bank account.

Cho, Khan, Park and Woo also pleaded guilty in the scheme. Khan was sentenced to 19 years in prison.

Cho pleaded guilty to one count of conspiracy to commit bribery, money laundering, wire fraud, defrauding the United States, and one count of bribery. He and Park are awaiting sentencing.

Woo was sentenced to two years of probation.

Kwon, who was also the operations manager for mortgage broker Onyx Financial Services, had previously pleaded guilty in a federal real estate fraud case involving at least six loans totaling $1.8 million; he was placed under house arrest for a period of months in that case.

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