HSI Norfolk investigation into Virginia tactical equipment company uncovers fraud, yields more than $2 million in violations of the Buy American Act

NORFOLK, Va. — An investigation conducted by Homeland Security Investigations (HSI) Norfolk, the Defense Criminal Investigative Service’s Mid-Atlantic field office, the Army’s Criminal Investigation Division’s Major Procurement Fraud field office, the General Services Administration’s Office of Inspector General (GSA-OIG); and Defense Logistics Agency (DLA) into a Virginia tactical gear and equipment company resulted in a settlement worth more than $2 million.

The London Bridge Trading Company, Ltd. (LBT) of Virginia Beach agreed to pay nearly $2.1 million Nov. 20 in the U.S. District Court for the Southern District of Ohio to resolve False Claims Act allegations that it failed to comply with the requirements of the Buy American Act, Trade Agreements Act and Berry Amendment when selling textile-based products to the Department of Defense. The company entered the settlement with the United States and qui tam relator Ann Keating.

“The London Bridge Trading Company deliberately deceived their customers and the U.S. government into believing they were buying American made products, while selling them cheaper foreign merchandise,” said HSI Washington, D.C. Special Agent in Charge Derek W. Gordon. “Furthermore, LBT potentially put the lives of our military personnel at risk by selling our government inferior protective equipment produced overseas. HSI Washington, D.C. will continue to work with our partner law enforcement agencies to ensure anyone attempting to defraud our government will be held fully accountable for their actions.”

The investigation detailed that since at least 2008, LBT submitted false claims in connection with the sale of “American made” products that were actually manufactured in foreign countries, including Peru, Mexico and China. The company marketed its goods as “100% made in America” and replaced the original foreign manufacturers’ tags with tags that read “Made in USA.”

LBT also offered its products for sale to all federal agencies on a government-owned website, “GSA Advantage!”, which permits government agencies throughout the United States to purchase products from contracted vendors.

The United States, including through the Defense Logistics Agency’s supply center in Columbus, Ohio, purchased a variety of textile-based products from LBT, including clothing, armor, boots, belts, bags, rope, slings, backpacks and medical pouches. The settlement specifically addressed load-out bags purchased from LBT that violated the Trade Agreements Act and the Berry Amendment.

“We greatly appreciate the steadfast, thorough and collaborative work on this case by each of the federal agencies involved,” said U.S. Attorney Kenneth L. Parker. “This office takes very seriously the duty of government contractors to meet all of their obligations under government contracts and we will pursue anyone falsely certifying compliance with the Buy American Act.”

The civil settlement includes the resolution of claims brought by an employee of LBT under the qui tam provisions of the False Claims Act. These provisions allow a private party, known as a relator, to file an action on behalf of the United States and receive a portion of any recovery. Under the terms of the settlement agreement, the relator receives a share of the proceeds. 

The relator in this case had a personal interest in the safety and security of the United States military. In 2004, her son was killed while serving in Iraq. The relator believes the scheme was a threat to the safety and integrity of U.S. military operations.

“We are very pleased with this resolution. This is a testament to the aggressive investigation we conducted, and now the public can see this.” said Andrew Johnson, special agent in charge of the Army’s Criminal Investigation Division’s Major Procurement Fraud field office. “Companies that do business with the government must comply with all of their obligations, and if they seek to circumvent the rules and regulations of what and how they supply our women and men in uniform, they must be held accountable for their actions.”

The Buy American Act was enacted in 1933 to protect U.S. manufacturing by creating a preference for domestic products when the federal government purchases supplies. The Berry Amendment requires certain items purchased by the Department of Defense to be 100% domestic in origin and mandates a higher level of domestic content than the Buy American Act. The Trade Agreements Act governs trade agreements between the United States and foreign countries and limits certain U.S. government procurement to U.S.-made products or products made in designated countries.

“GSA-OIG will continue to work with its investigative partners and the Department of Justice to protect the integrity of GSA's Multiple Award Schedule program and hold accountable those who attempt to defraud the government," said Special Agent in Charge Elisa Pellegrini with the General Services Administration’s Office of Inspector General.

This investigation was conducted with significant assistance from U.S. attorneys’ offices in the Southern District of Ohio and Eastern District of Virginia. 

HSI is the principal investigative arm of the U.S. Department of Homeland Security (DHS), responsible for investigating transnational crime and threats, specifically those criminal organizations that exploit the global infrastructure through which international trade, travel and finance move. HSI’s workforce of more than 8,700 employees consists of more than 6,000 special agents assigned to 237 cities throughout the United States, and 93 overseas locations in 56 countries. HSI’s international presence represents DHS’ largest investigative law enforcement presence abroad and one of the largest international footprints in U.S. law enforcement.

Source: U.S. Immigration and Customs Enforcement (ICE.gov)