Two Former Officers Pled Guilty In Connection With Fraudulent U.S. Army Contracts Scheme

The U.S. Justice Department released the below information:

In San Antonio this morning, New Braunfels, Texas resident Lawrence Peter Fenti and Manhattan, Kansas resident Heidi Lynn Webster pleaded guilty to defrauding the United States in connection with U.S. Army contracts worth millions of dollars for medical equipment and personnel, announced United States Attorney Robert Pitman.

Fenti is a 43-year-old former non-commissioned officer in charge of Base Realignment and Closure issues for Brooks Army Medical Center (BAMC) radiology. Webster is a 50-year-old former U.S. Army officer physician and civilian contractor who specialized in radiology.

Appearing before Chief U.S. District Judge Fred Biery, Fenti and Webster pleaded guilty to one count of conspiracy and one count of bribery. The conspiracy included intent to defraud the United States; violate the government conflict of interest law; commit bribery; commit wire fraud; make false claims against the United States; make false statements to federal authorities; and commit money laundering.

By pleading guilty, the defendants admitted to conspiring together since 2007 to fraudulently secure multiple army contracts and sub-contracts for radiology equipment and services by using Fenti’s position of influence, taking advantage of a prime contractor’s non-competitive bidding status, making false statements and fraudulent claims, and bribing army personnel and army contractors.

Those contracts included a $2 million BAMC magnetic resonance imaging (MRI) contract in June 2008, a $4.9 million BAMC MRI contract in July 2008, a $633,406.69 BAMC staffing contract in September 2008, and a $336,600 MRI contract in September 2009 for Womack Army Medical Center at Fort Bragg, North Carolina. Webster also admitted to paying Fenti thousands of dollars for his role in the overall scheme.

“The defendants in this case treated the American taxpayers like their own personal ATMs, rigging bids for government contracts and inflating invoices for radiology equipment and services. This prosecution should send a message to would-be thieves that we are keeping a close watch on government contracting and when we detect fraud we will respond with the full force of the criminal law,” stated U.S. Attorney Pitman.

Per their plea agreements, Fenti and Webster face a maximum six years in federal prison. During the investigation, authorities have seized approximately $500,000, much of which has been forfeited to the government. In addition, the government is seeking a monetary judgment against Fenti in the amount of $402,485.35, as well as a $613,828 monetary judgment against Webster, representing the amount of proceeds obtained directly or indirectly as a result of their fraudulent scheme. Sentencing will occur after the completion of a pre-sentence report by the U.S. Probation Office.

A third defendant in this case, 43-year-old John Walter Hoffman, owner/operator of Hoffman Surgical Devices Inc. in San Antonio, is awaiting trial on charges of conspiracy to commit wire fraud, money laundering, wire fraud, and making false statements to U.S. Army authorities. Jury selection is scheduled for March 3, 2014.

This investigation was conducted by the U.S. Army Criminal Investigations Division (Army CID), the Internal Revenue Service-Criminal Investigation (IRS-CI), Defense Criminal Investigative Service (DCIS), and the Federal Bureau of Investigation (FBI). Assistant United States Attorney James Blankinship is prosecuting this case on behalf of the government.