Virginia Businessman Pleads Guilty to Bribery and Other Charges in Contracting Scheme Involving U.S. Army

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DefendantAdmits Providing Money to Army Official, Paying for Trips, Luxury Vehicles, andOther Things of Value
WASHINGTON—Oh Sung Kwon, 47, a NorthernVirginia businessman, pled guilty today to federal charges stemming from abribery scheme in which he paid thousands of dollars to an Army official inreturn for government contracts, as well as a separate scheme involvingfraudulent real estate sales and refinances.
Kwon, also known as Thomas Kwon, ofVienna, Virginia, pled guilty in the U.S. District Court for the District ofColumbia to one count each of bribery, conspiracy to commit bank fraud andwillful failure to file a tax return. He appeared before the HonorableMagistrate Judge John M. Facciola. He faces a statutory maximum of 21 years inprison, along with potential fines, restitution and a judgment of forfeiture.No sentencing date was set.
Kwon was the co-founder and chiefexecutive officer of Avenciatech Inc., a government contractor based inAnnandale, Virginia. He is among 12 people who have pled guilty to federalcharges for their roles in the largest domestic bribery and bid-rigging schemein the history of federal contracting. The investigation is continuing.
The plea was announced by U.S. AttorneyRonald C. Machen Jr.; James W. McJunkin, Assistant Director in Charge of theFBI’s Washington Field Office; Rick A. Raven, Special Agent in Charge of theWashington Field Office of the Internal Revenue Service-Criminal Investigation(IRS-CI); Peggy E. Gustafson, Inspector General for the Small BusinessAdministration (SBA); Robert E. Craig, Special Agent in Charge of theMid-Atlantic Field Office of the Defense Criminal Investigative Service (DCIS);and Frank Robey, Director of the U.S. Army Criminal Investigation Command’sMajor Procurement Fraud Unit (MPFU).
According to a statement of offense,signed by the government and the defendant, Kwon learned of a contract-steeringscheme from two business contacts: Alex N. Cho, who was then the chieftechnology officer for Nova Datacom LLC and a second Nova Datacom employee.This scheme involved contracts and subcontracts awarded through the U.S. ArmyCorps of Engineers in return for hundreds of thousands of dollars in paymentsto Kerry F. Khan. At the time, Khan was a program manager at the Army Corps ofEngineers. Kwon’s role in the scheme involving the Army Corps of Engineersinvolved Kwon arranging for Cho and another Nova Datacom employee to exchangechecks for approximately $700,000 in cash, which was paid to Khan in exchangefor government contracts. Kwon later attempted to obstruct the resultingcriminal investigation by destroying evidence. Kwon also disclosed to lawenforcement authorities the efforts by Cho and another Nova Datacom employee toobstruct the criminal investigation, including Cho’s attempts while wearing arecording device to prevent Kwon from making incriminating statements.
Kwon learned of a second, similar schemethrough another business contact: Nick Park, a former Nova Datacom employee whowas then the president of Unisource Enterprise Inc. Kwon learned through Parkthat he had obtained a subcontract for his company by agreeing to pay bribes toa person identified in court documents as “Public Official C.” This official,based at the time in Seoul, South Korea, was an assistant project manager forthe U.S. Army who had responsibilities for a major contract.
In or about February 2009, Kwonestablished Avenciatech for the purpose of obtaining government contracts. Thefollowing month, Kwon traveled to South Korea to meet Public Official C. Inexchange for an undisclosed ownership interest in Avenciatech, Public OfficialC agreed to use his official position to steer subcontracts from the Army toAvenciatech. Plans later called for Public Official C to have a 40 percentownership interest in the company.
The court documents provide detailsabout two contracts. One, in September 2009, was in the amount of $366,844.However, army change orders later increased the value of this subcontract to$1,913,059. The second contract, obtained in February 2011, was in the amountof $551,093. Change orders later increased its value to $1,413,513.
From February 2009 until October 2011,Kwon made a series of bribe payments to Public Official C. They included cashpayments; payments for hotel stays for Public Official C and family members,including a trip to the Atlantis resort in the Bahamas; payments to finance thepurchase of a 2010 Lexus automobile; and payments for other things of value.Kwon also assisted Public Official C in financing the purchase of a home inFairfax Station, Virginia, where Public Official C resided following his reassignmentin 2010 to a position at Fort Belvoir.
Kwon also pled guilty to charges in aseparate scheme involving bank fraud. In addition to running Avenciatech, Kwonwas the operations manager for Onyx Financial Services, a mortgage broker basedin Annandale. He admitted involvement in at least six fraudulent real estatesales and refinances in northern Virginia, with loan amounts of about $1.8million.
Finally, Kwon pled guilty to the willfulfailure to file a tax return. This charge involved his 2010 income tax return.
Cho pled guilty in September 2011 to onecount of conspiracy to commit bribery, money laundering, and wire fraud and todefraud the United States and one count of bribery. Khan pled guilty in May2012 to one count each of bribery and conspiracy to commit money laundering.Park pled guilty in June 2012 to two counts of bribery.
The others who have pled guilty includeMichael A. Alexander, a former program manager with the Army Corps ofEngineers; Harold F. Babb, the former director of contracts at Eyak TechnologyLLC (EyakTek), an Alaska Native-owned small business; Theodoros Hallas, whoalso worked for Nova Datacom; Robert L. McKinney, the president of AlphaTechnology Group Inc.; James Edward Miller, the owner of Big Surf ConstructionManagement LLC; Larry G. Corbett, the owner of Core Technology LLC andEnterprise Technical Solutions Inc.; Lee A. Khan, the son of Kerry Khan; andNazim Khan, the brother of Kerry Khan.
Alexander was sentenced earlier thismonth to a six-year prison term and ordered to pay $1.25 million in restitutionand a $1.25 million forfeiture money judgment. The other defendants areawaiting sentencing.
In announcing the plea, U.S. AttorneyMachen, Assistant Director in Charge McJunkin, Inspector General Gustafson,Special Agent in Charge Craig, Special Agent in Charge Raven, and DirectorRobey thanked those who investigated the case from the FBI’s Washington FieldOffice; the Office of the Inspector General for the Small BusinessAdministration; the Department of Defense’s Defense Criminal InvestigativeService; the Defense Contract Audit Agency; the Washington Field Office of theInternal Revenue Service-Criminal Investigation; and the Army CriminalInvestigation Command. They also expressed thanks to the U.S. Marshals Servicefor its assistance on the forfeiture matter.
They also praised the efforts of thosewho worked on the case from the U.S. Attorney’s Office, including AssistantU.S. Attorneys Michael K. Atkinson and Bryan Seeley of the Fraud and PublicCorruption Section and Assistant U.S. Attorney Anthony Saler of the AssetForfeiture and Money Laundering Section. Finally, they expressed thanks forassistance provided by former Special Assistant U.S. Attorney Christopher Dana;Forensic Accountant Maria Boodoo; Paralegal Specialists Tasha Harris, LenisseEdloe, Shanna Hays, Taryn McLaughlin, Sarah Reis, Christopher Samson, andNicole Wattelet; and Legal Assistants Krishawn Graham and Jessica McCormick.