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Report: U.S. cuts off Army Corps fraud

Oct. 5, 2011 at 12:09 AM

WASHINGTON, Oct. 5 (UPI) -- Federal authorities say the defendants in an alleged corruption scandal within the U.S. Army Corps of Engineers had their sights set on a $780 million contract.

Four people -- including two program managers with the Corps -- were picked up Tuesday on charges they siphoned off about $20 million by manipulating the agency's complex contracting system, The Washington Post reported.

"The scheme was staggering in scope," said Ronald Machen, U.S. attorney for the District of Columbia. "It surprised all of us."

The accused scammers were arrested while they were allegedly in the process of laying the groundwork for a $780 million score in the form of a technology contract coming up for bid, the Post said.

The defendants, who also included two executives of a technology company, were maneuvering others -- whose identities were not reported -- onto the Corps' selection board for the deal, the newspaper said. The goal was to stack the votes in favor of EyakTek, an Alaska vendor that enjoyed the status of being owned by Native Americans.

The parent company of EyakTek told the Post it was cooperating with the investigation.

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