Subcontractor Instructed to Pay Almost $9 Million as a ‘Criminal Fine and Restitution for Rigging Bids and Defrauding the U.S. Military’

J&J Korea Inc. Fined Nearly $9 Million for Bid Rigging and Fraud

A federal judge in Austin, Texas, has imposed a substantial fine and restitution order of nearly $9 million on J&J Korea Inc., a South Korean company. This penalty stems from their involvement in bid rigging and fraudulent activities related to subcontract work at U.S. military installations in South Korea.

Guilty Plea and Conviction

On May 10, J&J Korea Inc. pleaded guilty in the U.S. District Court for the Western District of Texas to one count of wire fraud and one count of conspiracy to restrain trade. This admission of guilt led to the subsequent legal actions and sentencing.

Significant Fine and Restitution

Deputy Assistant Attorney General for Criminal Enforcement Manish Kumar of the Justice Department’s Antitrust Division emphasized the importance of safeguarding U.S. taxpayer dollars, both domestically and abroad. The division, along with the Procurement Collusion Strike Force, played a crucial role in pursuing bid rigging and collusion cases targeting the United States. As a result, J&J Korea Inc. now faces a substantial fine and restitution order.

Commitment to Accountability

Special Agent in Charge Michael Curran of the Department of the Army Criminal Investigation Division (CID), Major Procurement Fraud Field Office, reiterated that those involved in conspiracies to rig bids and defraud the government will face consequences. CID remains dedicated to bringing individuals and entities suspected of contract fraud and corruption to justice.

FBI’s Determination

Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division emphasized the FBI’s unwavering commitment to investigating and prosecuting those who engage in bid rigging and defraud the U.S. government and its citizens. Today’s sentencing demonstrates the FBI’s dedication to ensuring justice is served.

Bid Rigging Scheme Details

According to court filings, J&J Korea Inc. collaborated with other co-conspirators to manipulate bids and deceive the U.S. Department of Defense (DOD) to secure lucrative repair and maintenance subcontract work at U.S. military hospitals in South Korea. This subcontract work was connected to a U.S. Army Corps of Engineers (USACE) contract, which mandated a competitive bidding process. However, J&J Korea and a South Korean co-conspirator submitted rigged bids, effectively ensuring J&J Korea’s dominance in winning subcontract work in South Korea under the USACE contract.

Impact on DOD and Penalty

The bid rigging scheme, operational from at least November 2018 to March 2021, resulted in the DOD overpaying for J&J Korea’s services by approximately $3.6 million. As part of the sentencing, J&J Korea Inc. must pay a $5 million fine and $3.6 million in restitution. This case marks the first step in an ongoing investigation into bid rigging and related fraud at U.S. military installations in South Korea. In March 2022, two officers of J&J Korea faced indictment for their involvement in the same misconduct.

Investigation and Legal Proceedings

The Antitrust Division’s Washington Criminal II Section, CID, and the FBI conducted the investigation, while Trial Attorneys Daniel E. Lipton and Daniel P. Chung of the Antitrust Division prosecuted the case. Assistant United States Attorney Matthew B. Devlin supported the prosecution for the Western District of Texas.

Reporting Suspected Wrongdoing

Anyone with information related to this investigation or knowledge of market allocation, price fixing, bid rigging, or other anticompetitive conduct is encouraged to contact the Procurement Collusion Strike Force at www.justice.gov/procurement-collusion-strike-force.

Procurement Collusion Strike Force (PCSF): Global

The Procurement Collusion Strike Force, a coordinated effort by the Department of Justice, aims to combat antitrust crimes and fraudulent schemes affecting procurement, grant, and program funding at all government levels—federal, state, and local. It has also expanded its reach with PCSF: Global, focusing on deterring, detecting, investigating, and prosecuting collusive schemes that target government spending beyond the United States. For additional information, visit www.justice.gov/procurement-collusion-strike-force.

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