SIGAR | Special Inspector General for Afghanistan ReconstructionReport Fraud, Waste or Abuse

Criminal Cases

  1. Gallery of Greed
  2. Recent Criminal Cases
Gallery of Greed

 U.S. reconstruction activities in Afghanistan, or any other conflict zone, face the constant threat of criminal conspiracies among personnel who rotate in and out of theater, infecting their successors with the virus of corruption.

 Over the past five years, SIGAR’s Investigations Directorate has uncovered and detailed a classic example of this threat—an extended, widespread, and intricate pattern of criminality involving U.S. military personnel and Afghan contractors at the Humanitarian Assistance Yard (the Yard) at Bagram Airfield near Kabul, Afghanistan.

 In June 2012, SIGAR investigators following leads uncovered an unusual pattern of suspect criminal activity at the Yard. They found traces of criminal activity affecting inventories, accounting, issuance of supplies, payments, and contract oversight at the Yard, which serves as a storage-and-distribution facility for millions of dollars’ worth of clothing, food, school supplies, and other items purchased from local Afghan vendors. U.S. military commanders provided those supplies to displaced Afghans as part of the Commander’s Emergency Response Program (CERP) to meet urgent humanitarian relief needs for the Afghan people.

 As the SIGAR investigators, conducted interviews, checked records, and scrutinized other evidence, they confirmed that U.S. military personnel, stateside contacts, and local Afghans had conspired in bribery, fraud, kickbacks, and money laundering. Among other improper acts, U.S. personnel took bribes from vendors or from Afghan interpreters who wanted to steer supplypurchase business to favored vendors.

 The conspiracies pervaded activities at the Yard, and persisted for years as new personnel were assigned there and, in some cases, adopted the corrupt practices of their predecessors or their new colleagues. Some of the participants stayed involved remotely after they returning to the United States.

 The SIGAR investigation, whether conducted independently or in cooperation with the International Contract Corruption Task Force, focused on suspect paying agents and project purchasing officers responsible for administering the replenishment contracts and on military members responsible for paying vendors.

 The assembled evidence of corruption from this investigation led to a series of guilty pleas, prison terms, and forfeiture agreements as offenders were held accountable for their deeds and their dereliction of duty. The following gallery presents summaries of cases resolved or in progress as a result of the work performed by SIGAR Investigations Directorate. The stories illustrate the reality that no matter how well designed a procurement system may be, it requires strict oversight and accountability for the people who operate the mechanism.

Timothy H. AlbrightTimothy H. Albright:

An enlisted specialist with the Pennsylvania National Guard, Albright served at Bagram Airfield between January and October 2008 processing Afghan vendors’ invoices for resupplying goods at the Yard. During that time, according to court documents, Albright accepted several payments, ranging from $200 to $10,000, for accelerating payments on an Afghan vendor’s invoices. Albright’s supervisor and an Afghan interpreter allegedly were also involved in the scheme. About $25,000 from the payments was deposited into Albright’s and his wife’s bank account; they used $18,000 of it to buy a car. Albright pled guilty to conspiracy to receive bribes, and on January 27, 2016, was sentenced to a year and a day in prison. He was also ordered to forfeit $16,200 and the car, a 2008 Nissan Maxima. Noting Albright’s previous military service, his post-traumatic stress disorder, and his family’s support, Judge John E. Jones III told Albright during his sentencing, “This case is the proverbial dog’s breakfast. It’s a lousy, lousy deal for everybody involved, but it’s a situation that you caused [by repeatedly taking bribes] and you know it.”

Louis M. BaillyLouis M. Bailly:

Between October 2011 and October 2012, Army Staff Sergeant Bailly served at the Yard, and was a project purchasing officer for part of that time. In 2015, the U.S. government filed charges that Bailly had conspired with two Afghan contractors, accepting about $12,000 in bribes for influencing supply-replenishment contracts. Bailly pled guilty to one count of conspiracy to commit an offense or to defraud the United States, and was sentenced to a year and a day in federal prison, followed by a year of supervised release, and forfeiture of $10,000.

Donald P. BunchDonald P. Bunch:

U.S. Navy senior chief, Bunch served from February to August 2009 as yard boss at the Yard, and was responsible for resupplying supplies like rice, beans, and clothing, and overseeing truck loading in support of the Commander’s Emergency Response Program. Federal authorities charged that he took some $25,000 in payments from multiple Afghan vendors in return for moving their firms up in the normal rotation of suppliers, and for giving them larger and more lucrative contracts. Bunch pled guilty to one count of bribery, that is, of accepting something of value by a public official to influence the performance of an official act. In March 2016, he was sentenced to 24 months in federal prison and then 24 months of supervised release, fined $5,000, and agreed to forfeit $25,000.

The presiding judge at Bunch’s trial told him, “This is not only a disgrace to the uniform that you wear and a disgrace to the country . . . , but also [serves] to encourage this type of corruption and allow it to become more widespread. . . . It undermines the authority and the position of those in government, it undermines the government itself, and it certainly, in Afghanistan and the Middle East, it undermines our efforts at trying to help those people and promote the causes that we’re trying to defend.”

Jerry W. DennisJerry W. Dennis:

Dennis was a resident of Horn Lake, Mississippi, whose son Jimmy was a U.S. Army first sergeant serving as a paying agent at the Yard. The federal criminal information document filed against Jerry Dennis charged that for a period extending up to about January 2010, Dennis conspired with his son and with landscaper friend James C. Pittman to have containers of cash from bribes shipped out of Afghanistan and handled in ways that would disguise their nature, ownership, and location. In July 2014, Jerry Dennis pled guilty to one count of conspiracy to commit money laundering. He was placed on probation for two years, including six months’ home confinement, and forfeited $110,000 per a court-approved agreement.

Jimmy W. DennisJimmy W. Dennis:

The son of Jerry Dennis (above), Jimmy W. Dennis was a U.S. Army first sergeant serving as a paying agent at the Yard from March 2008 to March 2009. Federal authorities charged him with conspiring with his father and a Chattanooga, Tennessee, landscaping-company owner, James C. Pittman, to move about $250,000 in bribes from Afghanistan to the United States. Dennis and Pittman knew each other from serving together at Fort Campbell, Kentucky, previous to Dennis’s deployment to Afghanistan. Jimmy Dennis pled guilty to one count of conspiracy to commit money laundering. In January 2015, he was sentenced to 41 months’ imprisonment, followed by two years’ supervised release. He also agreed to and has forfeited $115,000 and a Rolex watch.

Ramiro Pena Jr.Ramiro Pena Jr.:

Between January 2008 and September 2009, Army Sergeant First Class Pena served as a project purchasing officer at the Yard, maintaining supply orders and inventory levels. His supervisor was First Sergeant Jimmy Dennis (see above). The men processed more than 200 contracts with Afghan vendors worth about $30.7 million total. The federal charge against Pena said Dennis gave him about $100,000 and a Rolex watch from vendor bribes received, and that Pena had shipped money home to his wife. Pena pled guilty to one count of conspiracy to defraud the United States, and in December 2015 was sentenced to 24 months in prison, followed by a year’s supervised release. He agreed to forfeit $100,000 and has forfeited a Harley-Davidson motorcycle and Rolex watch.

James C. PittmanJames C. Pittman:

Proprietor of a Chattanooga, Tennessee, landscaping company, Pittman was charged with conspiring with Jerry and Jimmy Dennis (see above) to transfer and launder funds received as bribes in Afghanistan. Pittman had left the military before Jimmy Dennis worked at the Yard, but was still in contact. The charge was that “on numerous occasions,” Pittman received containers of cash from Afghanistan via the Dennises, passed it through his business, and returned most of it to Jerry and Jimmy Dennis as checks for “salary.” Having pled guilty to conspiring to commit money laundering, Pittman was sentenced to a year and a day in prison, followed by a year’s supervised release. He also consented to and has forfeited $25,000.

The judge at Pittman’s trial noted that “There’s others out there that find themselves in a similar situation to you that would be tempted . . . to do what you did. That is going to be a large part of the sentence I impose today.”

Pittman marveled that “the Government can track your butt down after five years—”

“It’s pretty impressive, isn’t it?” the judge interjected.

Pittman continued. “Old friends and acquaintances from, you know, nearly 14 years in and, you know, text me . . . or whatever and be like, holy crap, you know, they caught you? . . . And I was like . . . they can find you anywhere.”

David A. TurciosDavid A. Turcios:

On July 27, 2017, in the Eastern District of California, Turcios, a U.S. Air Force staff sergeant who worked at the Yard, was indicted on two counts of receiving and agreeing to receive bribes.

Turcios began working at the Yard in November 2010 as a paying agent and contracting officer representative, and was involved with nine CERP supply contracts worth more than $2 million.

Allegedly, Turcios worked closely with two Afghan interpreters who gave him names of vendors they were proposing for contracts. Allegedly, they also gave Turcios gifts, jewelry, and thousands of dollars, some of which was not paid until after Turcios returned to the United States. E-mails written during and after Turcios’s tour at the Yard include references to “refunds” and instructions for wiring funds to a Bank of America account.

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Recent Criminal Cases

Subject Action Investigative Activity
Advanced Constructors International LLC–Salai Construction Company, Joint Venture Restitution of $1.7 Million Investigation Results in Over $1.7 Million in Restitution

On October 30, 2017, the U.S. government received restitution of $1,777,092 as a result of an investigation into the performance of Advanced Constructors International LLC–Salai Construction Company, Joint Venture (ACI-SCC JV), related to reconstruction projects in Afghanistan.

ACI-SCC JV had been awarded multiple contracts by the U.S. Army Corps of Engineers (USACE). However, it was determined that the company had either no ability or no intention of completing the work on nine contracts, despite receiving payment for them from the U.S. government. Due to this failure to perform, USACE issued ACI-SCC JV six Terminations for Default and three Terminations for Convenience. As part of the USACE’s settlement with ACI-SCC JV, the settlement amount was incorporated into an escrow account for the purpose of addressing claims made by 19 Afghan sub-contractors of ACI-SCC JV, for work and materials that the subcontractors had provided, and which ACI-SCC JV had accepted as part of the contractual agreements with the USACE, without being paid.

Jeremy Serna Conviction U.S. Contractor Pleads Guilty to Theft of Government Property

On October 30, 2017, in the Middle District of Florida, Jeremy Serna pleaded guilty to a one-count criminal information for the theft of government property. Serna is a former employee of Leonie Industries LLC (Leonie) based in Arlington, Virginia.

During June and July 2012, Serna was assigned to work on a $249 million U.S. Army contract for face-to-face public opinion polling in Afghanistan. When Serna was requested by an individual to provide confidential government information relating to the Leonie contract, Serna stole the information and provided it to the individual, who used it to negotiate and obtain a subcontract award from Leonie. In return for the information, the individual offered Serna cash as well as employment with ORB International, a United Kingdom public-opinion polling company.

This investigation was conducted by SIGAR, DCIS, and USCID, Major Procurement Fraud Unit, with assistance from the Defense Finance and Accounting Service.

Michael Banks Sentencing Former U.S. Military Member Sentenced

On November 6, 2017, in the Eastern District of North Carolina, former U.S. Army Specialist Michael Banks was sentenced to three years’ supervised probation for theft and conversion of government property. He was ordered to pay $144,638 in restitution and a $100 special assessment.

Federal agents conducted financial analysis and discovered that the spouse of Banks’ co-conspirator, Kenneth Blevins, had received several suspicious wire transfers originating from Afghanistan in small denominations to skirt reporting requirements. These funds totaled more than $17,000.

Further investigation revealed the funds previously wired were proceeds from a scheme orchestrated by Blevins and Banks to sell food and dry goods from the dining facility (DFAC) to which they were assigned at Camp Dyer, Afghanistan. As food-service specialists responsible for the preparation and service of food at the DFAC, Blevins and Banks conspired to over-order government-appropriated food and supplies meant to feed U.S. Special Forces members. Once a substantial amount of supplies were set aside, Blevins and Banks used local Afghan DFAC daily workers who acted as negotiators and smuggled the stolen supplies off base to a local bazaar, where they were sold on the black market. A small portion of proceeds from the scheme was shared with the Afghan workers.

Nebraska McAlpine Sentencing Former U.S. Government Contractor Sentenced for Accepting Kickbacks

On November 28, 2017, in the Northern District of Georgia, Nebraska McAlpine, former project manager of a DOD prime contractor in Afghanistan, was sentenced to 21 months’ incarceration and three years’ supervised release.

McAlpine and an Afghan executive agreed that in exchange for illicit kickbacks, McAlpine would ensure that the executive’s companies were awarded lucrative subcontracts. McAlpine repeatedly informed his supervisors that these companies should be awarded sole-source subcontracts, which allowed them to supply services to the prime contractor without having to competitively bid on them. As a result of the kickback scheme, the prime contractor paid over $1.6 million to the subcontractor to assist with maintaining the Afghanistan Ministry of the Interior ultra-high frequency radio communications system in Kabul, Afghanistan.

The executive agreed to pay kickbacks to McAlpine totaling approximately 15% of the value of the subcontracts and, in 2015 and 2016, McAlpine accepted over $250,000 in kickbacks. McAlpine hid these cash payments from his employer and took steps to secretly bring the funds back to his home in Georgia. Upon receipt of the cash in Afghanistan, McAlpine stored the money at the secure facility near the Kabul Airport and physically transported the cash when he traveled by airplane from Afghanistan to the United States on leave. McAlpine deposited the majority of these funds—approximately $183,250—into his bank accounts between August 2015 and May 2016.

Farrell Lines Incorporated $6.7 Million Civil Settlement Civil Investigation Yields Nearly $6.7 Million Recovery for the U.S. Government

On December 8, 2017, Farrell Lines Incorporated (Farrell) agreed to an administrative settlement with the United States Transportation Command (USTRANSCOM) for $6.7 million. The agreement was made as a result of false claims made by Farrell concerning retrograde shipments of cargo from Afghanistan. During an administrative review, USTRANSCOM determined false proof of delivery (PODs) claims resulted in overpayment to Farrell in excess of $14 million under a Universal Services Contract.

Farrell subcontracted Waterlink Pakistan Ltd. (Waterlink) to transport cargo from various locations in Afghanistan to Port Qasim, Pakistan. An investigation determined that Waterlink representatives cut open cargo containers, removed U.S. government property, and then resealed the containers prior to transporting them to their final destinations. Farrell failed to provide necessary oversight of Waterlink, resulting in this systematic pilferage of the containers.

Farrell provided PODs to USTRANSCOM regarding the delivery of these containers, falsely indicating the integrity of the containers had not been compromised. In 2014, the Pakistani government, with the FBI’s assistance, prosecuted the individuals involved in the thefts and the FBI file was closed. Subsequently, SIGAR and co-investigative agencies conducted a review of the FBI file and determined that Farrell management intentionally failed to provide oversight for Waterlink which allowed for the theft.

Following the issuance of a subpoena, Farrell agreed to pursue an administrative settlement with USTRANSCOM. This civil investigation was led by the Defense Criminal Investigative Service (DCIS), with assistance from SIGAR, U.S. Army Criminal Investigation Command (USCID), U.S. Air Force Office of Special Investigations (AFOSI) and Naval Criminal Investigative Service (NCIS).

Babur Nabat Road Construction Company (BNRC) $1.6 Million Savings Investigation Results in Over $1.6 Million Savings to the U.S. Government

As a result of a SIGAR investigation, the CJSOTF-A Contracting office denied a settlement proposal request resulting in a cost avoidance of $1,692,015.

On September 22, 2013, U.S. Army/SOJTF-A awarded a $4,923,860 contract to Babur Nabat Road Construction Company (BNRC) to repair and build a road outside of Bagram Airfield. On September 11, 2014, BNRC was notified that the contract was being terminated for convenience.

BNRC subsequently submitted a settlement proposal of $1,692,015 to the CJSOTF-A Contracting office for reimbursement for expenses related to the road contract. The documentation submitted by BNRC as justification for the settlement proposal included a number of suspicious-looking bank statements and other financial documents. A SIGAR investigation determined the bank statements were fraudulent, and that expenses claimed by BNRC were inflated. As a result of SIGAR’s investigative efforts, on December 17, 2017, the CJSOTF-A Contracting office denied BNRC’s settlement proposal request, resulting in a cost avoidance of $1,692,015.

Afghan National Conviction Afghan National Convicted for Use of Fraudulent SIGAR Identification to Carry Illegal Firearm

On December 10, 2017, SIGAR was informed by the Commander of the Kabul CID Police Unit that on August 15, 2017, Sayed Mustafa Kazemi was sentenced to 13 months in prison for possessing an illegal handgun and for possession and use of fraudulent SIGAR identification. Kazemi had brought the firearm to his place of employment in Kabul and had utilized the fraudulent identification as a permit to illegally carry the firearm.

On May 1, 2017, SIGAR special agents met with Kabul police officials to share evidence they had obtained and to inform them that the SIGAR name, and government symbols and seals were being fraudulently represented on Kazemi’s identification.

Special agents emphasized the importance of an investigation, both from SIGAR’s credibility as an investigative agency in Afghanistan and the significance of an Afghan national illegally using a fraudulent SIGAR identification to carry firearms in Afghanistan. SIGAR and the Kabul Police Department agreed to further collaborate in the investigation and discussed investigative options.

That same day, Kazemi was arrested for possessing an illegal handgun and for possession and use of false identification, and a criminal investigation was initiated. SIGAR special agents provided further documentary evidence and official letters to the Kabul Police, and the matter was subsequently transferred to the Criminal Investigation Division of the Kabul Police who referred it to the Afghan Attorney General’s Office for further legal action.

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