Enforcement Action

 

Docket or Case Number:    N/A

Court:    N/A

Initiation Date:    06/16/2015  Information

Prosecuting Agency:    US Department of Justice

Name of Prosecuting Attorneys:   

  • Tarek J. Helou, Trial Attorney, Fraud Section, Criminal Division
  • James P. McDonald, Trial Attorney, Fraud Section, Criminal Division
  • Paul Nathanson, Assistant United States Attorney

Assisting Agencies:    Federal Bureau of Investigation , U.K. Serious Fraud Office , Department of Justice- Criminal Division’s Office of International Affairs , Defense Criminal Investigative Service

Type of Action:    DOJ Criminal Proceeding

Origin of the Proceeding:    N/A

Whistleblower:    Unknown

Case Status:    Resolved


Summary

IAP Worldwide Services, Inc. (“IAP”) was a Delaware corporation headquartered in Cape Canaveral, Florida, that provided facilities management, contingency operations, and professional and technical services in contracting capacities to the U.S. military and civilian agencies. IAP operated in the United States and in various foreign countries, including Kuwait and Iraq. Between in or about August 2005 and in or about March 2007, James Michael Rama was IAP’s Vice President of Special Projects and Programs. After March 2007, Rama worked as a consultant for IAP.

In 2004, Kuwait’s Ministry of the Interior (MOI) initiated the Kuwait Security Program (KSP), a project that was intended to provide nationwide surveillance capabilities for several Kuwaiti government agencies primarily through the use of closed-circuit television. The project was divided into two phases: a planning and feasibility period called “Phase I” and an installation period called “Phase II.” The MOI was responsible for overseeing the KSP, including selecting contractors to facilitate its implementation. Revenues from the Phase II contract were expected to be substantially greater than from Phase I. IAP and Rama schemed to ensure that IAP worked as the consultant for Phase I so that it could tailor the requirements for the Phase II contracts to IAP’s strengths, which would give the company an advantage in the Phase II bidding. To that end, both IAP and Rama admitted that in February 2006, executives and senior employees of IAP, including Rama, set up a shell company called “Ramaco” to bid on Phase I, in part to conceal IAP’s role in crafting the Phase II requirements and its conflict of interest in connection with securing the Phase II contract.

Ultimately, Ramaco secured the Phase I contract for approximately $4 million. Rama and IAP agreed that half of that amount would be diverted to a consultant who would pay bribes to Kuwaiti government officials to assist IAP in obtaining and retaining the Phase I contract and to obtain the Phase II contract. IAP and Rama admitted that they disguised the payments by transferring funds Ramaco received to an IAP bank account and then to the consultant through a series of accounts and intermediaries. Between September 2006 and March 2008, IAP and its co-conspirators paid the consultant approximately $1,783,688 understanding that some or all of the funds would be used to bribe Kuwaiti government officials.

On June 16, 2015, the Department of Justice entered into a Non-Prosecution Agreement with IAP, based in part on IAP's cooperation and remedial actions undertaken by the company during the course of the investigation. The NPA requires IAP to pay a $7.1 million penalty and to assume ongoing compliance and reporting obligations.

On the same day, Rama pleaded guilty to one count of conspiracy to violate the FCPA. On October 15, 2015, Rama was sentenced to 120 days in prison, plus two years of supervised release. He was given a $100 special assessent but no fine. In its sentencing memorandum, the government noted Rama's financial hardships, and a Wall Street Journal article released around the time of sentencing indicated that Rama had filed for bankruptcy.

Country(ies) involved:    Kuwait

Sanction to Bribe Ratio:    $7,100,000 / $1,783,688 = 398.05 %

Sanction to Revenue Ratio:    $7,100,000 / $4,000,000 = 177.50 %

Sanction to Profit Ratio:    N/A

Number of Related Enforcement Actions (Including This Enforcement Action):    2

Country(ies) involved:    Kuwait

Total $ Bribery Payments:    $1,783,688

Total $ Revenue Generated from Bribery:    $4,000,000

Total $ Profit Earned or Expenses Avoided from Bribery:    N/A

Total $ Monetary Sanctions:    $7,100,100

Sanction to Bribe Ratio:    $7,100,100 / $1,783,688 = (398.06 %)

Sanction to Revenue Ratio:    $7,100,100 / $4,000,000 = (177.50 %)

Sanction to Profit Ratio:    N/A

Name:    IAP Worldwide Services, Inc.

Place of Incorporation:    United States

HQ Country(ies):    United States

Entity Type:    Private Company

FCPA Claims:    Anti-Bribery, Primary, Domestic Concern (15 U.S.C. § 78dd-2)

Related Claims:    N/A

Statutory Basis for FCPA Jurisdiction:    Domestic Concern

Period of Bribery:   2006 - 2008

Total Bribery Payments:    $1,783,688

Total Revenue Generated from Bribery:    $4,000,000

Total Profit Earned or Expenses Avoided from Bribery:    N/A

Country(ies) involved:    Kuwait

Officials Potentially Influenced (Name; Title; Organization): 

  • Name N/A, Kuwaiti Government Officials; Ministry of the Interior

Defendant-Related Entities Involved in the Misconduct:    N/A

Third-Party Intermediary:   

  • Kuwaiti Company , Agent/Consultant/Broker
  • Kuwaiti Consultant , Agent/Consultant/Broker
  • Ramaco , Shell Company

Type of Bribe:   Money

Cash, Wire or Check:    Wire Transfer

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Phase I Contract

Period of Bribery:   2006 – 2008

Total Bribery Payments:    $1,783,688

Total Revenue Generated from Bribery:    $4,000,000

Total Profit Earned or Expenses Avoided from Bribery:    N/A

Country(ies) involved:    Kuwait

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Kuwaiti Government Officials; Ministry of the Interior;

Defendant-Related Entities Involved in the Misconduct:    N/A

Third Party Intermediary:    Kuwaiti Company - Agent/Consultant/Broker
Kuwaiti Consultant - Agent/Consultant/Broker
Ramaco - Shell Company

Type of Bribe:   Money

Cash, Wire or Check:    Wire Transfer

Purpose of Bribe:    Obtain/retain business

Misconduct by Subsidiary?  Yes


Parent(s):   IAP Worldwide Services, Inc.

Subsidiary:  G3 Systems, Ltd.

  • Percentage of Ownership:    10000.00 %
  • Direct or Indirect Ownership:   
  • Parent Had Knowledge of Sub’s Bribery?:    Yes
  • Subsidiary Expressly Alleged to Be Parent's Agent:    No
  • Parent Liable for Sub Misconduct?:    No

M&A Negotiated or Completed During Misconduct, Investigation, or Resolution?     No

N/A

Mitigating Factors Referenced by the Government (Company Defendants):

Defendant Self-Report Cooperation Voluntary Remedial Measures Misconduct Limited to Low Level Individuals Other factors
IAP Worldwide Services, Inc.      

Aggravating Factors Referenced by the Government (Company Defendants):

Defendant Insufficient Cooperation Insufficient Remedial Measures
IAP Worldwide Services, Inc.    

Total Monetary Sanctions for the Action:    $7,100,000

Case Status:    Resolved


Disposition:    Non-Prosecution Agreement

Date of Disposition:    06/16/2015

IAP Worldwide Services, Inc.

—  Total Monetary Sanctions for Defendant:    $7,100,000

—  Organizational Probation:    None

—  Compliance Obligation:    Yes

—  Reporting Obligation:    Self-reporting

—  Admission of Guilt/Acceptance of Responsibility:    Yes

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