A federal jury convicted two men Thursday for participating in a bribery and kickback conspiracy involving a contract for the U.S. Department of Defense’s Office of Inspector General (DoD OIG).
According to court records and evidence presented at trial, beginning in 2010 and continuing through 2015, William S. Wilson, 56, of Florida, was the owner of a small construction company based in Lake Butler, Florida that paid numerous kickbacks and bribes to his co-conspirators. Among other things, Wilson paid tens of thousands of dollars in bribes to Matthew K. LumHo, 46, of Fairfax Station, then employed with the DoD OIG’s Information Services Directorate. In return, LumHo took official acts that benefitted Wilson’s companies, including steering work to Wilson’s company by placing fraudulent service orders through a government contract that LumHo controlled.
The evidence presented at trial further proved that, over the same time period from 2010 through 2015, Wilson also paid numerous kickbacks to Ronald Capallia and another employee for a telecommunications company that was a prime contractor to the government. Wilson paid these kickbacks to Capallia and the other individual to cause them to steer work and provide favorable treatment to Wilson’s companies as subcontractors to the telecommunications company.
One of the key subcontracts steered to Wilson’s company related to a prime contract between the telecommunications firm and the DoD OIG, in which the telecommunications firm was supposed to supply various information technology-related services to the government. Wilson’s company was awarded this subcontract despite its lack of any relevant experience or expertise, and despite having no employees based in or near northern Virginia, where all the work was to be performed.
Wilson frequently disguised the bribes and kickbacks to Capallia, LumHo, and another individual through fake invoices for services that were never provided, or by masking the payments as payroll to relatives of Capallia and LumHo for jobs that did not in fact exist.
As the scheme progressed, the co-conspirators caused the government to submit numerous false and fraudulent service orders through the prime contract. The false service orders typically described the items being provided as specialized IT-related support services, when in fact the co-conspirators were simply buying standard, commercially available items, dramatically marking up the price, and billing the government as though it had been provided with the specialized IT-related services. The co-conspirators also used fraudulent service orders to conceal bribes in the form of high-end camera equipment and stereo equipment sent from Wilson to LumHo, thereby causing the government to pay for the very bribes that Wilson was sending to LumHo.
The evidence adduced at trial further demonstrated that the co-conspirators repeatedly sought to interfere with the criminal investigation by creating false documentation, making false statements to law enforcement officials, lying on a financial disclosure form, committing perjury during sworn civil deposition testimony, and tampering or attempting to tamper with a witness. In addition, Wilson threatened to murder Capallia and his family members by slitting their throats if Capallia ever testified on behalf of the government.
Co-conspirator Ronald A. Capallia, Jr., 40, pleaded guilty on January 25, 2018 to his role in the conspiracy and will be sentenced on September 14, 2021.
Wilson and LumHo each face a maximum penalty of 20 years in prison when sentenced on October 15. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.
Raj Parekh, Acting U.S. Attorney for the Eastern District of Virginia; Timothy R. Thibault, Acting Special Agent in Charge of the FBI Washington Field Office Criminal Division; and Kelly P. Mayo, Deputy Inspector General for Investigations at the Department of Defense’s Office of Inspector General, made the announcement after Senior U.S. District Judge Liam O’Grady accepted the verdict.
Assistant U.S. Attorneys Matthew Burke and Russell L. Carlberg are prosecuting the case.