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Virginia Defense Contractor Facing Federal Indictment in Maryland for Selling Chinese-Made Body Armor and Related Goods to Federal Agencies

A federal grand jury in Maryland has returned an indictment charging Arthur Morgan, age 67, of Lorton, Virginia, with federal wire fraud charges, in connection with federal contracts to provide helmets, body armor, and other items to military and other federal entities. The indictment was returned on July 6, 2020.

Allegedly Falsely Certified that the Products Were Manufactured in Countries Approved Under Federal Regulations, When He Knew They Were From China, Which is Not Approved

The indictment was returned on July 6, 2020.

The indictment was announced by United States Attorney for the District of Maryland Robert K. Hur; Special Agent in Charge Eric D. Radwick of the General Services Administration (GSA) Office of Inspector General; Special Agent in Charge Ashan Benedict of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Washington Field Division; Special Agent in Charge John A. Salazar, Naval Criminal Investigative Service; and Special Agent in Charge Marc A. Meyer of the U.S. Department of State Office of Inspector General.

According to the indictment, Morgan is the Chief Executive Officer of Surveillance Equipment Group Inc. (SEG) and its relevant division, SEG Armor, both of which Morgan managed from Lorton, Virginia .

The GSA enters into government-wide contracts with commercial firms to provide supplies and services that are available for use by federal agencies worldwide. All GSA contracts are subject to the Trade Agreements Act (TAA), which requires that all products listed on GSA contracts must be manufactured or “substantially transformed” in a “designated country.”

China is not a designated country under the TAA. Contractors were not allowed, under these contracts, to supply products that did not comply with the TAA. Any such products would have been disqualified from eligibility under the contract.

Further, a contractor’s failure to certify that its products complied with the TAA would have disqualified the contractor from eligibility for the contract. A contractor who falsely certified that a product was TAA compliant could not lawfully seek payment from the United States for that product.

The indictment alleges that Morgan falsely certified that the ballistic vests, helmets, riot gear, and other items he offered for sale were from designated countries, specifically, Hong Kong and the United States.

The indictment alleges that while representing that none of SEG’s products offered to federal agencies under the relevant contract were manufactured in China, Morgan knowingly provided products that Morgan knew had been manufactured in China, in violation of the TAA and the contract.

SEG received multiple federal government orders under the contract between 2003 and 2019. According to the indictment, between September 15, 2014 and August 29, 2019, approximately six federal government agencies placed at least 11 orders for ballistic and other law enforcement/security equipment from SEG—which SEG sourced from China in violation of the TAA, as part of the scheme to defraud— totaling approximately $658,866.92.

For example, the U.S. Navy placed an order with SEG for helmets, and Morgan had a series of e-mail communications with Navy contracting personnel in Indian Head, Maryland, including concerning SEG’s inability to meet the agreed-upon delivery schedule.

The indictment alleges that in his e-mails, Morgan falsely advised the Navy contracting personnel that SEG had a factory in southern Virginia, that the helmets for the order “were in production” there, and that the delays were due to a backorder of materials needed for the helmets.

The helmets that Morgan provided under the U.S. Navy order allegedly originated from China before Morgan sent them to the Navy, in violation of the TAA and the contract. Specifically, the indictment alleges that these products were manufactured by Chinese Company 1, from which Morgan knowingly ordered them.

On February 16, 2016, and March 10, 2016, the Defense Finance and Accounting Service paid SEG $127,069.60 and $191,990.28, respectively, for the U.S. Navy order. For all of the orders, federal government agencies paid SEG at least approximately $488,976.92.

If convicted, Morgan faces a maximum sentence of 20 years in federal prison for each of two counts of wire fraud. 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.

An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.

United States Attorney Robert K. Hur commended the GSA OIG, the State Department OIG, the ATF, and the NCIS for their work in the investigation, and recognized the Army Major Procurement Fraud Unit, the Defense Criminal Investigative Service, Homeland Security Investigations, the FBI, the Air Force Office of Special Investigations, and the Coast Guard Investigative Service for their assistance.

Mr. Hur thanked Assistant U.S. Attorney Elizabeth Wright, who is prosecuting the case.

Blogs to Follow:

ATF.gov (July 2020) Virginia Defense Contractor Facing Federal Indictment in Maryland for Selling Chinese-Made Body Armor and Related Goods to Federal Agencies

CBP’s Autonomous Surveillance Towers Declared a Program of Record along the Southwest Border

U.S. Customs and Border Protection (CBP) on Thursday announced that the Autonomous Surveillance Towers (AST) system has become a Program of Record for U.S. Border Patrol (USBP). Autonomous surveillance towers, known formerly as Innovative Towers, operate off-grid with 100 percent renewable energy and provide autonomous surveillance operations 24 hours per day, 365 days per year.

Perfectly suited for remote and rural locations, the AST scans the environment with radar to detect movement, orients a camera to the location of the movement detected by the radar, and analyzes the imagery using algorithms to autonomously identify items of interest, such as people or vehicles.

Border Patrol agents are then alerted to this event and have the opportunity to make the final determination on what the item is and if it poses a threat.

These innovative towers operate completely off grid using 100 percent renewable energy, have a small geographic footprint, and minimize the impact to land owners and public lands to the maximum extent.

CBP personnel are able to re-locate a tower within two hours, providing front-line agents with a highly flexible, autonomous system that enhances situational awareness, agent effectiveness, and safety.

“These towers give agents in the field a significant leg up against the criminal networks that facilitate illegal cross-border activity,” said Border Patrol Chief Rodney Scott. “The more our agents know about what they encounter in the field, the more safely and effectively they can respond.”

CBP first piloted the towers in early 2018 with four towers in the San Diego Border Patrol Sector, and has since procured 56 additional towers. CBP is on a path to procure and deploy 140 additional towers in Fiscal Years 2021 and 2022, to reach a total of 200 towers.

Autonomous technology is a true force multiplier for CBP, enabling Border Patrol agents to remain focused on their interdiction mission rather than operating surveillance systems.

Investments in autonomous operation, artificial intelligence, and other advanced technologies native to the Autonomous Surveillance Towers are absolutely essential to border security and compliment other capabilities such as the Border Wall System, Remote Video Surveillance System, Integrated Fixed Towers, Mobile Surveillance and small drones.

Blogs to Follow:

CBP.gov (July 2020) CBP’s Autonomous Surveillance Towers Declared a Program of Record along the Southwest Border

Warrant and Complaint Seek Seizure of All Iranian Gasoil Aboard Four Tankers Headed to Venezuela Based on Connection to IRGC

A forfeiture complaint and warrant were filed in the U.S. District Court for the District of Columbia alleging that all petroleum-product cargo aboard the Bella with international maritime organization (IMO) number 9208124, the Bering with IMO number 9149225, the Pandi with IMO number 9105073, and the Luna with IMO number 9208100 are subject to forfeiture based on the terrorism forfeiture statute.

John C. Demers, Assistant Attorney General, National Security Division; Michael R. Sherwin, Acting U.S. Attorney for the District of Columbia; Steven W. Cagen, Special Agent in Charge, Denver, Colorado, Homeland Security Investigations (HSI); Rainer S. Drolshagen, Special Agent in Charge, Minneapolis, Minnesota, Federal Bureau of Investigation, made the announcement today.

The documents allege a scheme involving multiple parties affiliated with the IRGC to covertly ship Iranian gasoil, obtained via ship-to-ship transfers, to Venezuela.

The shipments are alleged to be a “source of influence” for the Islamic Revolutionary Guard Corps (IRGC), a designated foreign terrorist organization.

The documents allege that profits from petroleum sales support the IRGC’s full range of nefarious activities, including the proliferation of weapons of mass destruction and their means of delivery, support for terrorism, and a variety of human rights abuses, at home and abroad.

There are approximately 302,502 barrels of Iranian gasoline currently on board the Bella, approximately 302,522 barrels of Iranian gasoline currently on board the Bering, approximately 259,700 barrels of Iranian gasoline currently on board the Luna, and approximately 298,484 barrels of Iranian gasoline currently on board the Pandi.

United States District Judge James E. Boasberg issued a warrant to seize all Iranian gasoline on these four vessels, based on a probable cause showing of forfeitability. The warrant commands the property to be brought to the sole jurisdiction of the U.S. District Court for the District of Columbia.

A warrant for arrest and civil forfeiture complaint are merely allegations. The burden to prove forfeitability in a civil forfeiture proceeding is upon the government. Funds successfully forfeited based on terrorism authorities are in part directed to the the United States Victims of State Sponsored Terrorism Fund (http://www.usvsst.com/).

In announcing the forfeiture complaint, Assistant Attorney General Demers, Acting U.S. Attorney Sherwin, Special Agent in Charge Cagen, and Special Agent in Charge Drolshagen commended the work of those who investigated the case from HSI and FBI.

Finally, they acknowledged the work of Assistant U.S. Attorneys Zia Faruqui, Brian Hudak, and Stuart Allen; National Security Division, Counterintelligence and Export Control Section, Deputy Chief Elizabeth Cannon and Trial Attorney David Lim; and U.S. Attorney’s Office for the District of Columbia Paralegal Liz Swienc and Legal Assistant Jessica McCormick.

Blogs to Follow:

Justice.gov (July 2020) Warrant and Complaint Seek Seizure of All Iranian Gasoil Aboard Four Tankers Headed to Venezuela Based on Connection to IRGC

DHS Announces New Task Force to Protect American Monuments, Memorials, and Statues

Acting Secretary of Homeland Security, Chad F. Wolf, announced the establishment of the DHS Protecting American Communities Task Force (PACT), a special task force to coordinate Departmental law enforcement agency assets in protecting our nation’s historic monuments, memorials, statues, and federal facilities.

Today, Acting Secretary of Homeland Security, Chad F. Wolf, announced the establishment of the DHS Protecting American Communities Task Force (PACT), a special task force to coordinate Departmental law enforcement agency assets in protecting our nation’s historic monuments, memorials, statues, and federal facilities.

“DHS is answering the President’s call to use our law enforcement personnel across the country to protect our historic landmarks,” said Acting Secretary Wolf. “We won’t stand idly by while violent anarchists and rioters seek not only to vandalize and destroy the symbols of our nation, but to disrupt law and order and sow chaos in our communities.”

On June 26th, President Trump issued an Executive Order to ensure that our historic monuments and statues will be protected.

The Order, “Protecting American Monuments, Memorials, and Statues and Combating Recent Criminal Activity,” directs DHS, within its statutory authority, to provide personnel to assist with the protection of federal monuments, memorials, statues, or property.

As a result, DHS created the PACT, which will conduct ongoing assessments of potential civil unrest or destruction and allocate resources to protect people and property.

This may involve potential surge activity to ensure the continuing protection of critical locations.

DHS’s Office of Operations Coordination will also partner closely with the Departments of Justice and Interior to establish information and intelligence sharing.

“As we approach the July 4th holiday, I have directed the deployment and pre-positioning of Rapid Deployment Teams (RDT) across the country to respond to potential threats to facilities and property,” said Acting Secretary Wolf. “While the Department respects every American’s right to protest peacefully, violence and civil unrest will not be tolerated.”

Blogs to Follow:

DHS.gov (July 2020) DHS Announces New Task Force to Protect American Monuments, Memorials, and Statues

Pfc. Vanessa Guillen remains found, suspect identified as a fellow soldier, another suspect in custody

“We have made significant progress in this tragic situation and are doing everything possible to get to the truth and bring answers to the family of Pfc. Vanessa Guillen,” said Chris Grey, the spokesman for Army CID.

One military suspect is deceased after taking his own life yesterday in Killeen, Texas, and a civilian suspect has been arrested by the Texas Rangers in connection with the disappearance of Pfc. Vanessa Guillen.

Special Agents from the U.S. Army Criminal Investigation Command, along with the U.S. Marshals, Killeen Police Department, and the Lone Star Fugitive Task Force were attempting to locate the junior Soldier from Fort Hood who fled the post late yesterday.

While law enforcement agencies, minus Army CID Special Agents, attempted to make contact with the suspect, the suspect reportedly displayed a weapon and took his own life.

The name of the Soldier will not be released at this time pending the notification of next of kin.

The civilian suspect is the estranged wife of a former Fort Hood Soldier and is currently in custody in the Bell County Jail awaiting charges by civilian authorities.

Additionally, the Texas Rangers, with assistance from Army CID and other agencies, are still processing the scene at the Leon River in Bell County, Texas, where partial human remains were discovered yesterday. Coordination has been made with Armed Forces Medical Examiner Services, who will assist with dental x-rays/DNA for identification by the Southwest Institute of Forensic Science, Dallas, Texas.

A positive identification of the remains is pending.

The 20-year-old Guillen was last seen on the morning of April 22 in the parking lot of her Regimental Engineer Squadron Headquarters, 3rd Cavalry Regiment on Fort Hood, Texas, and had not been heard from since that date.

The Army Criminal Investigation Command has been working closely with multiple law enforcement agencies throughout this investigation to include the FBI, Belton Police Department, Bell County Sheriff’s Department, the United States Marshals Service, the Texas Rangers and the Texas Department of Public Safety.

According to CID officials, this is still an open and ongoing criminal investigation.

“There is still a lot of investigative work to be done and we ask for the public and media’s patience,” Grey said. “There are obviously pieces of information and evidence that cannot be shared with the public during an active criminal investigation. Doing so can seriously jeopardize the charging and successful prosecution of individuals. When important investigative information is prematurely released, criminals can and will destroy evidence, conspire to change their stories, build false alibis, etc.”

No further information will be released at this time.

Persons with information can contact Army CID Special Agents at 254-287-2722 or the Military Police Desk at 254-288-1170. They can also anonymously submit information at https://www.cid.army.mil/report-a-crime.html.

People wishing to remain anonymous will be honored to the degree allowable under the law and the information will be held in the strictest confidence allowable.

Blogs to Follow:

Army.mil (July 2020) Pfc. Vanessa Guillen investigation update