Night Vision Goggles Maker Charged in Scheme to Defraud U.S. Military

An indictment by a federal grand jury in San Francisco was unsealed April 21 against a Canadian night vision goggles manufacturing firm and two of its executives for their role in a scheme to defraud the U.S. military in the supply of equipment for the Iraqi army, the Department of Justice announced. The indictment, returned on Dec. 4, 2007, was unsealed Monday in U.S. District Court in San Francisco, charging Michael Beker (also known as Mendel Beker), president and chief executive of Newcon Optik Ltd.; Arie Prilik, the former senior vice president of Newcon Optik; and the company itself with two counts each of wire fraud and one count each of conspiracy to commit wire fraud. Beker and Newcon Optik were also each charged with one count of money laundering. Beker was arrested on April 11, and Prilik was arrested on April 18. Both arrests were made by the York Regional Police in Toronto, Canada.

Beker, Prilik, and Newcon Optik are charged with attempting to defraud the U.S. Army's Tank-Automotive and Armaments Command (TACOM), a military unit tasked with equipping and training the Iraqi Army. The alleged scheme could have resulted in an overcharge to the U.S. military of approximately $11 million, DOJ said. According to the indictment, Beker, Prilik, and Newcon Optik agreed to pay a competitor to withdraw from supplying TACOM with night vision goggles. They then envisioned stepping in and supplying TACOM with night vision goggles at a substantially inflated price, the department said. Beker, Prilik, and Newcon Optik made an initial $50,000 payment to a competitor as part of the scheme.

Beker and Prilik each face up to 20 years in prison for the wire fraud counts, and up to five years in prison and a $250,000 fine each if convicted on the conspiracy count. Beker faces imprisonment for up to 20 years and a fine of up to $500,000 if convicted of the money laundering charge. The United States also plans, upon the conviction of Beker, Prilik, and Newcon Optik, to seek criminal forfeiture of the $50,000 payment made in the case.

DOJ said Monday's charges demonstrate its commitment to protect U.S. taxpayers from procurement fraud through its creation of the National Procurement Fraud Task Force. The National Procurement Fraud Initiative, announced in October 2006, is designed to promote the early detection, identification, prevention, and prosecution of procurement fraud associated with the increase in contracting activity for national security and other government programs. The indictment is the result of a joint investigation by DOJ's San Francisco Office of Antitrust Division, the FBI, the Army Criminal Investigation Division, and the Defense Criminal Investigative Service. Anyone with information concerning illegal conduct in the procurement of night vision goggles is urged to call the San Francisco Field Office of the Antitrust Division at 415-436-6660.

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