Four Arrests in Alleged $20 Million Corps of Engineers Bribery Case

What the U.S. Attorney for the District of Columbia called "one of the most brazen corruption schemes in the history of federal contracting" was outlined Oct. 4, when the indictment was unsealed.

A federal criminal case involving more than $20 million in alleged bribes and kickback payments and a $780 million government contract has resulted in four arrests, including two men employed by the U.S. Army Corps of Engineers and a third defendant who is director of contracts for a company that did business with the government.

Ronald C. Machen Jr., U.S. attorney for the District of Columbia, announced Kerry F. Khan, 53, of Alexandria, Va.; his son, Lee A. Khan, 30, of Fairfax, Va.; Michael A. Alexander, 55, of Woodbridge, Va.; and Harold F. Babb, 60, of Sterling, Va., were arrested Oct. 4 as authorities executed search warrants and the indictment against the men was unsealed. Kerry Khan and Alexander work for the Corps of Engineers, while Babb was director of contracts for a government contractor.

The indictment charges Kerry Khan and Alexander with helping to direct more than $45 million in payments to a favored company through a federal government contract they oversaw and planning to steer hundreds of millions more to that business. About $20 million in fraudulent expenses were built into the invoices, and proceeds went to all four defendants, according to the news release from Machen's office. All four are charged with one count of conspiracy to commit bribery and wire fraud and aiding and abetting and causing an illlegal act to be done, as well as one count of conspiracy to commit money laundering. Kerry Khan and Alexander also were indicted on one count of receipt of a bribe by a public official, and Babb was indicted on one count of unlawful kickbacks.

"This indictment alleges one of the most brazen corruption schemes in the history of federal contracting," Machen said. "As alleged by the indictment, corrupt public officials and crooked contractors devised a plan to funnel more than $20 million in taxpayer funds to themselves in an elaborate scheme of bribes and kickbacks. These charges are only the beginning of a far-reaching, steadfast effort by the U.S. Attorney’s Office, the Department of Justice, and our federal law enforcement partners to root out and hold accountable shameless government officials and those who entice them –- through bribes and other personal benefits -– to violate the public's trust."

"The alleged actions of these individuals grossly undermine the honest work being done every day by federal employees and government contractors," said Inspector General Peggy Gustafson of the U.S. Small Business Administration. "These individuals conspired to steal from the American people by perpetuating a fraud to siphon vital resources away from an organization that supports our military and reduces risks from disasters. The SBA OIG will relentlessly pursue such violations of public trust and seek justice on behalf of the taxpayers."

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