Fort Gordon housing provider pleads guilty to fraud scheme

Published: Dec. 27, 2021 at 3:07 PM EST
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AUGUSTA, Ga. (WRDW/WAGT) - In an update to an I-TEAM story we’ve been covering for more than decade, Balfour Beatty Communities is paying more than $65 million in fines for a fraud scheme that affected our local service members.

The company is one of the nation’s largest providers for privatized military housing, including at Fort Gordon.

Our I-Team helped expose unfit living conditions on post-repair requests, never answered, and families who have gotten ill while living in their housing units, a story that made national headlines.

Now the company’s housing contractor is pleading guilty to defrauding the U.S. military.

Instead of promptly repairing housing for military members, the deputy attorney general says they lied about the repairs to pocket millions of dollars in performance bonuses.

The company entered the plea, pursuant to plea agreement with the United States, before U.S. District Judge Emmet G. Sullivan in the District of Columbia on Wednesday.

Prosecutors said the company agreed to pay more than $33.6 million in criminal fines and over $31.8 million in restitution, serve three years of probation and engage an independent compliance monitor for three years.

Separately, the company entered into a False Claims Act settlement under which it is obligated to pay approximately $35.2 million in civil restitution and penalties to the United State.

Law enforcement within the southern federal judicial district of Georgia assisted in reaching this settlement by investigating misconduct at Fort Stewart/Hunter Army Airfield in Savannah and Fort Gordon in Augusta.

“The men and women who live in our nation’s military housing, including those at Fort Stewart and Fort Gordon, deserve prompt and professional maintenance service from their housing providers,” said David H. Estes, U.S. attorney for the district of Georgia.

“Balfour’s guilty plea is progress toward accountability for the mistreatment of families housed at Fort Gordon, but there is more work to be done,” Georgia Democratic Sen. Jon Ossoff said. “As I pledged this summer, I will continue pursuing every avenue available to ensure accountability where our military families have been subjected to unsafe, unhealthy, low-quality housing. Our heroes and their families deserve the best.” 

After his swearing-in in January, Ossoff inspected Fort Gordon in February where he heard directly from service members about concerns with housing on post.

In July, Ossoff returned to the post Gordon and met with senior leadership and enlisted personnel and their families on this issue and pledged his support to hold Balfour accountable and upgrade living conditions.

BBC’s fees for the ongoing property management and maintenance of its military housing communities generally consisted of (1) a base fee, paid to BBC monthly and (2) performance incentive fees, paid to BBC quarterly or semi-annually. Performance Incentive Fees were payable only upon the approval of the relevant service branch. To obtain the incentive fees, BBC was required to submit to the service branches proof that it had satisfied written performance objectives related to, among other things, maintenance of the housing communities and resident satisfaction. The service branches relied on BBC’s submissions in deciding whether to approve the payment of relevant performance incentive fees.

According to court documents, from around 2013 to around 2019, BBC employees falsified information so that BBC’s incentive fee requests falsely reflected that BBC had met performance objectives. In reality, BBC did not legitimately meet those objectives in many of the quarters during that time, primarily the objectives related to maintenance and resident satisfaction, at various military housing projects. Specifically, BBC employees altered or manipulated data in property management software and destroyed and falsified resident comment cards to falsely inflate these metrics and, ultimately, to fraudulently induce the service branches to pay performance incentive fees which BBC had not earned.

As a result, according to court documents, there were lengthy and unnecessary delays in the resolution of maintenance issues to the detriment of residents. In addition, the military service branches had an inaccurate view of the state of BBC’s military housing communities and were unable to assess, and potentially correct, BBC’s performance.

A number of relevant considerations contributed to the department’s criminal resolution with BBC, including the nature and seriousness of the offense, the pervasiveness of the misconduct among BBC’s employees and at multiple military installations, and the state of BBC’s compliance program and the progress of its remediation, including the fact that BBC’s compliance program and internal controls have not been fully implemented or tested to demonstrate that they would prevent and detect similar misconduct in the future.

As part of BBC’s plea agreement, BBC agreed to cooperate fully with the United States in all matters relating to the conduct covered by the plea agreement and other conduct under investigation by the United States, to self-report violations of U.S. federal criminal law, and to continue to implement a compliance and ethics program designed to effectively detect and deter violations of U.S. anti-fraud laws throughout its operations.

This resolution follows the prior entry of guilty pleas by two BBC managers. In April 2021, Stacy Cabrera, a former community manager of BBC, pleaded guilty to conspiracy to commit wire fraud. In June 2021, Rick Cunefare, a former regional manager of BBC, pleaded guilty to major fraud against the United States.

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