Nevada Man Pleads Guilty to Rigging Bids for Healthcare-Related and Other Air Force Projects

A former employee of a shelving and storage distributor pleaded guilty today to two felonies for conspiring to rig bids and defraud the U.S. Department of War. As the defendant admitted in open court, his crimes related to the sale of shelving and storage products to the U.S. Air Force to service multiple healthcare and operations facilities.

According to the information and plea agreement filed in the Middle District of Georgia, Scott G. Srodes, 65, of Las Vegas, Nevada, and his co-conspirators submitted collusive bids for multiple projects at healthcare facilities at Air Force Base Moody in Valdosta, Georgia, and for aircraft maintenance facilities at Air Force Base Nellis in Las Vegas, Nevada. Srodes and his co-conspirators exchanged pricing information prior to submitting them, at times instructing each other exactly what price to quote for certain projects. The projects, which had a total value of more than $1.8 million, were funded through the Defense Logistics Agency's Facilities Maintenance, Repair, and Operations Program. The guilty plea is the second in an ongoing investigation into bid rigging and fraud impacting U.S. military facilities in the United States.

"America's warfighters deserve the best healthcare, and bid rigging that distorts healthcare procurement deprives them of free and fair competition," said Acting Deputy Assistant Attorney General Daniel W. Glad of the Justice Department's Antitrust Division. "The Antitrust Division's Procurement Collusion Strike Force and its partners will continue to hold accountable those whose schemes increase healthcare-related costs in the United States."

"We will pursue and bring to justice those who cheat the federal procurement system, while we work to protect taxpayers and honest contractors from the harm caused by bid rigging," said U.S. Attorney William R. "Will" Keyes for the Middle District of Georgia. "Our partnership with the Department of Justice's Antitrust Division demonstrates our resolve to root out fraud and uphold the law."

"The Air Force Office of Special Investigations remains steadfast in our mission to protect the integrity of Department of Defense procurement processes and safeguard resources critical to the readiness and welfare of our Airmen," said Special Agent in Charge Derrell Freeman of the Air Force Office of Special Investigations, Southeast Field Office. "Bid rigging schemes like this undermine fair competition, inflate costs for essential healthcare infrastructure, and ultimately harm the brave men and women serving in our military. Working alongside our partners at the Antitrust Division, DCIS, and DLA OIG, we will continue to vigorously investigate and hold accountable those who seek to defraud the United States."

"Bid rigging on military healthcare contracts undermines the competitive process that protects taxpayer dollars and the service members these facilities exist to serve," said Special Agent in Charge Jason Sargenski of the Department of Defense Office of Inspector General, Defense Criminal Investigative Service (DCIS) Southeast Field Office. "This additional guilty plea reflects the scope of this investigation and the consequences awaiting those who conspire to defraud defense contracting programs. DCIS and our law enforcement partners will continue to pursue every individual and company responsible for defrauding the programs that support our nation's military."

The Antitrust Division's Washington Criminal Section, Air Force Office of Special Investigations, Defense Criminal Investigative Service, and Defense Logistics Agency Office of Inspector General investigated the case. Trial Attorneys Daniel P. Chung and Christian Neumeister of the Antitrust Division's Washington Criminal Section are prosecuting the case, with the assistance of the U.S. Attorney's Office for the Middle District of Georgia.

The maximum penalty for a conspiracy to rig bids in violation of the Sherman Act for an individual is 10 years in prison and a $1 million criminal fine. The maximum penalty for conspiracy to defraud the United States is five years in prison and a $250,000 criminal fine. The fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime if either amount is greater than the statutory maximum fine. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The Justice Department's Procurement Collusion Strike Force (PCSF) is a joint law enforcement effort to combat antitrust crimes and related fraudulent schemes that impact government procurement, grant and program funding at all levels of government - federal, state and local. To learn more about the PCSF, or to report information on bid rigging, price fixing, market allocation and other anticompetitive conduct related to government spending, go to https://www.justice.gov/procurement-collusion-strike-force.

Whistleblowers who voluntarily report original information about antitrust and related offenses that result in criminal fines or other recoveries of at least $1 million may be eligible to receive a whistleblower reward. Whistleblower awards can range from 15 to 30 percent of the money collected. For more information on the Antitrust Whistleblower Rewards Program, including a link to submit reports, visit https://www.justice.gov/atr/whistleblower-rewards.