Five men are behind bars after being convicted of blatant fraud against taxpayers and the United States. According to court records, the men concocted a scheme to relabel Chinese-made goods as made in America and sell them to Uncle Sam. But that wasn’t enough. One of the men falsely claimed that he was a service-disabled veteran in order to obtain special set aside contracts. Their greed is still not satisfied. They also failed to pay taxes and duties.
Prosecutors say that between 2011 to 2018, Iris Kim, Inc., (aka “I-Tek”), owner Beyung S. Kim, employees Seung Kim, Dongjin Park, Chang You, Pyongkon Pak, and Li-Ling Tu, engaged in a conspiracy and scheme related to certain government contracts for which I-Tek acted as a supplier of goods. The goods were sold to the American military and other agencies.
The men obtained government contracts that had been set aside for small businesses owned by service-disabled veterans. The contracts also required the goods to be made in the USA. They also conspired to falsely classify the value of the goods imported into the U.S. to avoid higher customs duties and taxes.
In announcing the sentencing, a spokesperson from the Naval Criminal Investigative Service (NCIS) said,
“The defendants deserve to be held fully accountable for this reprehensible scheme to knowingly and deceptively source illicit Chinese goods to fulfill Department of Defense contracts. This scheme threatened the readiness and safety of our nation’s warfighters, defrauded the American taxpayer, damaged the integrity of the Department of the Navy procurement process, and squandered valuable investigative resources that could have been directed elsewhere. NCIS will continue to work with our law enforcement partners to aggressively root out those who seek to defraud the Navy and Marine Corps.”
Whistleblower Rewards for Information on Fraud
The case against I-Tek and owner Beyung Kim highlights the many ways that companies and individuals can defraud the government. This case involved three different types of fraud, all of which involve possible cash whistleblower rewards.
Rewards for Buy America Violations
Beginning in the great depression, Congress passed a series of laws designed to promote American-made goods and ensure that critical manufacturing jobs stay in America. While some have questioned the logic of these so-called Buy American laws, the recent supply chain disruptions caused by COVID-19 show how dependent we have become on countries like China for certain goods and products.
In addition to the Buy American / Buy America laws passed by Congress, both Presidents Trump and Biden issued presidential executive orders further bolstering the requirements that government agencies give preferences to American-made goods.
The contracts received by Beyung Kim required the goods being supplied to the Navy, Marine Corps, and National Guard to be made in America. Kim lied and hid the fact that some $11 million dollars of goods were mislabeled and were really imported from China.
Under the federal False Claims Act, whistleblowers with inside information about Buy America violations are entitled to between 15% and 30% of whatever the government collects from wrongdoers.
Rewards for Customs Evasion
By mislabeling the Chinese goods as made in America, Kim further defrauded the government and taxpayers of millions of dollars in unpaid customs duties and taxes. Once again, the False Claims Act allows whistleblowers with inside information about customs evasion to also collect rewards.
Often where there is a Buy America fraud violation, there is a second reward available for customs evasion.
Service-Disabled Veterans and Other Disadvantaged Small Business Entity Fraud
We try not to use acronyms on this site but government contractors are already familiar with the term SDVOSB (Service Disabled Veteran Owned Small Business) and DSBE (Disadvantaged Small Business Entity). The latter category, DSBE, covers a wide range of government set aside, including veteran-owned, women-owned, minority-owned, and Native American-owned small businesses. Depending on the program, Congress requires agencies to set aside a certain percentage of government contract opportunities for certain small businesses.
Prosecutors say that Kim took advantage of these laws by creating a phony company called Atlantic Solar Power Inc and then finding a veteran to serve as the “owner” of the business. However, the actual business was conducted by Beyung Kim’s company, I-Tek, which was not veteran-owned. These arrangements are often called “rent-a-vet” schemes.
The Trump administration prosecuted a record number of SDVOSB fraud cases. We expect that the Justice Department will continue to do so under the Biden administration.
Do You Have Information About Fraud Against the Government?
You may be entitled to a cash reward if you know of fraud involving government funds or a government-funded program. Our whistleblower clients have already received over $100 million in rewards. The next reward could be yours.
People like Beyung Kim hurt American businesses, disabled veterans trying to earn a living, and taxpayers. Our team of experienced qui tam lawyers can help you stop fraud, greed, and corruption and earn a whistleblower reward.
As an added benefit, the False Claims Act has strong anti-retaliation provisions. To learn more, visit our Buy American, SDVOSB – DSBE fraud, and customs fraud whistleblower pages. All inquiries are protected by the attorney – client privilege and kept completely confidential.
Ready to see if you qualify for a reward? Contact us online, by email or by phone 202-800-9791.
(We accept cases worldwide. All inquiries are protected by the attorney – client privilege and kept confidential. Cases handled on a contingency fee basis, meaning if there is no reward, you owe us nothing.)