A Fairbanks flooring company owner pleaded guilty in federal court to providing kickbacks, estimated by the government to be worth as much as $150,000, in exchange for work on Fort Wainwright and has agreed to fully cooperate with an ongoing federal investigation.
Benjamin McCulloch, owner of McCulloch Commercial Flooring Inc., provided a 2017 Ford Explorer, a side-by-side all-terrain vehicle, Apple watches, TVs, a camera and camera lens, binoculars, workout equipment and cash payments in exchange for favorable treatment related to “prime contracts for construction services” at multiple Fort Wainwright facilities, reads an eight-page indictment filed in U.S. District Court for Alaska on Aug. 25.
Authorities say he “conspired to inflate the costs of four flooring construction subcontracts, and then provided the proceeds to his coconspirator as kickbacks,” a justice department news release reads.
McCulloch pleaded guilty on Sept. 22 to five felony charges including conspiracy to provide kickbacks and providing kickbacks. Under a plea agreement, his sentencing was “postponed until his cooperation is complete.” The charges to which McCulloch pleaded guilty carry a maximum penalty of 10 years in prison and a fine the “may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime,” reads a news release from the U.S. Justice Department.
The person who received the kickbacks was not named and was employed by at least two prime contractors on Fort Wainwright, according to court documents, which hint at a larger investigation into construction contracts on the U.S. Army base.
The investigation involves the U.S. Attorney’s Office for the District of Alaska; the FBI’s Anchorage Field Office; the Antitrust Division’s San Francisco Office; the U.S. Army Criminal Investigation Division’s Major Procurement Fraud Field Office and the Defense Criminal Investigative Service’s Western Field Office in Seattle, according to a news release.
“The government contracting process is supposed to be a healthy competition, not a rigged match with illegal kickbacks thrown in,” reads a statement from Special Agent in Charge Bret Kressin, of the IRS-Criminal Investigation, Seattle Field Office. “Mr. McCulloch’s greed not only undermined the U.S. Army, but it hurt our communities when the stolen funds went directly to line his coconspirators’ pockets.”
The con is described in the indictment as McCulloch inflating prices in proposals that were resubmitted. The coconspirator caused the contracts to be awarded to McCulloch, who “provided kickbacks in the form of cash and goods equal to approximately half of the inflated amount.”
The kickbacks reportedly happened from March 2017 to July 2020. The indictment describes McCulloch’s coconspirator as “Individual 1.”
The first kickback reportedly happened on March 13, 2017. According to court documents, McCulloch provided a 2017 Ford Explorer to Individual 1, in exchange for favorable treatment related to a subcontract for flooring for a facility known as Building 1053.
Between September 2018 and December 2019, Individual 1 received about $32,000 worth of gifts in exchange for favorable treatment related to a subcontract for flooring services for a facility referred to as Building 3416. A base information map lists Building 3416 as a dining facility, the Wolves Den Warrior Restaurant.
From January to April of 2020, Individual 1 received about $1,800 worth of kickbacks in connection with a subcontract for work at a Popeyes/Taco Bell restaurant, according to court records.
The records show that McCulloch also provided a side-by-side and cash payments, together worth about $20,000, in exchange for work at Hangar 1.
McCulloch agreed to pay restitution of $101,402, according to the plea agreement.
He was released of his own recognizance pending his sentencing in March 2023 and has agreed to “prospective cooperation with the United States’ investigation.”
Under a plea agreement, the government “will recommend that the court impose a sentence at the low end” and a minimum applicable fine, according to court documents.
A message was left for McCulloch at his store. He was also contacted via text message but there was no response.
The U.S. government is asking anyone with information about the investigation to contact the Antitrust Division’s San Francisco Office at 415-934-5300, the Antitrust Division’s Citizen Complaint Center at 888-647-3258 or www.justice.gov/atr/contact/newcase.html, or the FBI’s Anchorage Field Office at 907-276-4441.
“Those who engage in fraudulent kickback schemes undermine the government’s competitive contracting practices, and harm American taxpayers in the process,” Special Agent in Charge Antony Jung of the FBI’s Anchorage Field Office said in a prepared statement. “Detecting and disrupting these schemes will always be a priority for the FBI, and together with our partners, we will hold offenders accountable.”
