Five Plead Guilty in $6 million DOD Fraud

PITTSBURGH - Five defendants have pleaded guilty in federal court in Pittsburgh to major fraud against the U.S. Department of Defense, tax violations and illegal gratuities, Acting U.S. Attorney Soo C. Song announced today.

Thomas G. Buckner, 66, of Gibsonia, Pennsylvania, and his brother, John P. Buckner, 68, of Lyndora, Pennsylvania, pleaded guilty to one count of defrauding U.S. Army Tank-Automotive and Armaments Command (TACOM), and two counts of income tax evasion.

In connection with the guilty pleas, the court was informed that the Buckner brothers were 50/50 owners of Ibis Tek, LLC (hereinafter Ibis Tek). Ibis Tek’s main office was located at 912 Pittsburgh Street, Butler, Pennsylvania 16002, and it had an office at Ibis Tek Victory Road facility, 220 South Noah Drive, Saxonburg, PA 16056. Ibis Tek manufactured both military and commercial products but specialized in the development of transparent armor and accessory products for tactical and military combat vehicles. Ibis Tek itself was not charged with any violations.

TACOM, located in Warren, Michigan, was responsible for letting and overseeing contracts on behalf of the U.S. Department of Defense, including contracts concerning High Mobility Multipurpose Wheeled Vehicle (hereinafter Humvees). Ibis Tek had a subcontract to produce Vehicle Emergency Escape Window (VEE Window) Kits for Humvees. The Buckners inflated Ibis Tek’s costs to manufacture the VEE Window kits by creating Alloy America, LLC, (Alloy) a company that was co-located at Ibis Tek that the Buckner brothers controlled, by using Alloy to purchase the frames in China for $20 per frame, and by using false invoices from Alloy to make it appear that Ibis Tek paid $70 per frame. In addition, the Buckner brothers sold scrap aluminum collected in the manufacturing process but failed to credit that money to TACOM. The losses to TACOM were $6,085,709. Both Buckner brothers pleaded guilty to income tax evasion for 2009 and 2010 for not reporting the cash from sales of scrap aluminum, and for taking unallowable business deductions described below.

Harry H. Kramer, 52, of Wexford, Pennsylvania, pleaded guilty to one count of fraud for his role as CFO of Ibis Tek in the above described scheme against TACOM, and to filing false returns for Ibis Tek for 2009 and 2010.

David S. Buckner, of Warren, Michigan, (no relation to Thomas or John Buckner) pleaded guilty to a one-count Information charging him with impeding the IRS by acting as a financial intermediary who received and then paid out money to Anthony Shaw, for the purpose of concealing that the monies were income of Shaw, concealing the true source of the monies, David Buckner owned D & B Cycle Parts and Accessories.

Anthony A. Shaw, 55, of Rochester Hills, Michigan, pleaded guilty to a five-count Information. Shaw, formerly a civilian employee at TACOM, was a Deputy Project Manager responsible for directing development of and managing government contracts for combat vehicle systems such as Humvees. Shaw pleaded guilty to demanding and receiving a total of $1,055,500 of illegal gratuities paid by checks, cash and wire transfers by Thomas Buckner to and through D & B Cycle Parts and Accessories for Shaw. Shaw also pleaded guilty to income tax evasion for 2009 and 2010 for not reporting payments from Thomas and John Buckner totaling in excess of $1,000,000. Finally, Shaw pleaded guilty to making false statements when he denied that he had socialized with Thomas Buckner and John Buckner, and denied that he had traveled in a car, boat and an airplane owned by Thomas Buckner or John Buckner.

“These guilty pleas demonstrate the Defense Criminal Investigative Service’s (DCIS) ongoing commitment to ensuring the integrity of the U.S. Defense Department’s procurement process,” said Leigh-Alistair Barzey, Special Agent in Charge, DCIS Northeast Field Office. “Fraudulent schemes, such as those identified in this successful investigation, endanger U.S. military forces, waste valuable resources and erode public confidence. DCIS will continue to work with its law enforcement partners and federal prosecutors to protect the American taxpayer and Warfighter.”

Acting IRS-CI Special Agent in Charge Greg Floyd added, “The guilty pleas entered in this case should serve as a strong reminder to all of those who engage in deliberate acts to defraud the U.S. Government and the taxpaying citizens of our country, that they will be held accountable for their actions. We will partner with other agencies to ferret out and unravel the schemes that these individuals concoct, and they will face justice.”

United States District Judge Arthur J. Schwab scheduled the sentencings for Thomas and John Buckner for October 10, 2017; for Anthony Shaw on October 12, 2017; for David Buckner on October 17, 2017, and for Kramer on October 18, 2017. For Thomas and John Buckner, the law provides for a maximum total sentence of 20 years in prison, a fine of $1,500,000, or both. For Kramer, the law provides for a maximum total sentence of 16 years in prison, a fine of $1,500,000, or both. For David Buckner, the law provides for a maximum total sentence of 3 years in prison, a fine of $250,000, or both. For Shaw, the law provides for a maximum total sentence of 19 years in prison, a fine of $1,250,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.

Assistant United States Attorney Nelson P. Cohen is prosecuting this case on behalf of the government.

Special Agents of the Department of Defense, Defense Criminal Investigation Service, the Internal Revenue Service, Criminal Investigation, and the U.S. Army Criminal Investigation Division conducted the investigation that led to the prosecution of these defendants.