Former CFO Sentenced for Role in Department of Defense Fraud, Filing False Tax Returns on Behalf of IbisTek

PITTSBURGH – A resident of Wexford, PA, has been sentenced in federal court to three years probation, six months home detention, 150 hours community service and a $15,000 fine, on charges of major fraud against the U.S. Department of Defense and filing false tax returns on behalf of Ibis Tek, LLC, for 2009 and 2010, Acting United States Attorney Soo C. Song announced today.

Judge Schwab imposed these sentences on Harry H. Kramer, 52, of Wexford, Pennsylvania.

According to the information presented to the court, Kramer was the Chief Financial Officer of Ibis Tek. Ibis Tek is a Butler, PA company previously owned 50/50 by brothers Thomas and John Buckner. 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.

One of the primary sources of business for Ibis Tek was contracts and subcontracts for TACOM. TACOM is a Department of Defense agency 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 and Kramer 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 Buckners 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 Buckners sold scrap aluminum collected in the manufacturing process but Kramer and the Buckners failed to credit that money to TACOM. The losses to TACOM were $6,085,709, of which $367,356 is associated with Kramer’s specific conduct.

The income tax evasion charges against Kramer and the Buckner brothers arose from not reporting the cash from sales of scrap aluminum, and for taking unallowable business deductions described below. The criminal losses from these false returns was $423,473.

The contract fraud violations described above formed the basis for False Claims Act charges against the Buckner brothers brought by the Affirmative Civil Enforcement Unit of the U.S. Attorney’s Office. Attorneys on both sides agreed on a civil settlement of $12,171,580.00. On Friday, October 6, 2017, the Buckners made the final payment to the Department of the Treasury on their civil settlement.

There is one more related defendant who is awaiting sentencing on November 6, 2017. 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 from Ibis Tek, LLC to Anthony Shaw, for the purpose of concealing that the monies were income of Shaw.

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 was charged in Counts One and Two with 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 David Buckner’s company, D & B Cycle Parts and Accessories, for Shaw’s benefit. Counts Three and Four charged Shaw with income tax evasion for 2009 and 2010 for not reporting the illegal gratuities. In Count Five Shaw was charged with 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. Shaw was sentenced to 46 months of incarceration, a $100,000 fine, and restitution to the IRS of $325,800.

These cases were investigated by the Special Agents of the Department of Defense, Defense Criminal Investigative Service, the Internal Revenue Service, Criminal Investigation, and the U.S. Army Criminal Investigation Division.

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

Acting United States Attorney Soo C. Song commended the Special Agents of the Department of Defense, Defense Criminal Investigative Service, the Internal Revenue Service, Criminal Investigation, and the U.S. Army Criminal Investigation Division for the investigation leading to the successful prosecution of these defendants.