The alleged crimes formed part of a larger $2.7m procurement fraud scheme © US Navy
The alleged crimes formed part of a larger $2.7m procurement fraud scheme © US Navy

US Navy paid $200,000 to sham company

27 January 2020

A US man has been charged with conspiracy to commit theft of government money after allegedly setting up a sham company to sell non-existent training devices to the US Navy (USN). 

According to court documents filed by the US State Attorney, Michael Kitrel, 42, from Chesapeake, Virginia, conspired with two naval officers to defraud USN out of almost $200,000. 

Federal prosecutors said the aim of the conspiracy, involving Kitrel, Lt Randolph Prince and Lt Courtney Cloman, was to “personally profit by steering USN procurement contracts to a sham company and by submitting false and fraudulent purchase documents to the USN for the fraudulent purchase of inert training devices”. 

The court documents alleged in June 2014 Kitrel registered a business called L&K Technology and Logistics, with help from Cloman. 

Prince, who had authority to purchase goods for his unit, then steered business to L&K by “ensuring that his unit would grant procurement contracts to L&K” for inert explosive training aids.

However, prosecutors said L&K “maintained no inventory or warehouse, was not registered to do business with the Department of Defense (DoD) ... never purchased any military training devices or goods, never held any such items in inventory, and never made deliveries of any such items to the USN”. 

Prince then “signed and dated packing slips on behalf of his USN unit indicating that L&K had delivered products to the USN when in fact they had not”, the document said.

Between May 2014 and February 2015, USN paid approximately $190,386.00 despite receiving no equipment, while Kitrel personally obtained around $78,000 in fraud proceeds.

The alleged crimes were part of an 18-month procurement fraud scheme in which Prince ensured $2.7m was spent on purchase orders with sham companies. In January 2019, Prince was sentenced to four years in prison for his role in the scheme. Cloman was placed on probation for three years and ordered to pay restitution of $387,107.45. 

Kitrel is due to appear in court today (27 January 2020). 

In 2018, a report by the DoD revealed over 15m contracts with a value of more than $334bn had been awarded to firms that were indicted, fined or convicted of procurement fraud.

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