The United States Department of Justice pressed a civil forfeiture case involving wrongfully acquired assets retained by Hikmatullah Shadman, a government contractor in Afghanistan. The DOJ settled the case with forfeiture of $25 million to the United States as recompense for the unlawful acquisition of United States assets for himself.
Hikmatullah Shadman is an Afghan national operating multiple companies serving as delivery suppliers for U.S. service members located throughout Afghanistan. One was Hikmat Shadman Logistics Services Company (HSLSC). From November 2010 to March 2012, it charged more than $77 million to the United States for delivering supplies as a government contractor in Afghanistan.
The investigation revealed that charges were disproportionate to what was transported. The prices for such transportation services were also inflated. In addition to the civil forfeiture and False Claims Allegations Act Resolutions, HSLSC will also be charged criminally by the U.S. Attorney’s Office in the Eastern District of North Carolina. This company has pleaded guilty on Jan 3rd to two accounts of paying gratuities to U.S. service members in Afghanistan, as well as one act of conspiracy to do the same. The sentence for this criminal case resulted in HSLSC paying an $810,000 fine and a forfeit of $190,000 to the United States. They will be on probation for five years from seeking any business with the United States.
“The United States relies on government contractors to supply and resupply our military with vital resources they require to carry out critical missions,”, commented Assistant Attorney General Jody Hunt of the Department’s Civil Division. “We will continue to ensure that companies and individuals who contract directly or indirectly with the federal government do not engage in fraudulent business practices at the expense of our nation’s military and the American taxpayer.”, she added.
“The success of our overseas war and reconstruction efforts is tied directly to the trust and respect established with the local populace,”, states U.S. Attorney Robert J. Higdon Jr. for the Eastern District of North Carolina.
“Corruption in our military operations undermines those efforts and cannot be tolerated.”, stated Special Inspector General John F. Sopko. “This case involved fraud and corruption that exploited subcontracts designed to support American troops in a conflict zone.”, he added. “I’m proud of the tenacity displayed by SIGAR special agents, whose dogged pursuit of justice led to the return of $25 million to the United States Treasury.”
The U.S. Government has paid contractors, as well as subcontractors, to aid in the resupplying of U.S. military forces in Afghanistan from at least 2007 to 2012. By utilizing local Afghan-owned businesses, the U.S. could easily get fuel and other supplies transported by truck to various locations throughout the country. This investigation into these contracts has revealed thousands of falsified documents that were submitted by Shadman’s companies. As a result, the U.S. government often ended up paying Shadman for work that was never even performed, but was described in the documents. There was also an analysis done that revealed that Shadman was overcharging the U.S. millions in comparison to competitors for the services of his companies.
This case was brought to light by a team of dedicated prosecutors in the Criminal Division’s Money Laundering and Asset Recovery Section under the Kleptocracy Asset Recovery Initiative. This team was working in partnership with federal law enforcement agencies to forfeit the proceeds of foreign corruption and help those harmed by these acts of corruption to recover any lost assets.
Those interested in this case and other forms of fraud can learn more at the Newman & Shapiro!