National Compressor

U.S. Department of Justice Executive Office for United States Attorneys Freedom of Information & Privacy Sraff 600 E Str...

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U.S. Department of Justice Executive Office for United States Attorneys Freedom of Information & Privacy Sraff 600 E Streer, N. W. . Suite 7300, Bicentennial Building Washington, DC 20530-0001 (2 021252-6020 FAX 252-6047 (www.usdoi.gov iusao/

April 15, 2015

Jonathan Ashley University of Virginia School of Law 580 Massie Road Room WB237a Charlottesville, Virginia 22903-1738 Re: Request Number: """F-"' O~JA'-"--'-2=--oOo...;;1-=-5--'-0'-'0'"""6-'-7""-5_ _ _ _ _ _ _ _ __ _ _ _ _ __ Date of Receipt: ~A""'pc:..n=·l-=2c...:.4_,_,=-20""'1"-4'------- -- - - - - - - - - - - - Subject of Request: National Compressor Agreement (Corporate Non-Individual records only)IOHS Dear Mr. Ashley: Your request for records under the Freedom of Information Act/ Privacy Act has been processed. This letter constitutes a reply from the Executive Office for United States Attorneys, the official record-keeper for all records located in this office and the various United States Attorneys' Office. To provide you with the greatest degree of access authorized by the Freedom of Information Act and the Privacy Act, we have considered your request in light of the provisions of both statutes. The records you seek are located in a Privacy Act system of records that, in accordance with regulations promulgated by the Attorney General, is exempt from the access provisions of the Privacy Act. 28 CFR § 16.81. We have also processed your request under the Freedom of Information Act and are making all records required to be released, or considered appropriate for release as a matter of discretion, available to you. This letter is a [ X] partial [ ] full denial. Enclosed please find: 2 page(s) are being released in full (RIF); 5 page(s) are being released in part (RIP); _ _ _page(s) are withheld in full (WIF). The redacted/withheld documents were reviewed to determine if any information could be segregated for release. The exemption(s) cited for withholding records or portions of records are marked below. An enclosure to this letter explains the exemptions in more detail.

(B)(6) (B)(7)(c)

This is the final action on this above-numbered request. If you are not satisfied with my response to this request, you may administratively appeal by writing to the Director, Office of Information Policy, United States Department of Justice, Suite 11050, 1425 New York A venue, Washington, DC 20530-0001 , or you may submit an appeal through this Office's eFOIA portal at http://www.justice.gov/oip/efoia-portal.html. Your appeal must be received with in sixty days from the date of this letter. If you submit your appeal by mail, both the letter and the envelope should be clearly marked "Freedom of Information Act Appeal."

Sincerely,

Susan B. Gerson Assistant Director Enclosure(s)

Form No. 02 1nofce-6/1 2

EXPLANATION OF EXEl\IPTIONS FOJA: TITLES, UNITED STATES CODE, SECTION 552

(b)( l )

(A) specifically authorized under criteria established b} and Executive order to be kept secret in the in the interest of national defense or foreign policy and (B) are in fact properly classi fied pursuant to such Executive order;

(b)(2)

related solely to the internal perso1mel rules and practices of an agenC) ;

(b)(3)

specifically exempted from disclosure by statute (other than section 552b of this title), provided that such statute (A) requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue, or (B) establishes particular criteria for withholding or refers to particular types of matters to be withheld;

(b)(4)

trade secrets and commercial or financial information obtained from a person and privileged or confidential;

(b)(5)

inter-agency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency;

(b)(6)

personnel and medical files and similar files the disclosure of which would constitute a clearly unV1arranted invasion of personal privacy;

(b)(7)

records or in formation compiled for law enforcement purposes, but only the extent that the production of such law enforcement records or infomiation (A) could reasonably be expected to interfere with enforcement proceedings, (B) would deprive a person of a right to a fair trial or an impartial adjudication, (C) could reasonably be expected to constitute an unv.arranted invasion of personal privacy, (D) could reasonably be expected to disclose the identity ofa confidential source, (E) would disclose techniques and procedures for law enforcement investigations or prosecutions, or would disclose guidelines for law enforcement investigations or prosecutions if such disclosure could reasonably be expected to risk circu1m ention of the law, or (F) could reasonably be expected to endanger the life or physical safet) of any individual.

(b)(8)

contained in or related to examination, operating, or condition reports prepared by, on behalf of, or for the use of an agency responsible for the regulation or supervision of financial institutions; or

(b)(9)

geological and geophysical information and data, including maps, concerning wells. PRIVACY ACT: TITLE 5, UNITED STATES CODE, SECTION 552a

(d)(5)

in fo rmation complied in reasonable anticipation ofa civil action proceeding;

(j)(2)

material reporting investigati\ e efforts pertaining to the enforcement of criminal law including efforts to prevent. control, or reduce crime or apprehend criminals;

(k)(l)

information which is currently and properly classi tied pursuant to Executive Order 12356 in the interest of the national defense or foreign pol icy, for example, infonnation im·ohing intelligence sources or methods;

(k)(2)

investigatory material complied for law enforcement purposes, other than criminal, whi ch did not result in loss of a right, benefit or privilege under Federal programs, or which would identify a source who furn ished in fo rmation pursuant to a promise that his/her identity would be held in confidence;

(k)(3)

material maintained in connection with providing protective services to the President of the United States or any other individual pursuant to the authority of Title 18, United States Code, Section 3056;

(k)(4)

required by statute to be maintained and used solely as statistical records;

(k)(5)

investigatory material compiled solely for the purpose of determining suitability eligibility, or qualification fo r Federal civilian employment or fo r access to classified information, the disclosure of which would reveal the identity of the person who furnished information pursuant to a promise that his identity would be held in confidence;

(k)(6)

testing or examination material used to determine individual qualifications for appointment or promotion in Federal GO\ emment service the release of which would compromise the testing or examination process;

(k)(7)

material used to determine potential for promotion in the armed services, the disclosure of which \\Ould reveal the identity of the person who furnished the material pursuant to a promise that his identity would be held in confidence.

FBLDOJ L06

Deferred Prosecution Agreement

1. The United States Attorney's Office for the Southern District of Ohio (USAO), on behalf of the United States of America, and National Compressor Exchange Inc., (NCE) hereby enter into this Deferred Prosecution Agreement (the "Agreement"). Acceptance of Responsibility for Violation of Law

(8)(6)

(8)(7)(c)

2. KCE admits that between the years 2001- 2005, an NCE employee, Vice-President of Sales,

supplied non specified parts to the Department of Defense either

knowingly or without correctly ascertaining whether the parts were the contractually specified (B)(6)

OEM parts, on the 16 contracts listed on the attached Statement of Facts.

acting

within the scope of his employment at NCE, on three (3) or more occasions, provided fraudulent supporting documents to the Department of Defense as set forth in detail in the Statement of Facts attached hereto as Attachment A, thus violating 18 U.S.C. Section I 00 I.

D efe rntl of Pz·osecution and Terms of the Agreement 3. In consideration of NCE's entry into this Agreement, the USAO, absen t a material breach of this Agreement, will refrain from seeking an indictment, filing an infom1ation or otherwise initiating criminal prosecution of NCE, or any of its owners, officers, directors or employees, for violations of criminal law related to the conduct described in the attached Statement of Facts and any other conduct relating to purchase orders between DOD and NCE between January 1, 2001 and December 31, 2005. 4. If NCE materially breaches this Agreement, the USAO may prosecute NCE for any violatio ns known to it at that time, including the conduct described in the Statement of Facts.

BO I 15946562. 1

(B)(7)(c)

Determination of breach shall be governed by Paragraph 13 of this Agreement. 5. NCE agrees that in ariy such prosecution the attached Statement of Pacts, and this "Deferred Prosecution Agreement", shall be admissible in evidence and deemed an admission of NCE. 6. NCE agrees to toll the running of the criminal statute of limitations during the term of this Agreement, (effective date October 1, 2008), with respect to all conduct related to the conduct described in the Statement of Facts. NCE expn::ssly intends and hereby does waive its right to make a claim premised in the statute of limitations to the extent any such statute expires during the term of this agreement. NCE also waives any claim concerning pre-indictment delay, including but not limited to, speedy trial rights under the Sixth Amendment of the Uni led States Constitution, Title 18, United States Code, Section 3 I 61, Federal Rule of Criminal Procedure 48(b), and any applicable Local Rules, for the period during which this Agreement is in effect. 7. In the event the USAO reasonably dcte1mines that NCE has materially breached this agreement and that a prosecution is warranted, NCE agrees to waive its constitutional right to presentment of an indictment to a grand jury, and to allow the United States to proceed against NCE by filing an Information, with regard to all conduct related to the conduct described in the Statement of Facts. 8.

In accordance with 18 U.S.C .§ 3663A, and related statutes, NCE

agrees to pay

restitution to the Department of Defense's Defense Logistics Agency (DLA) in the amount of $190,000.00. 9. NCE agrees to obey the laws of the United States and, in particular, not make any intentional misrepresentations to DOD, nor intentionally and unlawfully substitute parts in any

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contract with any agency of the United States, nor intentionally defraud the United States Depa1tment of Defense, or any other U.S. governmental entity, in communications therewith or in fulfilling contractual obligations, Cooperation with the Government in All Criminal and Administrative Proceedings

10.

NCE will cooperate with the United States in all criminal and administrative

investigations and proceedings related to the conduct described in the attached Statement of Facts, including providing tmthful testimony upon request in any trial or proceeding.

11. In connection with this Deferred Prosecution Agreement, NCE has agreed to address the government's investigation of NCE's defense contracting practices with the payment of a civil penalty of $22,000.00 under the False Claims Act. 12. The term of the Agreement shall commence on the date of execution and run through December 31, 2009. Breach of the Agreement

13.

Should the USAO have a basis to reasonably believe that NCE has materially

violated this Agreement, the uSAO shall provide notice of the basis for that determination to NCE and allow NCE 30 days to demonstrate that no breach occurred, that the breach has been cured, or that the breach does not merit further action by the USAO. If the USAO thereafter reasonably determines that NCE has in fact materially breached its obligations under the terms of this Agreement, the USA 0 may proceed against NCE by information or indictment without prior judicial approval.

14.

Jt is understood that this Agreement is binding on the USAO for the Southern

District of Ohio, and the U.S. Department of Defense, but specifically docs not bind other

BO I I 5946562. 1

. ...

Oct 10 08 05:07p

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federal agencies, state, or local law enforcement agencies, licensing authorities, or regulatory

authorities . lntee:ratioo C lause

15.

This Agreement sets forth all the terms of the Deferred Prosecution Agreement

between NCE and the United States. No m od ifications or addit ions to this Agre e ment shal l b e valid unless they are in w riting and signed by the parties to this Agreement .

Respe ctfully subm itted,

GREGORY G. LOCKHART United Stat.es Attomsy

(B)(6) (B)(7)(c) <\ss1stant lUnitesi States Attorney .:103 Marconi BbuJevard, Suite 200

(6)(6)

Columbus, Ohio 43215 (6 J4) 469Fax: r6 14) 469-

Agree?(

(6)(6) (6)(7)(c)

~u sd oj.gov

(6)(7)(c) ~auonal Compressor Inc.

(6)(6) Esq.

(6)(7)(c)

Esq. counsel ro r Nallonal Compresso r Inc.

Date

ofExecution:/t?;/W~

llOl IS?4G362 I

Attachments: Stat.ement of Facts (Attachment A)

STATEMENT OF FACTS National Compressor Exchange, Inc

National Compressor Exchange Inc. (NCE), Ridgewood, NY, is a defense contractor who sold and supplied a variety of air conditioning, heating, compressor, and motor parts to the United States Depaitrnent of Defense (DOD). The parts suppli ed by NCE were for use by the United States military. The DOD, through its Defense Logistics Agency (DLA) and its field activities, such as the Defense Supply Center Co lumbus (DSCC), Columbus, OH, within the Southern District of Ohio, and the Defense Supply Center Philadelphia (DSCP), issues purchase orders to companies for the supply of various items to be used by members of the United States military. The Department of Defense requires these parts to strictly conform to stated contractual requirements, including providing only the exact item described. NCE invoices the DOD through the Defense Finance and Accounting Service (DFAS), Columbus, OH, within the Southern District of Ohio, representing the parts they shipped conform to all stated contractual requirements . Based on the invoice submitted, DF AS issues payment electronically to NCE. During 2001 through 2005 , the DOD , through its DLA field activities issued purchase orders to NCE for parts to have been manufactured by specific manufacturers known as Original Equipment Manufa.c turer (OEM). The purchase orders on their face, required delivery of the specified OEM parts. Vice President for Sales for NCE corresponded with the DLA centers on a number of occasions assuring them that NCE was supplying the correct parts meeting all contractual obligations . The foll owing is a list of purchase orders issued to National Compressor Exchange in which they supplied items purportedly meeting all contractual obligations when in fact . knew that the speci fied OEM parts were not supplied or he did not correctly ascertain whether the specified OEM parts were supplied. These purchase orders totaled $215,797.55. SPM760-04-P-1547 SPE760-04-P-1857 SPE760-03-P-2582 SP07 60-02-V -L7 64 SP0560-05 -M-H826 SP0560-05-M-G 195

SP0570-05-M-3934 SP0570-05-M-6471 SP0570-05-W-0013 SP0560-04-M-DE94 SP0740-02-V-G623 SP0740-04-V-A327

SP0740-03-V- l 4 l 5 SP0760-02-V-2885 SP0740-02-M-LH56 SP07 60-04-D-5D8 9-0003

The following is a brief description of four of the above listed purchase orders issued to NCE. SPM760-04-P-1547 and SPE760-04-P-1 857 Purchase order (PO) 154 7 was issued to NCE on November 26, 2003 to supply 121 g.l obe valve parts kits, National Stock Number (NSN): 4820-00-036- 1323, for $4,331.80. The order required the items to have been manufactured by the only approved source, Henry Technologies (Henry), cage 28 193, part number D241 -2A. These parts are BO I 15946559. l

(B)(6) (B)(7)(c)

(B)(6) (B)(7)(c)

considered critical application items by the Department of Defense. PO 1857 was issued to NCE on March26, 2004 to supply 293 of the same globe valve pa1ts kits, for $10,401.50. The order also required Hemy part number D241-2A. (8)(6)

A DSCC Contracting Officer requested traceability from NCE. i V.P., NCE provided a copy of an invoice 3025940 from Henry showing they purchased 42 1 of the required globe valve pa.its kits from Hemy. The government contends that DSCC Quality Assurance Specialist (QAS) obtained globe valve parts kits supplied by NCE under each purchase order. A representative from Henry advised that their parts are marked within the cap forging with raised letters "OPEN (with anow) PAT NUMBER & 241." The parts supplied by NCE were marked only with "OPEN." On July 13, 2005, Henry provided a copy of Henry's invoice number 3025940. This invoice shows that NCE only purchased one part (not 421). SPE760-03-P-2582 This PO was issued to NCE on March 27, 2003, to supply 286 flow control valves, NSN: 4820-00-369-3860, for $6,006. The order required the items to have been supplied by the only approved source, York International. pait number 665-2483 1. These parts are considered critical application items by DOD.

9 5 ( )( )

9 7 ( )( )(c)

DSCC Contracting Officer requested traceability from NCE showing they had purchased parts manufactured by York International. A response was received from V .P. He provided a copy of a N CE PO T5180 issued to York on March 25. 2003, ordering 316 part number 365-24831. He also provided a copy of a York inYoice PB3 l 8624, referencing NCE PO T5180 dated March 28. 2003. This invoice showed York sold NCE 316 part numbers 665-24831. On July 18, 2005, York, provided a copy of their invoice PB3 l 8624 issued to NCE. A review of invoice PB3 l 8624 received from York shows a customer order number of T5 180, ship and invoice date of03/28/03. The invoice shows 6 discharge valves assembli es, part number 665 25183 000 and 2 valve plate kits, part nwnber 665 2518 1 000 sold to NCE. This invoice was for totally different parts than what NCE's copy of the invoice shows. SP0760-04-D-5D89-0003 This PO 5D89-0003 was issued to NCE on December 18, 2004, for 41 plain seal assemblies, NSN 4320-00-678-2838, a critical application item, for a total value $2,449.75. The order required OEM CruTier part number 5H l 20-732 . NCE quoted indicating they would supply the required Carrier parts.

(8)(6) (8)(7)(c)

A letter requesting traceability was sent to NCE and on June 10, 2005 a response _Jrovided a copy of Carrier work was received from NCE. order number 256980-05 dated 214105, indicating they ordered and received 4 1 part number 5H l 20-732. The invoice provided by NCE is dated February 4, 2005 and shows

RO I 15946559.1

(8 )(7 )(c)

a Bill of Lading number 8435 14559228/FED EX, and NCE work order number 25698005 . Carrier provided copies of 4 Carrier invoices {relating to NCE work order number 256980-05. Two of the invoices, both marked invoice number 4887104 RI, both dated January 21, 2004, have a different Bill of Lading number and neither one is for the parts listed on the invoice provided by NCE. The other two Carrier invoices are both marked invoice number 4919275 RI and both dated February 4, 2004, and have the same Bill of Lading number as the invoice provided by NCE. Further review of these two invoices show all other information to be the same, except neither one of the Carrier supplied invoices are for the same part number as the invoice provided by NCE, and are it was dated one year earlier. Closer review of the invoice provided by 1 observed that the date of "02104105" the ·'S" is not lined up with the rest of the numbers and the part number "SH 120-732" is a different type set then the rest of the doc'ument. Parts supplied by NCE for this order was examined by Carrier and determined not to have been supplied by Carrier as required.

BO I 15946559.1

(8)(6) (B)(7)(c)