Government contractor sentenced to 18 months for fraudulently claiming to perform services as a minority business enterprise defendant also sentenced for money laundering and tax fraud

 

Date: January 3, 2020

Contact: newsroom@ci.irs.gov

Kelly R. Jackson, Special Agent in Charge of the Internal Revenue Service Criminal Investigation (IRS-CI) Washington D.C. Field Office announced Keith Forney of Washington, D.C., was sentenced Friday to 18 months in prison for fraudulently claiming to perform services as a Minority Business Enterprise on a copier contract with the State of Maryland.

On August 13, 2019, Forney pled guilty to mail fraud, money laundering, and tax fraud. The Honorable Rosemary M. Collyer sentenced Forney to 18 months of incarceration on the mail and money laundering charge to run concurrently to one another in addition to six months of incarceration for the tax fraud. She also entered a $400,000 forfeiture money judgment and
ordered Forney to pay $92,000 in restitution to the IRS. Forney was also placed on three years of supervised release.

According to the statement of offense, Forney was the sole owner of Forney Enterprises, Inc. (FEI). FEI was primarily engaged in the construction business as a general contractor. Its principal office was located in the District of Columbia.

Forney participated in a scheme with John Vassos and the President of Sharp Business Systems (SBS) to obtain a contract with the Maryland Administrative Office of the Courts (Maryland AOC) for copier maintenance and repair services throughout the state’s court system.

In 2009, the Maryland AOC solicited bids for the contract. The contract required that at least 20% of the work be performed by a Minority Business Enterprise (MBE). SBS bid on the contract and identified FEI as the MBE. Forney, on behalf of FEI, signed a subcontracting agreement with the President of SBS. The Maryland AOC awarded the contract to SBS, and renewed the contract in 2010 and 2011.

As detailed in the statement of offense, FEI performed no work and provided no services during the three years that the contract was in effect. Forney falsely stated in a letter to the MBE compliance manager that FEI was providing “logistic support” to SBS. Forney signed monthly work force rosters to the Maryland AOC falsely claiming that an FEI employee was working as a “Logistics/IT Support Technician” on the contract. The FEI employee was in fact a Quality Control Manager for FEI’s construction projects.

FEI submitted monthly $12,500 invoices to SBS for FEI’s purported work as an MBE. Sharp Electronics, the parent company of SBS, then issued checks to FEI. In total, FEI received $400,000 for its purported work as the MBE. Forney committed money laundering by providing the entire $400,000 to Vassos, who was an SBS consultant. Vassos pled guilty in June 2017 to one count of conspiracy to commit mail fraud, one count of tax fraud, and one count of conspiracy to commit wire fraud. He is awaiting sentencing.

In the statement of offense for the tax fraud case, Forney acknowledged that he knowingly under-reported his income from FEI on his personal federal income tax returns for the 2009 and 2010 calendar years. Forney did so by fraudulently treating certain expenses as deductible business expenses. Those expenses included: FEI payments to reimburse individuals whom Forney had directed to make contributions from their personal funds to candidates for D.C. political offices and to D.C. Council members’ Constituent Services Programs; an FEI $25,000 contribution to a mayoral campaign; an FEI payment to a law firm for its representation of a former foreign government official from a country where Forney owned investment property, in connection with the official’s trip to Washington, D.C.; FEI payments to Forney for “consulting” work; and FEI payments for his child’s college education. 

In April 2019, Forney was convicted of eleven counts of campaign finance violations, three counts of fraud, two counts of perjury, and one count of corrupt election practices following a trial in the Superior Court of the District of Columbia. He was sentenced to six months in prison for the 11 illegal campaign violations and an additional 36 months, suspended, for fraud, perjury, and corrupt election practices.