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From Antitrust Law Daily, March 13, 2017

Israeli national pleads guilty to defrauding U.S. foreign aid program

By Jeffrey May, J.D.

The Department of Justice has secured a guilty plea from a former executive of an Israel-based defense contractor who was caught up in an effort to defraud the Foreign Military Financing Direct Commercial Contract program (FMF) through which the U.S. government assists foreign governments in purchasing military equipment and services from domestic companies. Today, the Justice Department announced that Yuval Marshak pleaded guilty to one count of mail fraud, two counts of wire fraud, and one count of major fraud against the United States in federal district court in Connecticut in connection with the fraud scheme (U.S. v. Marshak, Case 3:16-cr-00011-AWT).

The January 2016 charges against Marshak were the result of an investigation into bidding irregularities involving the FMF. According to the government, Marshak and others falsified bid documents to make it appear that certain FMF contracts had been competitively bid when they had not. Marshak further caused false certifications to be made to the Department of Defense, stating that no commissions were being paid and no non-U.S. content was used in these contracts, even though he had arranged to receive commissions and to have services performed outside the United States. This conduct was in violation of the Defense Department’s rules and regulations, the government alleged. Marshak arranged for these undisclosed commission payments to be made to a Connecticut-based company that was owned by a close relative to disguise the true nature and destination of these payments. The challenged conduct took place between 2009 and 2013.

The charges against Marshak were filed under seal in 2016. The seal was lifted in July 2016. No related charges have been publicly disclosed by the Department of Justice Antitrust Division.

Acting antitrust chief’s reaction. “Today’s guilty plea marks the successful culmination of a complex investigation that required us to work closely with the Israeli government, the [Department of Defense] and the Office of International Affairs to gather foreign-located evidence and to secure Marshak’s extradition,” said Brent Snyder, Acting Assistant Attorney General in charge of the Antitrust Division. “This result reflects the division’s deep commitment to identifying and prosecuting schemes to defraud American taxpayers.”

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