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Navy Supply Officer Pleads Guilty to $2.7 Million Fraud Scheme

The Department of Justice announced earlier this week that a Virginia Beach-based naval officer assigned to the Naval Expeditionary Combat Command (EOD) pleaded guilty to his role in a $2.7 million procurement fraud scheme, and to lying on his federal income tax return.

According to court documents, Randolph M. Prince, 45, defrauded the Navy out of over $2.7 million through a procurement fraud scheme in which he, as a member of his Navy unit’s supply staff, steered government contracts to sham companies who were created and run by his friends. Prince had the authority to make purchase requests for military equipment on behalf of his command, and also had the ability to sign for goods when a company delivered them to his unit on the back end.

Prince took advantage of his position to direct purchases to the sham companies, which had been opened for the sole purpose of receiving government contracts from Prince. When a contract landed on the desk of one of these companies, Prince, and others, would generate fraudulent documentation to suggest the company had honored its end of the bargain. With this documentation in hand, the Navy would then pay the company. However, the sham companies never provided the Navy with anything at all. Instead, they distributed the Navy money amongst Prince and his associates.

Prince pleaded guilty to wire fraud and making a false statement in connection with his 2014 tax return. He faces a maximum of 20 years in prison when sentenced on December 3. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.

Although Prince has been brought to justice, it means that EOD operators deployed without critical equipment which the Navy paid for. There are several others involved in this situation. Hopefully, they will be held accountable as well.

17 Responses to “Navy Supply Officer Pleads Guilty to $2.7 Million Fraud Scheme”

  1. Cpt M says:

    ‘Deployed with’ or ‘deployed without’?

    With all the political and bureaucratic shenanigans that do occur with procurement, this kind of thing is easy to slide under the table. Thankfully it was caught and the ringleader brought to justice.
    Unfortunately the majority of the money will probably never be recovered and the Navy will have to shell out again for all the equipment they thought they already had. Hats off to the EOD operators who presumably had to make do without.

  2. Marcus says:

    There is a special corner of hell for people like this. I can think of few things more important to those deploying than readiness. To steal from those brothers you are meant to help, is an abandonment of every principle, commitment and pillar of honor that exists. Especially in light of the fact this stain probably knew all too well some of the challenges those men already face with getting battle ready.

    And there is no reason, given the real potential these actions put men in danger, combined with the deterrent effect, the federal sentence should not consider the maximum.

  3. rob says:

    EOD guys deployed, with or without their gear? GG reporting.

  4. Ernie says:

    There’s something odd about this story. Was he a commissioned or non-commissioned officer, or an “official” (civilian)? Another news outlet states he was a lieutenant, but a 45 year old O-2 or O-3 seems surprising. Anybody have better gen?

  5. Kevin says:

    You know this happens all the time at a lower level. Guys develop products for their buddies who are out. I know for a fact there was a SEAL team 3 guy who funneled like a 100,000+ rounds to his buddy who developing a FN SCAR part. It was all over the internet. From what I understand this happens all the time. used to be you got a no pay due if you stole stuff. You must have to hit cash amount to get punished though. Mr. Prince hit the 7 figure mark so he’s getting the slammer.

    • SSD says:

      I don’t think it happens all of the time. Even so, this guy and his accomplices created fake businesses and with the aid of someone in industry, gained access to legitimate businesses to obtain what they considered valid bids for warfighting equipment. The products were never actually ordered. They even went so far as to create more than one fake business so as to avoid scrutiny.

      • David P Hensley says:

        You really have to get your hands on the Record of Trial/Statement of Facts to determine what happened. Just make sure you have several color of highlighters while reviewing it so you can remember who is whom.

        The Navy Officer’s scam was run through three valid/un-suspecting companies who held prime contracts, one of which appeared to be running their own illegal substitution scam and was got caught doing so due to their scam being conducted in conjunction with the Navy Officer’s scam.

        The exposure of this is important for two reasons. First, as showing that people get held accountable for their crimes, it serves as a deterrent to others. Secondly, by understanding how these frauds are conducted, it helps industry Primes to protect themselves and the government against similar scams.

  6. David Hensley says:

    When is SSD going to report on the other cases of contract fraud in the Tidewater Area?

    There have been two companies from Virginia Beach who have had their CEO or President indicted and convicted in federal court. One of the companies have been suspended pending debarment. The other company is presumably pending suspension.

    • SSD says:

      I’ve referenced some of the stories in the past. I understand your motivation in all of this, both from an ethics and business standpoint, but there is a lot going on currently. Some of it will play out the way you think it will, and some of it won’t.

      While you like to reference the Virginia Pilot, they don’t have to be right like I do. The Pilot can and does cast aspersions against those it wants to harm. They are politically motivated and seriously anti-republican and anti-defense industry. Considering your political views, if your business were located in the Tidewater, it would be a target of the Virginia Pilot.

      • David Hensley says:

        I must have missed the stories on SSD about the indictment and conviction of the CEO of SEK Solutions and the President of Karda Systems in federal court. Can you provide links where you covered this indictments and convictions?

        I did see SSD coverage of where Karda and SEK settled much less serious civil “False Claims Act” lawsuits.

        I don’t think my business would be a target of the Virginia-Pilot because I do not commit fraud against the US Government, nor will I (or my company) get charged or indicted for contracting fraud because we simply don’t engage in that type of behavior. There are plenty of Defense contractors (thousands?) in the tidewater area which receive positive coverage – or no coverage – from The Virginia-Pilot.

        • SSD says:

          I have not, specifically published those stories, because after the fines were paid, the guilty pleas weren’t nearly as interesting as seeing what their sentences will look like.

  7. ATHENS says:

    The title of the article state “Navy Supply Officer”. This person was not a Navy Supply Corps Officer. He was an EOD TECH.

    • SSD says:

      That is how the Department of Justice characterized him. Feel free to contact them. I’m sure they’ll be happy to take your name and follow up with you.