Locally-based U.S. defense contractor, employees sentenced for procurement fraud scheme

Posted at 12:43 PM, Aug 22, 2021
and last updated 2021-08-22 12:43:29-04

HAMPTON, Va. - A Hampton-based U.S. defense contractor, its owner and employees were sentenced for their roles in a procurement fraud scheme that involved more than $7 million in government contracts targeting the Department of Defense and other agencies.

From 2011 to 2018, Newport News man and Iris Kim, Inc. ("I-Tek") owner Beyung S. Kim and employees Seung Kim, Dongjin Park, Chang You, Pyongkon Pak and Li-Ling Tu engaged in a conspiracy and scheme relating to I-Tek's government contracts. I-Tek supplied goods to the U.S. Marine Corps, the U.S. Army, the U.S. Coast Guard and the National Guards of various states, among others.

Court documents say that the U.S. government spent the money on fraudulently imported goods supplied by I-Tek, which imported goods from China and allegedly relabeled the items as being made in the U.S.

Kim and his employees also acted through a separate nominee company to conceal where the goods came from, and installed a nominee officer of I-Tek in order to be able to fraudulently qualify for contracts set aside for service-disabled veterans.

The conspirators also submitted false documents and further falsely classified the value of the goods imported into the U.S. to avoid higher duties and taxes.

“The defendants deserve to be held fully accountable for this reprehensible scheme to knowingly and deceptively source illicit Chinese goods to fulfill Department of Defense contracts,” said Eric Maddox, Special Agent in Charge of the NCIS Economic Crimes Field Office. “This scheme threatened the readiness and safety of our nation’s warfighters, defrauded the American taxpayer, damaged the integrity of the Department of the Navy procurement process, and squandered valuable investigative resources that could have been directed elsewhere."