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Army Corps Bribery Case Suspect Babb Agrees to Plead Guilty

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March 7 (Bloomberg) -- The former director of contracts for Eyak Technology LLC, Harold Babb, will plead guilty to bribery as part of a $20 million false billing scheme targeting the U.S. Army Corps of Engineers, prosecutors said.

The U.S. Attorney’s office in Washington, in a federal court filing today, said Babb will admit to one charge of bribery and one charge of unlawful kickbacks. Prosecutors asked U.S. District Judge Emmet Sullivan to schedule a plea hearing for March 13, according to the filing.

“We have reached a tentative agreement,” Babb’s lawyer, Jeffrey Jacobovitz, said in an interview. “We are still working out the details.”

The maximum sentence for bribery is 15 years in prison and the maximum sentence for kickbacks is 10 years.

Babb was one of four people charged in a case that prosecutors called one of the “most brazen” frauds in federal contracting history. Last month, a U.S. Army Corps contracting official, Michael A. Alexander, admitted to taking bribes and conspiring to launder money.

Alexander said he and a colleague, Kerry Khan, funneled more than $45 million through a contract he managed, which resulted in $20 million of kickbacks generated by overbilling. Khan’s son also was charged.

‘Domino Effect’

Jacobovitz said that generally when one co-defendant pleads guilty “it creates a domino effect.”

Eyak Technology is a unit of Anchorage, Alaska-based Eyak Corp., which has received more than $1.9 billion in government contracts since the fiscal year that began October 2001, according to data compiled by Bloomberg Government.

The company qualifies for preferential treatment through a program that reserves some contracts for small companies owned by disadvantaged minorities.

Eyak Technology’s so-called Indefinite Delivery, Indefinite Quantity, or IDIQ, contract with the Army Corps allowed Babb to steer work to a subcontractor who would inflate invoices, prosecutors alleged.

Many agencies have used IDIQ contracts as a way to speed up the process by awarding the contract to one business that essentially acts as a “management agent” and doles out orders for products and services for the government, Bunny Greenhouse, a former civilian head of contracting for the Army Corps, said after the indictment became public in October.

Bill Miller, a spokesman for U.S. Attorney Ronald Machen, declined to comment on the filing, citing the ongoing prosecution.

Brennan Cain, corporate counsel for Eyak, declined to comment on the proposed guilty plea. Babb’s employment at Eyak ended on Oct. 4, he said in an e-mail.

The case is U.S. v. Khan, 1:11-cr-00276, U.S. District Court, District of Columbia (Washington).

To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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