Cigars. Cash. Shell companies. 2 charged in alleged kickback scheme tied to Fort Benning

Federal prosecutors have charged two business people in connection with alleged construction kickback schemes at two Georgia military installations, including Fort Benning.

Employees at an unnamed company and Georgia-based Southern Atlantic Construction, LLC have been accused in the alleged schemes at Benning and Fort Gordon in Augusta.

The most recent indictment came last month against David Kennedy, the director of operations for the unnamed company.

Feds allege that Kennedy received kickbacks from Gary Hamby, the owner and managing partner of Southern Atlantic Construction LLC, and other Southern Atlantic employees in the form of cash and cigars to help Southern Atlantic win subcontract bids from Kennedy’s company. Work on projects was sometimes not done, prosecutors allege.

Kennedy faces one count of conspiracy to violate the Anti-Kickback Act and commit wire fraud and one count of unlawful kickbacks. If convicted, prosecutors will call for Kennedy to forfeit approximately $463,000 he allegedly obtained via wire fraud, according to court documents.

News of Kennedy’s indictment was first shared by Seamus Hughes, the deputy director of the Program on Extremism at George Washington University via Twitter.

Hamby pleaded guilty to conspiracy to violate the Anti-Kickback Act in 2017 and is awaiting sentencing, according to federal court records.

Fort Benning allegations

The schemes date back to September 2013 when Kennedy’s employer, referred to in the indictment as “Company A,” was awarded a contract to renovate Fort Benning’s Starship Barracks. The contract was a Multiple Award Task Order Contract valued at approximately $29.4 million.

Here’s more from the indictment:

  • Kennedy allegedly told Hamby in February 2015 that Southern Atlantic would be awarded a subcontract on the Fort Benning project if Hamby paid Kennedy kickbacks. In the next few months, Southern Atlantic sent Kennedy an $800 box of cigars and $5,000 in cash. In May 2015, Southern Atlantic was awarded the subcontract for about $538,000, according to Kennedy’s indictment.

  • From May 2015 to December 2015, the unnamed company awarded Southern Atlantic a total of nearly $1.4 million through purchase orders and contract modifications. Some of that additional money was allegedly sent back to Kennedy, according to the indictment.
  • From July 2015 to December 2015, Hamby paid Kennedy a total of $383,000 in Fort Benning project kickbacks, with most of it being funneled from the bank account of GH Construction Consultants, a shell company created by Hamby, to Alexis Development & Investments, a shell company created by Kennedy, according to Kennedy’s indictment.

Fort Gordon allegations

Kennedy and Hamby also worked together in an alleged kickback scheme at Fort Gordon. “Company A” was awarded a nearly $8 million contract to construct a sensitive compartmentalized information facility in September 2014, according to the indictment.

Here’s more from the indictment:

  • In July 2015, Kennedy realized that there was approximately $300,000 left on the contract. He, Hamby, and Phillip Taylor, an employee from the unnamed company, came up with a plan to award Southern Atlantic a subcontract for work the company didn’t intend to do in exchange for kickbacks.
  • Hamby had a Southern Atlantic employee send two bids on the project. One came from Southern Atlantic, and the other came from Hamby’s shell company. Company A awarded Southern Atlantic the subcontract for nearly $35,000 based on a price analysis done by Taylor.
  • A Southern Atlantic employee sent fraudulent invoices to the unnamed company for $34,380, $26,372 and $18,731 between August 2015 and December 2015.
  • Hamby paid Kennedy for helping Southern Atlantic secure the subcontract. Payments include wire transfers of $31,000 and $22,000 from Hamby’s shell company to Kennedy’s shell company. Kennedy paid Taylor in cash and checks from Kennedy’s shell company.

Progress in federal court

Hamby waived his indicted in April 2017 and signed a plea agreement later that month. His sentencing has been reset several times over the past two years. He’s set to be sentenced in October 2019, according to federal court records.

Kennedy, who was indicted last month, was arrested and appeared before a federal judge in Tennessee on May 21. He was released. He later appeared before a federal judge in Georgia on June 6 and was again released.

Kennedy’s case has been pushed back until the January trial term. It’s unclear when his next court appearance will be. Attempts to contact Kennedy’s lead attorney, Paul Bruno, were unsuccessful before publication.

The U.S. Attorney’s Office does not comment on pending litigation but U.S. Attorney for the Middle District of Georgia Charlie Peeler did issue a statement saying fraud against the government is one of his office’s priorities.

“Fraud on the government continues to be one of the priorities of our office,” he said. “Fraud on the military affects all of us in that it interferes with the military’s mission to protect all Americans and American interests across the globe.”