On October 18, the Department of Justice (DOJ) announced that it had charged Frank Rafaraci, CEO of defense contractor Multinational Logistics Services (MLS), with bribery in connection with a scheme involving bribery, fraud, and money laundering.  MLS services U.S. Navy ships while they are in port in foreign countries by refueling and restocking supplies in the vessels.  The company has been awarded over $1 billion in Navy contracts over the last decade.  Over the course of many years, Rafaraci is alleged to have defrauded the Navy by inflating invoices by over $50 million, bribed Navy officials, and laundered the proceeds through accounts in the United Arab Emirates.

Following an international manhunt, Rafaraci, a U.S. citizen, was arrested in Malta and voluntarily returned to the United States to face the charges in the U.S. District Court for the District of Columbia.  The charges appear to be the result of information obtained from one of the Navy officials that Rafaraci allegedly bribed, who remains an active Navy officer while serving as a cooperating witness.  Cooperating witnesses are often crucial to efforts by law enforcement to investigate and prosecute bribery, fraud, and other white-collar crimes.  Rafaraci has been charged with one count of bribery and faces a maximum of 15 years in prison if convicted.

The investigation was conducted by the Department of Defense Office of Inspector General (DOD-OIG), Defense Criminal Investigative Service (DCIS), Naval Criminal Investigative Service (NCIS), IRS Criminal Investigation’s (IRS-CI) Los Angeles Field Office, the Federal Bureau of Investigation (FBI), the U.S. Attorney’s Office for the District of Columbia, and various other law enforcement agencies.  This laundry list demonstrates the variety of government agencies that investigate and prosecute claims of fraud against the federal government and the level of cooperation with which such agencies operate.

Along with the criminal charges against Rafaraci, MLS faces potential False Claims Act liability for the inflated invoices submitted to the Navy.  Given the volume of the contracts awarded to MLS and the alleged $50 million in inflated invoices, treble damages against MLS could reach into the hundreds of millions of dollars.  

The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with white-collar criminal investigations, False Claims Act investigations, and qui tam litigation.  If you need assistance with such a matter, please contact us today.