Korean Businessman Pleads Guilty in Bribery and Fraud Scheme Involving $206 Million Contract
WASHINGTON, -- A South Korean businessman pleaded guilty today for his role in a bribery conspiracy involving a $206 million telecommunications contract and employees of the Army and Air Force Exchange Service (AAFES), a federal entity that provides billions of dollars worth of goods and services annually to U.S. Armed Forces service members and their families around the world, Assistant Attorney General Lanny A. Breuer of the Criminal Division announced.
According to court documents, Gi-Hwan Jeong, conspired between 2001 and 2006 with two AAFES officials, Henry Lee Holloway and Clifton Choy, among others, to commit bribery and honest services wire fraud when he agreed to make payments to the officials in the form of cash, travel, entertainment expenses, and other things of value in exchange for their aid in securing and maintaining a $206 million telecommunications contract for Jeong's company, Samsung Rental Ltd., (SSRT).
From October 2001 to August 2005, Jeong admitted providing approximately $80,000 in cash, entertainment and other things of value as bribes to Choy, an AAFES services program manager for the Pacific region, in exchange for Choy's use of official action to benefit SSRT. Specifically, according to court documents, prior to AAFES' award of the telecommunications contract to SSRT in 2001, Choy used his official position to gain access to confidential bid proposal information that competing bidders had submitted to AAFES and passed information to Jeong, who used it to ensure that SSRT submitted the winning bid. Shortly after AAFES awarded the contract to SSRT, Jeong admitted paying $20,000 in cash to Choy, who passed away in 2008.
From May 2003 to April 2005, Jeong also admitted providing approximately $70,000 in cash, entertainment, travel expenses, stock options and other things of value as bribes to Holloway, in exchange for Holloway's use of official action to benefit SSRT. Jeong admitted making payments to curry favor with Holloway, who, as an AAFES general store manager for the Republic of Korea, was in a position to seek termination of AAFES' contract with SSRT following allegations of performance-related problems relating to SSRT's contractual obligations. After Jeong began paying Holloway, according to court documents, Holloway used official acts and influence to support the contractual relationship between SSRT and AAFES.
Jeong pleaded guilty to a five-count indictment before Judge Ed Kinkeade in the Northern District of Texas, charging him with one count of conspiracy, two counts of honest services wire fraud and two counts of bribery. At sentencing, scheduled for Sept. 16, 2009, Jeong faces up to five years in prison on the conspiracy count, as well as a $250,000 fine. He faces up to 20 years in prison for each honest services wire fraud count, as well as a $250,000 fine. He also faces up to 15 years in prison for each of the bribery counts, as well as a fine of $250,000 or three times the value of the things of value Jeong provided, whichever is greater. A sentencing date has not been set by the court.
On April 21, 2009, Holloway, 42, of Hamilton, Ga., pleaded guilty before Judge Clay D. Land in the Middle District of Georgia for his role in the conspiracy and for not reporting the bribes he admitted he accepted on his income tax returns. Holloway's sentencing date has not been set by the court.
The case is being prosecuted by Senior Trial Attorney Richard C. Pilger and Trial Attorneys Richard B. Evans and Eric G. Olshan of the Criminal Division's Public Integrity Section, headed by William M. Welch, II, Chief. The case was investigated by the Air Force Office of Special Investigations, the FBI's Dallas Field Office and the Internal Revenue Service - Criminal Investigation.
According to court documents, Gi-Hwan Jeong, conspired between 2001 and 2006 with two AAFES officials, Henry Lee Holloway and Clifton Choy, among others, to commit bribery and honest services wire fraud when he agreed to make payments to the officials in the form of cash, travel, entertainment expenses, and other things of value in exchange for their aid in securing and maintaining a $206 million telecommunications contract for Jeong's company, Samsung Rental Ltd., (SSRT).
From October 2001 to August 2005, Jeong admitted providing approximately $80,000 in cash, entertainment and other things of value as bribes to Choy, an AAFES services program manager for the Pacific region, in exchange for Choy's use of official action to benefit SSRT. Specifically, according to court documents, prior to AAFES' award of the telecommunications contract to SSRT in 2001, Choy used his official position to gain access to confidential bid proposal information that competing bidders had submitted to AAFES and passed information to Jeong, who used it to ensure that SSRT submitted the winning bid. Shortly after AAFES awarded the contract to SSRT, Jeong admitted paying $20,000 in cash to Choy, who passed away in 2008.
From May 2003 to April 2005, Jeong also admitted providing approximately $70,000 in cash, entertainment, travel expenses, stock options and other things of value as bribes to Holloway, in exchange for Holloway's use of official action to benefit SSRT. Jeong admitted making payments to curry favor with Holloway, who, as an AAFES general store manager for the Republic of Korea, was in a position to seek termination of AAFES' contract with SSRT following allegations of performance-related problems relating to SSRT's contractual obligations. After Jeong began paying Holloway, according to court documents, Holloway used official acts and influence to support the contractual relationship between SSRT and AAFES.
Jeong pleaded guilty to a five-count indictment before Judge Ed Kinkeade in the Northern District of Texas, charging him with one count of conspiracy, two counts of honest services wire fraud and two counts of bribery. At sentencing, scheduled for Sept. 16, 2009, Jeong faces up to five years in prison on the conspiracy count, as well as a $250,000 fine. He faces up to 20 years in prison for each honest services wire fraud count, as well as a $250,000 fine. He also faces up to 15 years in prison for each of the bribery counts, as well as a fine of $250,000 or three times the value of the things of value Jeong provided, whichever is greater. A sentencing date has not been set by the court.
On April 21, 2009, Holloway, 42, of Hamilton, Ga., pleaded guilty before Judge Clay D. Land in the Middle District of Georgia for his role in the conspiracy and for not reporting the bribes he admitted he accepted on his income tax returns. Holloway's sentencing date has not been set by the court.
The case is being prosecuted by Senior Trial Attorney Richard C. Pilger and Trial Attorneys Richard B. Evans and Eric G. Olshan of the Criminal Division's Public Integrity Section, headed by William M. Welch, II, Chief. The case was investigated by the Air Force Office of Special Investigations, the FBI's Dallas Field Office and the Internal Revenue Service - Criminal Investigation.
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