Beyung S. Kim, Procurement Fraud, Virginia 2018

NEWPORT NEWS, VA – A Hampton-based defense contractor, Iris Kim, Inc. (aka I-Tek), its owner, and six employees are facing federal charges in a massive procurement fraud scheme that allegedly siphoned millions from U.S. Department of Defense contracts. The indictment, unsealed today, details a years-long conspiracy to falsely obtain government funds by circumventing established regulations.

Beyung S. Kim, 61, of Newport News, owner of I-Tek, is at the center of the alleged scheme, alongside employees Seung Kim, 30, of Newport News; Dongjin Park, 53, of Yorktown; Chang You, 61, of Yorktown; Pyongkon Pak, 53, of Toano; and Li-Ling Tu, 57, of China. The indictment alleges that from at least 2011 through 2018, the group conspired to import goods – including supplies for the U.S. Marine Corps, U.S. Army, U.S. Coast Guard, and various state National Guards – from China, then illegally relabel them as “Made in the USA.”

The United States paid I-Tek approximately $8.1 million between January 2012 and December 2018 based on invoices related to the fraudulent contracts. However, the total revenue generated by I-Tek from these contracts reached a staggering $24 million, with over $20 million stemming from deals where goods were originally sourced from China. This blatant disregard for contract stipulations allowed I-Tek to unfairly compete for and secure government business.

The scheme allegedly exploited set-aside preferences designed to benefit American manufacturers. The indictment states the defendants used a “nominee company” to conceal the Chinese origins of the goods and installed a puppet officer within I-Tek to fraudulently qualify for contracts reserved for specific types of businesses. This wasn’t just a simple mislabeling issue; it was a calculated effort to deceive the government and profit from a rigged system.

“This case represents a serious breach of trust with the American taxpayer,” said G. Zachary Terwilliger, U.S. Attorney for the Eastern District of Virginia, in a statement. “The defendants allegedly prioritized profit over integrity, jeopardizing the supply chain and undermining the fairness of government contracting.” Raymond Villanueva of ICE Homeland Security Investigations, Robert E. Craig of DCIS, and Gregory Scovel of NCIS Norfolk also contributed to the announcement.

Assistant U.S. Attorneys Brian J. Samuels and Matthew Mattis are prosecuting the case, with significant assistance from the U.S. Small Business Administration’s Office of the Inspector General and the U.S. Department of State. An indictment is merely an accusation, and all defendants are presumed innocent until proven guilty. Court documents can be found on the U.S. Attorney’s Office website for the Eastern District of Virginia and on PACER under Case No. 4:20-cr-57.

MORE FEDERAL CRIME NEWS

White Collar Crime

Mursuli Caballero, Healthcare Fraud, Florida 2018

Jan 15, 2018

White Collar Crime

Arthur Newman, Asbestos Crime, FL 1998

Sep 9, 1997

White Collar Crime

Anthony Schwabb, Money Laundering, Nevada 1999

Jan 15, 1999

White Collar Crime

Sergio Gonzalez-Delgado, Money Laundering, Nevada 2002

Jan 15, 2002