Promogram

Distributor Indicted On Promo Products Fraud

A lieutenant colonel in the U.S. Army Reserve is accused of fraudulently supplying the Army Recruiting Command with foreign-made promotional products. In a news release on May 25, U.S. Attorney Joyce White Vance stated that a federal grand jury had indicted Lt. Colonel Frederick Lamar Burnett on three counts of fraud on promotional products contracts worth a total of $6.2 million. This comes after an investigation by the Defense Criminal Investigative Service and Army Criminal Investigation Demand.

Prosecutors, led by Assistant U.S. Attorney David H. Estes, contend that Burnett, president of Huntsville, AL-based distributorship Lamar International Inc., defrauded the Defense Department on three contracts for baseball caps and backpacks to be given to Army recruits between 2005 and 2009. They accuse Burnett of using Chinese-made backpacks and baseball caps to fill the orders, and of hiring workers, whom he paid in cash, to remove the foreign labels and repackage the items.

The first government contract, awarded to Lamar International in 2005, was for 209,706 baseball caps to be supplied over three years. The government paid Burnett $1.4 million. The second contract, in 2007, was for 590,042 caps, for which Burnett received $4 million. Soon after, a bid competitor claimed Burnett would only have been able to submit his low bid if he were using foreign suppliers, but the government allowed Burnett to fill the order after he submitted documentation stating that only US-made products would be used. Under the third contract, awarded the same year, Lamar International supplied 146,375 backpacks, for which the government paid $1.1 million.

As part of each bidding process, Burnett assured the Army that all products would meet the requirements of the Buy American Act, which requires that the government prefer American-made products in its purchases, and the Berry Amendment, which restricts the Department of Defense from purchasing items not produced in the US, and would conform to all federal regulations. Additionally, two of the contracts included instructions, in all capital letters, that the products must be 100% US-made.

Prosecutors are now seeking $6.2 million from Burnett to give back to the government as proceeds resulting from illegal activity. The maximum penalty for wire fraud is 20 years in prison and a $250,000 fine.