John Wolz

A South Carolina distributor committed suicide and her twin sister pleaded guilty after collecting nearly $1 million to ship two 19-cent lockwashers to the U.S. Department of Defense.\ The criminal charges were part of an investigation involving more than $20 million the sisters billed the Pentagon since 2000.
Charlene Corley, 47, and C&D Distributors LLC of Lexington, SC, pleaded guilty to wire fraud and money laundering conspiracy charges August 16 in federal court in Columbia, SC. Corley could be sentenced to 20 years in prison and face a $250,000 fine for wire fraud and 20 plus years and $500,000 fine for money laundering.
Darlene Wooten, Corley”s twin and co-owner of C&D, committed suicide in October 2006 after being contacted by investigators.
The Pentagon blamed a flawed system designed to rush supplies to troops in Iraq and Afghanistan, which let the small-parts supplier collect $998,798.38 for the washers. C&D also billed and got paid by the Pentagon $455,009 to ship three $1.31 machine screws to Iraq and $293,451 for an 89-cent split washer shipped to Patrick Air Force Base in Florida.
C&D had been submitting bills since 2000 and continually raised amounts over the years. Federal prosecutors said C&D billed the government $20.5 million in fraudulent shipping costs prior to the lockwashers.
The DoD announced that the loopholes in its automated purchasing system have been changed.
The investigation started with a DoD purchasing agent noticing a $969,000 bill for shipping two 19-cent washers last September following an investigation of the previous $998,798 payment for two washers.
Corley and Wooten submitted online bids for hardware components, plumbing fixtures, electronic equipment and other items, according to court papers.
Related shipping claims were processed automatically “to streamline the resupply of items to combat troops in Iraq and Afghanistan,” said a statement by Reginald Lloyd, U.S. attorney for the district of South Carolina. C&D fabricated shipping costs into the hundreds of thousands of dollars even though the value of the items rarely was over $100.
The DoD Logistics Agency review shows fraudulent billing is “not a widespread problem” and any other overcharges didn”t come close to C&D.
The Pentagon hopes to recoup the $20.5 million by selling the beach houses, luxury cars, boats and jewelry the twins spent their profits on.
C&D, Sisters “Unknown to Fastener Industry
South Carolina-based C&D is not a member of neither the Southeastern Fastener Association nor the National Fastener Distributors Association, and multiple fastener leaders in the area told FastenerNews.com they had never heard of the sisters or their distributorship.
Several fastener suppliers reported that C&D is not one of their customers.
The situation is similar to a 2005 conviction of a Texas businessman operating a fastener distributorship in Colorado. American Material Resources was not a member of the Southwestern Fastener Association or Western Association of Fastener Distributors or NFDA. Several fastener executives in the region said they had never heard of the distributor.
In that case president and owner Greig Placette, 54, pleaded guilty to one count of fraud and two counts of wire fraud and sentenced to 23 months in federal prison for defrauding the DoD small business program. American Material Resources sold industrial supplies ranging from nuts and bolts to heavy equipment.
The small business preference program was used by the government to simplify and expedite purchasing supplies in orders of $2,500 or less. The DoD issued calls for orders of not more than $2,500 on a rotating basis. Participating contractors were limited to a flat markup of $30 per call, or 30% of the cost of the goods sold, whichever was greater. According to the indictment, Placette charged significantly more on many of the orders. �2007 FastenerNews.com