Sadly corruption occurs anywhere there is money to be made, as we learned from the recent indictment of David Kennedy, director of operations for a company identified only as Company A. The Department of Justice (DoJ) indictment reveals Kennedy was paid $436,000 in kickbacks when he awarded subcontracts to Gary Hamby, the owner of Southern Atlantic Construction (SAC) for the construction of a Sensitive Compartmentalized Information Facility (SCIF) at Fort Gordon and the renovation of the Fort Benning Starship Barracks.

How the dirty deed went down

Company A was awarded two contracts by the Army Corps of Engineers. One was to renovate the Fort Benning barracks and the other to build the Fort Gordon SCIFs. Kennedy, in his position as director of operations entered into a clandestine agreement with Hamby for Hamby’s firm SAC to be awarded these construction contracts. The indictment describes a meeting in early 2015 where Kennedy and Hamby devised a scheme where SAC would be awarded contracts by Kennedy – if he provided a kickback. Shortly after the meeting, Hamby sent Kennedy an $800 box of cigars.

Their scheme included the creation of shell companies, one each by Hamby (GH Construction Consultants, LLC) and Kennedy (Alexis Development & Investments). Hamby’s shell company would submit bids in concert with Hamby’s SAC’s bid and Kennedy’s company Alexis would be a sub-contractor to the sub – i.e. the funnel by which Hamby would kickback funds to Kennedy.

The Fort Benning project, awarded in May 2015, saw Hamby’s SAC awarded $537,500 contract for the renovation. When all was said and done, a total of $1,383,306.18 was paid to Hamby via purchase orders and various modifications to the original contract.

The Fort Gordon SCIF project, awarded in August 2015 to Company A for $7,771,495 was a sole-source contract, to which Kennedy and the SCIF project manager for Company A , Phillip Taylor, awarded SAC a subcontract in the amount of $34,623.  The catch was, SAC was never going to conduct any of the SCIF work, but would be submitting invoices from SAC and his shell company GH Construction. The invoices would be paid by Company A and then Hamby would kick back a portion to Kennedy.  Kennedy’s shell company was the recipient of the payments from Hamby, so that the funds did not land into Kennedy’s personal account.

All told, Hamby paid Kennedy $463,000 in kickbacks, and of course that box of $800 cigars.

The aftermath of fraud

Hamby was arrested and pleaded guilty, testified against Kennedy and Phillips, and will be sentenced in October 2019. Kennedy, arrested and arraigned, has pleaded not-guilty. If found guilty, Kennedy will forfeit $463,000 and spend an indeterminate amount of time in prison.

The Augusta Chronicle notes that Fort Gordon Chief of Public Affairs Geralyn Noah issued a statement: “Fort Gordon takes seriously, and will turn over for prosecution, those who may have defrauded the government, including any act of kickback, which includes any money, fees, commission, credit, gratuity, gift, thing of value or compensation of any kind.”

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Christopher Burgess (@burgessct) is an author and speaker on the topic of security strategy. Christopher, served 30+ years within the Central Intelligence Agency. He lived and worked in South Asia, Southeast Asia, the Middle East, Central Europe, and Latin America. Upon his retirement, the CIA awarded him the Career Distinguished Intelligence Medal, the highest level of career recognition. Christopher co-authored the book, “Secrets Stolen, Fortunes Lost, Preventing Intellectual Property Theft and Economic Espionage in the 21st Century” (Syngress, March 2008). He is the founder of