EL PASO, Texas - A former local resident was arrested on Wednesday in connection with a scheme to defraud the U.S. military and commit money laundering by allegedly selling stolen U.S. military ammunition. Special agents with U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) made the arrest in Carson City, Nev.
Chad Eric O'Kelley, 40, a former El Paso resident, was arrested at his home. ICE HSI special agents assigned to the Southwest Border Financial Operations and Currency Unified Strike Force (FOCUS) and the Defense Criminal Investigative Service's (DCIS) Office of the Inspector General (OIG) in El Paso conducted the investigation and traveled to Nevada to execute the federal arrest warrant.
O'Kelley had his initial appearance Thursday in Reno, Nev., before U.S. Magistrate Judge Valerie P. Cooke who ordered him to report for further court hearings in the El Paso Division of the Western District of Texas.
O'Kelley is charged by a federal grand jury indictment with conspiracy to defraud the United States and money laundering.
According to the indictment, in early 2007, O'Kelley was employed as the Iraq deputy in-country manager stationed at the Baghdad Operations Center by Security Operations Consulting (SOC), a private company holding U.S. Department of Defense contracts. O'Kelley's job was to ensure that all bases of operation in Iraq under contract with SOC were supplied with ammunition and other logistical support and supplies.
The indictment alleges that beginning in January 2007 and continuing until July 2008, O'Kelley conspired with others to illegally obtain ammunition belonging to the United States, then resell the ammunition to private individuals and businesses in Iraq. At times, O'Kelley sold the ammunition back to the United States and coalition forces effectively requiring the government to pay for the ammunition twice.
The indictment also alleges that O'Kelley and others, using Federal Express and body couriers, shipped bulk currency, more than $10,000 at one time, derived from these transactions from Iraq to the United States to distribute among the conspirators. After being promoted in August 2007 to Iraq operations senior program manager at SOC headquarters in Minden, Nev., O'Kelley continued to receive proceeds from the scheme via Fed Ex. The indictment alleges that O'Kelley took the proceeds and subsequently made four structured cash deposits - each less than $10,000- into an El Paso bank account to avoid financial transaction reporting requirements.
If convicted of the conspiracy charge, O'Kelley faces up to five years in federal prison for the charge of conspiracy to defraud the U.S. government, and up to 20 years for the money laundering charge. The government is also seeking to forfeit any traceable proceeds from the scheme.
"HSI uses force multipliers such as the Southwest Border FOCUS to, among other things, identify, arrest and help prosecute individuals who take advantage of their positions to fraudulently obtain ammunition and equipment directly from the U.S. government for personal financial gain," said Manuel Oyola-Torres, special agent in charge of ICE HSI in El Paso. "This case identified an illegal scheme and vulnerability that seriously threatened homeland security."
The Southwest Financial Operations and Currency Unified Strike Force (FOCUS) is a multi-agency financial strike force based in El Paso that detects and targets a wide variety of financial crimes. It is composed of the following agencies: ICE HSI, Ithe nternal Revenue Service (IRS), the Drug Enforcement Administration (DEA), the U.S. Secret Service, and the Texas Alcohol and Beverage Commission (TABC). Each participating agency uses its own unique authorities to enhance the task force's capabilities. Strike force members target financial crimes such as money laundering, mortgage and bank fraud, structuring, trade-based money laundering, money transmitting businesses/couriers, bulk cash smuggling and other financial crimes. The Southwest Border FOCUS also aggressively targets assets illegally derived by criminal organizations.
An indictment is merely a charge and should not be considered as evidence of guilt. The defendant is presumed innocent until proven guilty in a court of law.