NEWARK, N.J. - A New Jersey-based defense contracting company and its president pleaded guilty Monday to contracting fraud following an investigation by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI).
Eric Helf, 38, president of Staff Manufacturing Corporation (Staff Gasket), admitted April 18 to military contract procurement fraud for selling replacement parts for use in military operations, U.S. Attorney Paul J. Fishman announced. Staff Gasket also pleaded guilty to violating the Arms Export Control Act.
Staff Gasket, located in Alpine, N.J., pleaded guilty to two charges of wire fraud and an export control violation. Helf, of New York, N.Y., pleaded guilty to one count of conspiracy to commit wire fraud in connection with the scheme. Both Helf and the company entered guilty pleas before U.S. District Judge William J. Martini in Newark federal court.
According to documents filed in this case and statements made in court, from August 2004 through March 2006, Staff Gasket entered into contracts with the U.S. Department of Defense (DoD) to provide replacement parts for use in military operations. Many of the parts to be supplied under DoD contracts were deemed Critical Application Items that were required to be manufactured in the United States to the exact specifications in the contracts.
Instead, Staff Gasket contracted with manufacturers outside the United States which manufactured the items at a much cheaper price per unit than the U.S.-made product.
As a result of its cheaper and inferior product, Staff Gasket was able to win DoD contract awards by using lower bids that violated the terms required by DoD for requests for quotes and contracts. Staff Gasket's actions caused DoD to sustain $751,091 in losses in connection with the fraudulent contracts. Helf admitted to a particular instance of wire fraud relating to one of the fraudulently obtained contracts.
Under the terms of the plea agreement, Staff Gasket agreed to pay full restitution to DoD for the losses, and to forfeit an additional $50,000. Staff Gasket is also subject to a fine of between $728,000 and $1,456,000. Helf agreed to forfeit $49,926.
The count to which he pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is currently scheduled for Aug. 2.
U.S. Attorney Fishman credited special agents from DoD's Defense Criminal Investigative Service, under the direction of Special Agent in Charge Edward T. Bradley, and ICE HSI Special Agent in Charge Peter T. Edge, for the investigation leading to the guilty pleas. The government is represented by Assistant U.S. Attorney Philip James Degnan of the U.S. Attorney's Office National Security Unit in Newark.