Former defense contractor admits defrauding US military with foreign aircraft parts

TRENTON, N.J. — The former owner of a New Jersey defense contracting business admitted Thursday to supplying the U.S. Department of Defense (DOD) with foreign made replacement parts on contracts that only allow products manufactured in the United States. The guilty plea follows an investigation by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) and the DOD’s Defense Criminal Investigative Service Northeast Field Office.

Mehmet Karatokus, 39, of Ankara, Turkey, pleaded guilty to one count of mail fraud.

According to court documents,  Karatokus, a Turkish citizen who became a United States resident in 2013, was the founder and owner of Diamond Parts, a company that supplied the DOD with replacement parts for aircraft and other defense items. When he registered the company with the DOD, Karatokus provided a location in Red Bank, New Jersey, even though Diamond Parts did not have manufacturing capabilities in the United States. The investigation revealed that Diamond Parts was actually a shell company created for the purpose of obtaining DOD contracts that Turkish-based manufacturers were not permitted to receive.

From January 2012 to September 2013, Karatokus submitted fraudulent bids stating that Diamond would provide parts manufactured in the United States, when in fact, the items were manufactured in Turkey. Karatokus admitted that in March 2012, he submitted a false bid to provide the DOD with replacement parts for the Hercules C-130 aircraft. Based on Karatokus’ false bid, Diamond Parts was awarded the contract, which was valued at $10,350. Shipping records showed that the parts were sent from Turkey Sept. 25, 2012, to a packaging and shipping company in Clifton, New Jersey. The parts were subsequently provided to the DOD Oct. 10, 2012. DOD testing later revealed that the parts had dimensional nonconformities, exhibited poor workmanship and lacked critical markings which could result in a safety issue. As a result, the parts were suspended from use.

The charge to which Karatokus pleaded guilty carries a maximum penalty of 20 years in prison and a fine of $250,000. As part of the plea, Karatokus must pay restitution in the amount of $641,454. Sentencing is scheduled for July 15, 2015.