Keywords: invoice fraud, invoice, fraud, finance, electronic invoicing, e-invoicing, einvoicing

$30m federal invoice fraud

Ivan Ujvari | News | 23 May 2012

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A man and his son have pleaded guilty to their connection with a scheme that involved more than $30m of invoice fraud, bribes and money laundering.

In what is believed to be the largest bribery and bid-steering scheme in the history of federal contracting, Kerry Khan, a former program manager for the US Army Corps of Engineers and his son Lee Khan, pleaded guilty to the federal charges, leading to eight guilty pleas in the case.

Last October it was discovered that Mr Khan and another ex-program manager for the US Army, Michael Alexander, had been submitting fraudulently inflated invoices to the government since 2006 after obtaining government contracts for corrupt contractors.

These contractors, working under a major project known as TIGER, or Technology for Infrastructure, Geospatial, and Environmental Requirements, then gave the men millions of dollars in bribes, at times sent through other company names.

Personally, Mr Khan admitted to receiving more than $12m through the fake invoices.

All defendants are awaiting sentencing, but US Attorney Ronald Machen said at Mr Khan's case: "Today, the ringleader of the largest bribery and bid-steering scheme in the history of federal contracting accepted responsibility for his crimes.

"For his shocking abuse of his position of power, Kerry Khan faces more than two decades in prison. The homes, cars and jewelry he financed with bribes and kickbacks have now been returned to their rightful owner - the American taxpayer."

So far, the Justice Department has succeeded in recovering around $7.5m in bank account funds, cash and repayments, as well as properties and other assets.

The case highlights the vulnerabilities of non-electronic invoicing, which can be easily doctored and inflated. It can also take a significant amount of time before fraud is identified.

e-invoicing is one way to make payment processes more reliable and eliminate these types of fraud.