Plaistow Government Contractor Pleads Guilty To Fraud

CONCORD, NH — A government contractor from Plaistow pleaded guilty Monday to making false claims to the federal government. In 2012 and 2013, Enco Industries, Inc. had received more than $683,000 for supplying hazardous materials mats to the U.S. Department of Defense, for use in the U.S. military. According to the U.S. Attorney's Office, during that time Enco was stating that the mats met the strict requirements listed in its contract, when in fact they were not.

“Fraud is never a victimless crime,” said Special Agent in Charge Leo S. Lamont of the Naval Criminal Investigative Service (NCIS), one of the agencies that conducted the investigation. “This case of using inferior and substandard materials damaged the readiness and safety of U.S. forces. The victims are not just our men and women in uniform, but all American taxpayers. NCIS will continue to tirelessly pursue all those who seek to take advantage of the Department of the Navy and its interests while keeping the procurement system fair and honest."

Enco, of Plaistow, has been a government contractor since 2004. In January 2012, the company submitted a bid to supply 96,000 hazardous material mats to the U.S. Department of Defense's Defense Logistics Agency, which purchases supplies for the U.S. military. The mats, which are used to absorb flammable liquids, would be supplied over a five-year period.

The Defense Logistics Agency awarded the contract to Enco in June 2012. Among the requirements listed in the contract was that the mats meet standards for static decay and surface resistivity, and that the contractor purchase the mats from a company in Tipton, Pennsylvania, or another Pennsylvania company. During the bidding process, Enco stated that it would buy the mats from the Tipton company, but in fact Enco had no intention of doing so, according to the U.S. Attorney's Office.

Enco provided approximately 21,700 hazardous mat units to the Defense Logistics Agency between June 2012 and October 2013. To get payments, the Enco's office manager submitted claims to the Department of Defense, and most of the claims were false — only seven of the units were manufactured by the Tipton company, according to the U.S. Attorney's Office. And based on those claims, Enco received a total of $683,513.

In August 2013, an independent company concluded that several mats provided by Enco did not meet the contract's requirements for static decay or surface resistivity. The Defense Logistics Agency sent a letter to Enco about the issue the following October. In response, Enco stated that they had to buy the mats from a non-approved manufacturer because the amount charged by the Tipton company was cost-prohibitive. Enco also stated that at that time, they could not identify that non-approved manufacturer — and this was a false statement also, because Enco knew the manufacturer from whom it had purchased the mats, the U.S. Attorney's Office has stated.

In February 2014, Enco's president spoke to special agents from NCIS and Defense Criminal Investigative Service (DCIS), stating that before submitting the bid Enco received price quotes from two approved manufacturers, and that it chose the Tipton company because its prices were lower. According to the the U.S. Attorney's Office, that was a false statement because at the time the bid was submitted, Enco actually intended to buy the mats from a non-approved manufacturer.

Company officials pleaded guilty to the false statements on Monday. A sentencing hearing is scheduled for Sept. 11, and the company could be placed on probation for up to five years and find up to $500,000, according to the U.S. Attorney's Office.

“Defense procurement fraud is a serious crime that can jeopardize the safety of military personnel,” said U.S. Attorney Scott Murray. “Those who seek to do business with the government should be truthful and candid. We will always work closely with our law enforcement partners to identify and prosecute individuals or entities that seek to defraud the government or who are dishonest in their dealings with federal agencies.”

This case was investigated by NCIS, DCIS, the Air Force Office of Special Investigations Office of Procurement. The prosecutor for this case is U.S. Attorney Robert Kinsella.