Three charged in U.S. presidential helicopter fraud case

Reuters News
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Posted: Nov 06, 2014 5:39 PM

By Harriet McLeod

CHARLESTON S.C. (Reuters) - A federal grand jury has indicted three men in a fraud scheme involving the helicopters used to transport the U.S. president and vice president, federal prosecutors said on Thursday.

The five-count indictment accused a Marine Corps officer, along with two retired military mechanics who now operate a defense contractor, of conspiring on a bid to do work for Marine Helicopter Squadron One, or HMX-1, according to the U.S. attorney's office in the Eastern District of North Carolina.

“This investigation highlights the unwavering determination of the Department of Justice to root out corruption in the military contracting process and to safeguard taxpayer dollars,” U.S. Attorney Thomas G. Walker said in a statement.

Craig Kolhagen, a chief warrant officer in the Marine Corps, was accused of leaking confidential information on the cost of the proposed bid contract, prosecutors said in a news release.

He traveled from Quantico, Virginia, where the HMX-1 squadron is based, to Camp Lejeune, North Carolina, to take part in a selection board evaluating the bidders, according to the indictment. Kolhagen had been ordered not to participate because of his close relationship to the other two defendants, it said.

Kolhagen rated Valour LLC, a Louisiana-based defense contractor that repairs helicopters for the military, higher than other bidders despite serious past performance concerns about the company, the indictment says.

The other defendants, Dennis Pennington and James Bowling, both executives at Valour and retired Marine helicopter mechanics, worked with him to inflate the cost estimate of the bid and draft a proposal that favored their company, the U.S. attorney's office said.

Pennington is the chief executive officer of Valour and Bowling is president.

"We have full confidence that Valour ownership will be proven innocent of the charges through due process," Tim Golden, its director of administration, said in a phone interview.

Pennington and Bowling are acquiring an attorney, he said.

The three men each face five charges of wire fraud,conspiracy to commit wire fraud, major fraud against the government and procurement fraud involving their actions between 2011 and late 2013.

(Editing by Letitia Stein and Eric Walsh)