Stafford Couple Sentenced for $53M Fraud Against U.S. Government

The former State Department contract employee and her husband steered work to their own company.

Gavel.  Patch file photo.
Gavel. Patch file photo.
Kathleen D. McGrade and Brian C. Collinsworth were sentenced Dec. 6 for committing major fraud against the government, conspiracy to launder monetary instruments and engaging in unlawful monetary transactions, the United States Attorney’s Office for the Eastern District of Virginia reported in a press release.  

Sentences of 24 and 18 months incarceration, respectively, were handed down by U.S. District Judge Liam O’Grady. 

The Stafford County residents admitted that McGrade was a contract employee for the Department of State and performed the role of a contract specialist for an office that awarded construction contracts for work done at U.S. embassies worldwide, court records showed.  Collinsworth worked at one of the companies that received contracts. 

In 2006, the defendants married, but did not tell others at the Department of State.  The defendants started a company, the Sterling Royale Group, or SRG, with McGrade being the president and Collinsworth the vice-president and project manager. 

"In late 2007, McGrade caused a State Department contracting officer to sign a contract between the Department of State and SRG, when McGrade failed to disclose her role in SRG, her marriage or that proper contracting competitive procedures had not been followed," the press release stated.

The contract made SRG eligible to receive task orders for work to be done at embassies and McGrade began steering work to the company.  She acted as the contract negotiator between the Department of State engineers responsible for getting the jobs done, on the one hand, and Collinsworth, who was acting on behalf of SRG and the subcontractors, on the other. 

"Between 2008 and 2011, McGrade caused Department of State contracting officers to sign 17 task orders awarding work worth almost $53 million," the press release said. 

In 2010, the defendants also lied about their marriage to investigators conducting McGrade’s background investigation regarding renewal of her security clearance.

In the summer of 2011 a news article disclosed the defendants’ marriage, and the Department of State terminated her employment.  The Department of State, however, had paid SRG about $39 million, and after the defendants had paid their subcontractors, they still had millions of dollars.  Among other things, they bought houses, a condominium, a yacht, a Lexus automobile, jewelry and a Steinway piano with the fraudulently obtained money, court records showed. 

The defendants were ordered to forfeit all of those items in the amount of $7,864,795.

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JimTh December 24, 2013 at 08:06 AM
I am trying to figure out what the difference is between what these folks did and michele obamas giving her college buddy hundreds of millions of dollars to create a website for obamacare that failed miserably. Can someone explain the difference please or is it just that when your are 1st lady so to speak you are allowed a certain amount of corruption and waste?


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