A federal jury has convicted two defense contractors – including a Coronado resident – and a corporation of conspiracy and bribery in connection with a fraud and corruption scheme at Naval Air Station North Island.
The defendants, including Centerline Industrial Inc., a Poway defense contractor, were charged with conspiracy to commit wire fraud, bribery and money laundering.
The executives who were convicted are:
- Robert Ehnow, 46, of Coronado, owner and president of Poway defense contractor L&N Industrial Tool & Supply Inc.
- Joanne Loehr, 52, of La Jolla, owner and operator of Centerline.
The case went to trial Feb. 20 and the jury issued verdicts Monday. After two days of deliberations, jurors returned verdicts of guilty for each defendant on the conspiracy count and on one or more bribery counts.
The panel also returned verdicts of not guilty for each defendant on one or more bribery counts.
Sentencing is set for May 20.
During the course of the conspiracy, the Department of Defense made a total of $6.5 million in payments to:
- Ehnow's company, L&N, which received more than $3 million.
- Centerline, which obtained in excess of $1.5 million.
- Carlsbad-based X&D Supply Inc., which was paid over $2 million.
As part of the conspiracy, according to prosecutors, the contractors provided Navy officials with a wide range of personal benefits, including cash, checks, retail gift cards, flat-screen televisions, massage chairs, bicycles, model airplanes, in return for millions of dollars worth of government orders.
The contractors also prepared and submitted fraudulent invoices to the Department of Defense, making it appear that they were billing the government for goods and services within the scope of legitimate contracts.
In fact, the government was paying for the cost of bribes provided to the Navy officials. Compounding the cost of the fraud, the defense contractors also routinely charged a markup on the fraudulent invoices, according to the evidence.
L&N and Centerline also engaged in money laundering by using their government contract to fraudulently bill the Navy for items never supplied, and then pass along the criminal proceeds to Centerline.
L&N, also known as Mardoc Corporation, filed for Chapter 7 bankruptcy in June 2011. Centerline remains in business.
The verdicts bring to 11 the total number of defendants convicted in the scheme. Of the eight previously convicted, five were Navy officials who admitted to receiving a total of more than $1 million in cash, goods and services for their personal use, all fraudulently charged to and paid for by the government.
The other defendants previously convicted were owners or sales managers of San Diego-area defense contracting firms.
The investigation grew out of citizen complaints that followed the July 2009 indictment of six individuals on fraud and corruption charges centered at the Space and Naval Warfare Systems Command in San Diego.
– City News Service contributed to this report.