Reed, Inhofe Statement on Guilty Pleas in Military Housing Fraud Case

Statement

Two former managers at a major property management firm have pleaded guilty for their roles in a scheme to defraud the U.S. Air Force in connection with privatized military housing contracts.

The former employees served in roles as regional manager and community manager, respectively, for a major property management firm that managed housing communities created under the Military Privatized Housing Initiative at Lackland Air Force Base (AFB), Travis AFB, Vandenberg AFB, Tinker AFB, Fairchild AFB and other U.S. military installations. The former employees admitted that they conspired with others to manipulate and falsify maintenance information reports so that the reports falsely reflected that the company had met performance maintenance objectives, when it had not. This allowed the company to submit requests to the Air Force for payment of performance incentive fees to which it was not entitled. These actions had the effect of falsely inflating the company's maintenance performance objectives, resulting in the company receiving approximately $2.5 million in performance incentive fees.

U.S. Senators Jack Reed (D-RI) and Jim Inhofe (R-OK), Chairman and Ranking Member of the Senate Armed Services Committee, issued the following statement after today's court hearing:

"When we first heard reports of alleged falsified records back in July 2019, we were disturbed. Now that the Department of Justice is involved, and has found that this fraud was carried out at the direction of company leadership, and that due to such fraudulent actions, "substantial parts of the housing community fell into disrepair, leaving service members living in substandard conditions,' we are absolutely outraged. At the same time, we are glad justice is being served, and want to reiterate our commitment to doing right by our military families. As leaders of the Senate Armed Services Committee, we will be keeping a close eye on the results of this case, which remains ongoing as we do not know how high up this conspiracy may go.

"Should any other charges pan out, we expect all criminals involved to be held accountable to the fullest extent of the law. With the help of the Department of Justice, the Department of Defense and military services must work to ensure this never happens again.

"Military housing companies must take every step to regain the trust of our military families. An easy place to start is finalizing the Housing Bill of Rights and making sure it includes three key elements as we directed in the Fiscal Year 2020 National Defense Authorization Act: dispute resolution, a common lease, and ability to withhold rent. It's been well over one year since this was signed into law -- and more than two years since our first hearing on the matter -- and it's unacceptable that DOD has once again delayed formalizing these critical protections for our military families. After hearing countless complaints from military families starting over two years ago, we led the charge to address widespread problems with military housing, and we are determined to see this through on behalf of those brave families."

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