News » Shell Corporations Facilitate Fraudulent DOD Contracts

Shell Corporations Facilitate Fraudulent DOD Contracts

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April 29, 2020

Government contracts are subject to domestic ownership and production requirements, but illegitimate contractors hide behind shell corporations to skirt those and other conditions. For example, last year the Dept. Of Defense discovered that network-linked surveillance cameras on many military bases and aircraft carriers had cybersecurity vulnerabilities that could enable hackers to take control of the cameras and obtain the data they record. The DOJ alleges that the supplier, New York-based Aventura Technologies, misrepresented the origin of the cameras by disguising its illegal importation through the use of shell corporations. A review of a small slice of DOD contracts revealed that the agency has been defrauded of hundreds of millions of dollars through deceptive shell corporations. Some of the illegal importers have connections to adversary governments. Military tech with serious cybersecurity vulnerabilities is among the items the Pentagon procured. The review concludes that a lack of beneficial ownership information on contractors has played a major role in compromising Defense supply chains.

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