US Marine gets 6 years for Iraq contracts fraud

WASHINGTON (AFP) – A US Marine captain was sentenced to six years in federal prison for conspiring with his wife to skim nearly $1.7 million from government contracts in Iraq.

Eric Schmidt, who still serves with the First Marine Division at Camp Pendleton, California, pleaded guilty in May to conspiracy to commit wire fraud and filing a false tax return that hid the illicit income from his scheme.

His wife Janet pleaded guilty to a tax offense for failing to report the income she received from her illicit dealings. She faces up to three years behind bars and is due to be sentenced on March 7.

According to court documents, the 40-year-old Marine directed contracts to an Iraqi firm, the Al-Methwad company, during his yearlong deployment to Iraq in 2008.

After Al-Methwad was awarded the contract, Jane Schmidt used funds from the company to purchase fewer or inferior products than those required by the contract and got them delivered to Marines in Iraq.

Her husband would then falsely certify that Al-Methwad had provided the number and type of goods required.

During the sentencing hearing, US District Judge Virginia Phillips noted that in addition to their illicit proceedings from their scheme, the Schmidts caused military personnel to obtain fewer first aid kits and explosive detecting devices.

The couple caused the US Defense Department to lose $1.69 million and the Internal Revenue Services to suffer losses of nearly $460,000. They were ordered to pay full restitution to both agencies.

During the investigation, authorities seized two California properties, two luxury vehicles and about $40,000 in cash from the Schmidts.

“The Schmidts defrauded US taxpayers, cheated the Iraqi people and betrayed the trust placed in them,” said Stuart Bowen, the special inspector general for Iraq reconstruction. “They will now pay the price for their criminal wrongdoing.”

Chris Hendrickson, special agent in charge of the Defense Criminal Investigative Service Western Field Office, said the fraud was an example of corruption having a direct impact on the military capabilities of Marines in Iraq.

“Iraqi contractors bought this Marine with cash, gifts, and a cut of their contracts,” he added.