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US v. Modrich Information PDF
US v. Modrich Information PDF
FILED 9 0CT71814:33JSDC~P
DISTRICT OF OREGON
PORTLAND DIVISION
Defendant.
COUNT ONE
(Wire Fraud)
(18 U .s.c. § 1343)
Tech), a limited liability company with a principal place of business at 29485 Airport Road in
Eugene, Oregon. Med-Tech imported medical, sewn, and equine goods and marketed and resold
several of these products to emergency, fire and rescue professionals and entities. Med-Tech
imported merchandise primarily through a trading company in China that used a variety of
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Revised April 20 I 8
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IMPORT PROCEDURES
3. Title 19, United States Code of Federal Regulations, generally prescribed the
requirements and procedures for the "entry" of imported merchandise through a port of entry into
the United States. Importation procedures required the submission of entry papers containing
import data that was relied upon by the Department of Homeland Security, Customs and Border
Protection (Customs) to assess duties, collect statistics on imported merchandise, and determine
compliance with applicable law and regulations. Entry papers and import data generally
included the importer's identification number, the merchandise's identification number, and a
4. Regulations required a commercial invoice to set forth: (1) the port of entry; (2)
the identities of the buyer and seller; (3) a detailed description of the merchandise; (4) the
quantity in weights and measures of the merchandise; (5) the value of the merchandise, which is
customarily the price actually paid or payable to the supplier; (6) an itemized list of charges; (7)
the country of origin; and (8) the identity of the person or entity invoicing the merchandise,
among other things. To assess import duties, Customs relied upon the authenticity of, and the
5. Import duties were taxes assessed on the value, classification and price of the
imported merchandise and generally accrued when the merchandise arrived within a United
States Customs port of entry. Customs determined the amount of import duties owed based upon
the importer's representation as to value, classification and price of the imported merchandise as
taken from the commercial invoice and read in conjunction with the applicable rate of duty from
the Harmonized Tariff Schedule of the United States (HTSUS), which was a standardized duty
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and coding classification system. The payment of import duties was a personal liability of the
importer.
services of "Customs brokers," who were licensed to transact Customs business, including the
filing of entry papers, the submission of import data and the payment of import duties, based on
and submitted import data, including merchandise value, classification and price information
from commercial invoices, to Customs through the Automated Broker Interface (ABI), a
voluntary program that permitted qualified participants to electronically file entry papers and
submit import data with Customs. MODRICH's and Med-Tech's Customs brokers routinely
filed entry papers and submitted import data, including commercial invoices, electronically to
8. From on or about January 1, 2013, through on or about March 31, 2015, in the
District of Oregon and elsewhere, MODRICH and others devised and engaged in a scheme and
artifice to defraud the United States out of money, namely import duties owed on imported
merchandise.
and maintained fraudulent entry papers that included t_wo versions of the same commercial
invoice: (a) a supplier invoice that contained the actual value and purchase price of the
merchandise which MODRICH and others used in making payments owed to the supplier; and
(b) a fraudulent invoice that contained a lower value, misclassified merchandise or lower
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purchase price of the merchandise which MODRICH and others caused to be transmitted to
Customs.
10. As a further part of the scheme to defraud, MODRICH and others submitted, and
caused to be submitted, fraudulent entry papers and import data to Customs through the ABI,
namely fraudulent commercial invoices with materially false representations regarding the
11. As a further part of the scheme to defraud, MODRICH caused Customs to rely
upon Med-Tech 's materially false commercial invoices that MODRICH submitted, or caused to
12. As a further part of the scheme to defraud, after submission of the materially false
commercial invoices to Customs, MODRICH and others paid thousands of dollars less in import
13. On or about the date set forth below, in the District of Oregon and elsewhere,
MODRICH, for the purpose of executing a scheme and artifice to defraud the United States of
money as to a material matter, and for obtaining money by means of materially false and
fraudulent pretenses, representations, promises, and omissions, did knowingly transmit and cause
to be transmitted the following wire communication in interstate or foreign commerce to the ABI
in Virginia:
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COUNT TWO
(Wire Fraud)
(18 u.s.c. § 1343)
16. Paragraphs 1 and 2 of Count One are hereby re-alleged and incorporated by
17. In or about April of 2014, MODRICH and Med-Tech hired a financial consulting
and professional services firm (Firm) to review and analyze Med-Tech's Quickbooks data files
SET-ASIDE PROGRAM
18. The Small Business Act of 1953 promoted the participation of small businesses
To comply, federal government agencies utilized the set-aside program to encourage certain
businesses to obtain and perform federal government contracts and streamlined the ability of
these business to participate in federal contracting. The set-aside program limited competition to
with agencies through Multiple Award Schedules (MAS). Through MAS, an agency is
permitted to order and purchase directly from suppliers, all of whom are already vetted for
participation in the program. In doing so, a federal agency avoids the traditional public bidding
process, receives volume discount pricing for commercial products and services, shortens
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procurement lead times and lowers administrative costs. Those businesses participating in the
participate in the set-aside program on the basis it was a woman-owned business, small business
and woman-owned small business. Pursuant to the set-aside program, the Firm was eligible to
secure federal government contracts through the MAS without further competition.
21. From on or about September 11, 2014, through on or about September 16, 2014,
in the District of Oregon and elsewhere, MODRICH and others devised and engaged in a
scheme and artifice to defraud the United States out of money, namely proceeds payable from
22. In furtherance of this scheme to defraud, MODRICH and others falsely and
fraudulently advertised, promoted and represented, and caused to be advertised, promoted and
represented on its website that Med-Tech was a GSA set-aside business, woman-owned business,
small business and woman-owned small business, and held set-aside contract number XX-XXX-
0509Y.
23. As a further part of the scheme to defraud, MODRICH and others falsely and
products and services, all while materially misrepresenting Med-Tech was a GSA set-aside
business, woman-owned business, small business and woman-owned small business, and held
24. As a further part of the scheme to defraud, MODRICH and others falsely and
fraudulently submitted via MAS a quote for 89 pairs of firefighter boots in the amount of
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Case 3:18-cr-00466-BR Document 1 Filed 10/09/18 Page 7 of 7
$26,343.11 , all while materially misrepresenting the Firm as the supplier and set-aside contract
25. A federal government agency relied upon the materially false representations
made by MODRICH and others in procuring a contract to purchase 89 pairs of firefighter boots
26. On or about the date set forth below, in the District of Oregon and elsewhere,
MODRICH, for the purpose of executing a scheme and artifice to defraud as to a material
matter, and for obtaining money by means of materially false and fraudulent pretenses,
representations, promises, and omissions, did knowingly transmit and cause to be transmitted the
Transmitted
Count Date Wire Description of Quote
From
Quote No. RFQ924396-ZIL for
Two 9/11/2014 Oregon
$26,343.11
BILLY J. WILLIAMS
United States Attorney
CQ .W r____. . ._
Clemon D. Ashley, IL #6294839
Assistant United States Attorney
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