PITTSBURGH — Two brothers who co-founded a Middlesex Township-based defense contracting company were sentenced Tuesday to prison and fines after pleading guilty earlier this year to a multimillion-dollar fraud scheme against the U.S. government.
Thomas Buckner, 68, of Gibsonia was sentenced to 30 months in prison and fined $500,000.
John Buckner, 66, of Lyndora was sentenced to 24 months and fined $300,000.
Both sentences were handed down by U.S. District Judge Arthur Schwab on Tuesday morning in Pittsburgh.
The Buckners and Harry Kramer, 52, of Wexford, pleaded guilty in May to charges of fraud and tax evasion in connection with the scheme at Ibis Tek, a defense contracting firm that had won a contract building emergency escape window kits for humvees for the U.S. Army Tank-Automotive and Armaments Command (TACOM).
The men admitted that they inflated costs and created a shell company to drive up the price of the Chinese-made components used in the kits. They also admitted that they sold scrap aluminum collected during the manufacturing process and did not credit the money to the government’s contract.
Prosecutors said the fraud cost the Department of Defense more than $6 million, according to online court documents. The men had already repaid that money to the government, according to prosecutors, and have paid another $6 million to settle a lawsuit the government filed against them, as well as $1 million each in income tax and interest tied to false tax returns they filed in an attempt to cover up the scheme.
According to The Associated Press, Schwab said Thomas Buckner received a harsher sentence because he was more involved in the day-to-day business of Ibis Tek than his brother, who retired from the company in 2007.
The Buckners each owned half of Ibis Tek when the crimes occurred.
The company was sold in February to new investors who had nothing to do with the scheme.
Kramer was charged because he aided the cover up by filing false tax returns that underreported the company’s income in 2009 and 2010. He will be sentenced later this month.
In a related matter, Anthony A. Shaw, 55, of Rochester Hills, Mich., was sentenced in federal court Thursdayto 46 months incarceration and a $100,000 fine on charges of taking illegal gratuities, income tax evasion and making false statements to federal law enforcement officers, according to a news release from the U.S. Attorney for the Western District of Pennsylvania.
Shaw was a deputy project manager responsible for directing development of and managing government contracts for combat vehicle systems such as U.S. Army Humvees at the U.S. Department of Army Tank-Automotive and Armaments Command (TACOM).
Because of his position, Shaw came to know the Buckners.Following the 2008 housing market collapse, Shaw, who was heavily invested in real-estate, took $1,055,500 in illegal gratuities from the Buckners between 2008 through 2011.
Shaw failed to pay income tax on that money and ran up a criminal tax liability of $325,800, according to the news release.
Authorities say he also lied about meeting with the Buckners.
Awaiting sentencing is as David S. Buckner of Warren, Mich., for impeding the IRS by acting as a financial intermediary who received and then paid out money from Ibis Tek to Anthony Shaw, for the purpose of concealing that the monies were Shaw’s income.