Philip Flores, the owner, president, and chief executive of Intellipeak Solutions, Inc., a former defence contractor based in Fredericksburg, Virginia, was sentenced in federal court to 48 months’ custody after admitting that he participated in a bribery scheme with former Naval Information Warfare Centre employee James Soriano.
In announcing the sentence, U.S. District Judge Todd W. Robinson explained that the “fraud was pervasive” and “it is hard to understate in terms of this area of business practice any offence conduct which would be of a more serious nature, it goes to the heart of the fairness of the contracting system.”
U.S. District Judge Todd W. Robinson also ordered Flores to pay $80,500 in restitution to three victims of the offence.
According to his plea agreement, Flores gave various things of value to Soriano, including expensive meals at restaurants in San Diego and Washington, D.C., field-level tickets and parking passes to Game 5 of the 2018 World Series in Los Angeles, and tickets to the 2019 Super Bowl in Atlanta, Georgia.
The cost of tickets to these premier sporting events totalled over $18,000.
In return, Soriano used his position as a contracting officer’s representative at the Naval Information Warfare Centre to ensure that Intellipeak was awarded numerous no-bid contracts through the Small Business Administration’s 8(a) programme.
Soriano secured the contracts by falsifying technical evaluations, providing high ratings to Intellipeak to do the contracted work, and approving Intellipeak’s invoices on the awarded contracts, despite knowing that Intellipeak was not doing the work but instead subcontracting out all or most of the work to non-8(a) companies in violation of the SBA 8(a) rules.
Soriano also exploited competitive contracting through the SBA 8(a) program to benefit Intellipeak over other contractors. For example, Soriano secretly allowed Flores to draft contract discriminators to ensure that Intellipeak was selected as a winning bidder on a competitive contract.
Soriano also allowed Flores to secretly draft procurement documents for a $87 million competitive contract and then took multiple steps to award the contract to Intellipeak, even though its bid was $7 million higher than another contractor’s.
According to his plea agreement, Flores also exploited Intellipeak’s 8(a) small business status by marketing Intellipeak to other defense contractors, who were not part of the 8(a) program, as a way for those companies to get access to 8(a) sole source contracts, generally in exchange for “pass through” fee that was equal to 6 to 8 percent of the contract value.
Flores charged his six to eight per cent fee to the government, which Soriano approved, even though both knew that Intellipeak was not performing the work under the contracts, and the fee did not reflect the work actually performed.
According to his plea agreement, as a result of the conspiracy, the government paid Intellipeak more than $16 million to perform work on approximately 26 government contracts and task orders.
The profit Intellipeak made from these contracts and task orders was conservatively estimated at between $550,000 and $1.5 million, despite performing little to no work on them. According to the United States’ sentencing memorandum, this was not the first time that Flores and Intellipeak defrauded the government.
Years before the bribery conspiracy, Flores engaged in a separate scheme to draft procurement documents and use sham quotes to ensure Intellipeak would be awarded millions of dollars of contracts through the SBA 8(a) programme.
Once obtained, Flores subcontracted the work to other companies in exchange for a fee. In 2022, Flores was indicted in the Northern District of Georgia with one count of conspiracy and two counts of major fraud against the United States.
Flores went to trial and was found guilty of all charges. Flores was sentenced to four months in custody and allowed to remain on bond pending the resolution of his appeal.
“The integrity of the procurement process is not for sale,” said U.S. Attorney Adam Gordon. “Those who trade bribes for government contracts undermine our warfighters and betray the American taxpayer—and they will be held accountable.”
“The successful prosecution of Mr Flores underscores the serious consequences for undermining the integrity of the Department of Defence’s procurement process. This outcome serves as a significant deterrent to any individual who would exploit their position for personal financial gain at the expense of U.S. taxpayers,” said John E. Helsing, Special Agent in Charge for the DoD Office of Inspector General, Defence Criminal Investigative Service (DCIS), Western Field Office. “DCIS remains committed to working with the United States Attorney’s Office and our law enforcement partners to root out public corruption within the DoD.”
“The integrity of our defence acquisitions is built on fairness and transparency, but Mr Flores’ illicit bribery scheme eroded that foundation and betrayed the public’s trust,” said Special Agent in Charge Greg Gross of the NCIS Economic Crimes Field Office. “NCIS remains steadfast in protecting the Department of the Navy procurement process by holding wrongdoers accountable and ensuring taxpayer dollars are spent in accordance with the law.”
“Today’s sentence sends a clear message: Anyone who exploits a position of trust to fuel personal greed will be found and held accountable,” said Marcus Sykes, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG). “Funnelling money into bribery schemes instead of delivering promised services undermines the integrity of federal programmes. HHS-OIG will continue collaborating with our law enforcement partners to pursue justice against those who defraud the American people.”
“This sentencing shows what happens when someone abuses the system for personal gain. Philip Flores cheated taxpayers and hurt fair competition for government contracts,” said Special Agent in Charge Tyler Hatcher, IRS Criminal Investigation (IRS-CI), Los Angeles Field Office. “IRS Criminal Investigation remains steadfast in working with our law enforcement partners to follow the money, expose corruption, and ensure that those who exploit positions of trust are held fully accountable.”
“Fraud and bribery have no place in SBA programmes. SBA-OIG is committed to protecting the integrity of the 8(a) programme and ensuring these opportunities benefit eligible small businesses,” said SBA Inspector General William Kirk. “We will continue partnering with DOJ and law enforcement to pursue accountability and safeguard taxpayer funds.”
“The 8(a) Program is designed for legitimate small businesses in federal contracting—not as a vehicle for DEI, bribery, or political agendas,” said SBA Administrator Kelly Loeffler. “SBA is grateful to our law enforcement partners for their work to stop fraud and put criminals behind bars. We will continue to audit participants and investigate the 8(a) Program, while implementing oversight and accountability on behalf of America’s taxpayers and job creators.”
