Former VA employees plead guilty to $2.9M embezzlement scam

The two created fake purchase orders and then billed the Dallas VA Medical Center. They entered guilty pleas in federal court and could spend a decade in prison.

Two former employees of the Department of Veterans Affairs created phony companies and managed to steal $2.9 million from the Dallas VA Medical Center, federal prosecutors say.

Both have pleaded guilty to theft of government funds, according to Chad E. Meacham, U.S. Attorney for the Northern District of Texas. Randius McGlown, 56, entered a guilty plea in October, and Charles Gates, 54, pleaded guilty in November, prosecutors say. They now face up to 10 years in federal prison, authorities say.

McGlown worked as an inventory manager and acquisition utilization specialist at the Dallas VA Medical Center. He inserted the name of a company he created, G4 Logistics, into the facility’s vendor system in 2014, authorities say.

McGlown and Gates produced “phony purchase orders” for equipment and materials, prosecutors said. They used a purchasing card from the medical center to pay the bill, but never delivered any items, authorities said.

The VA money was deposited into an account controlled by an individual identified in court documents as “J.R.”, prosecutors said. That individual would deliver most of the money from the account and pay it to McGlown or Gates, and keep some of the money for himself, authorities said.

McGlown switched from G4 to another company he created, Caprice Electronics, in 2018. McGlown produced “fake invoices,” prosecutors said, and then used existing items in the medical center’s inventory to appear as if the materials were delivered, even though neither of the companies actually delivered on any of the orders, authorities said.

Acting Special Agent in Charge Patrick Roche of the VA Office of Inspector General’s South Central Field Office said the case should serve as a warning to those trying to steal money from the VA, which serves millions of veterans.

“Using their official government positions to steal millions of taxpayer dollars is an egregious crime that diverts resources from deserving veterans and erodes public trust. These guilty pleas should send a clear message that the VA Office of Inspector General will diligently investigate those who would misuse their positions to commit fraud,” Roche said in a statement.

The Department of Veterans Affairs, Office of Inspector General, conducted the investigation,  with assistance from the FBI’s Fort Worth Field Office, and the General Services Administrations, Office of Inspector General.

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