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Coos Bay company's owner & 4 employees plead guilty to fraud on defense contracts

PORTLAND, Ore. A Coos Bay business, its owner, and four employees were sentenced by in federal court on December 12 for their roles in a conspiracy to defraud the United States by supplying knock-off vehicle and aviation parts to the United States Department of Defense.

Harold Ray Bettencourt II, 60, of Coos Bay and the owner of Kustom Products, Inc.(KPI), was sentenced to 45 months in custody. His sons were also sentenced to prison terms: Nicholas Ryan Bettencourt, 32, was sentenced to 27 month in prison; Bo Bettencourt, 34, was sentenced to a term of 25 months; and Peter Tracy Bettencourt, 28, was sentenced to 12 months in custody. KPI's office manager, Margo Antoinette Densmore, 43, also of Coos Bay, was sentenced to a 12 month prison term. The business, KPI, was sentenced to pay a fine of $150,000. All of the defendants were ordered to pay restitution to the military in the amount of $5,000,000.

The United States Attorney charged that KPI, Bettencourt, and the others conspired to commit wire fraud, money laundering, and trafficking in counterfeit goods and services. As part of the plea, the defendants agreed to forfeit all proceeds traceable to the fraud, including $365,503.26 in funds from 20 bank accounts, eight vehicles, one boat, two boat trailers, two jet skis, and three all-terrain vehicles.

The report says KPI, acting through the individual defendants, lied to the DOD in order to secure what the government found to include 750 fraudulent contracts with a value in excess of $10,000,000 and used wire communications in interstate and foreign commerce to carry out the scheme. In addition, the defendants knowingly engaged in approximately $8,000,000 in monetary transactions in amounts greater than $10,000 derived from the wire fraud scheme.

Finally, in some contracts, the defendants supplied counterfeit Freightliner parts and shipped some parts on pallets that falsely contained the logo and heat treatment certification stamp of Timber Products Inspection, Inc.

In essence, the defendants bid to supply a specific OEM part from an approved vendor at a price consistent with an OEM part, but instead knowingly provided a knock-off part from an unapproved vendor that cost them significantly less. This allowed them to under-bid the competition, and generated substantial profits for KPI and the individual defendants.

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