WASHINGTON — A former manager with the U.S. Army Corps of Engineers was sentenced to more than 19 years in prison Thursday for orchestrating a $30 million bribery and kickback scheme that authorities called historic in scope.
U.S. District Judge Emmet Sullivan called Kerry F. Khan's conduct, which included wiretapped conversations about a planned sexual encounter with a teenage girl and the assault of his mistress by an associate in the Philippines, "shocking, vicious and cruel." The judge imposed a sentence four years longer than what prosecutors had recommended.
Khan, 55, a resident of the Washington suburb of Alexandria, Va., pleaded guilty last year to orchestrating the fraud, which prosecutors call the largest domestic bribery and bid-rigging scheme in the history of federal contracting cases. He acknowledged pocketing bribes from corrupt contractors in exchange for certifying bogus or inflated invoices for services that were never provided. The funds were used to pay for mistresses located in several states and overseas as well as for luxuries including Rolex watches, first-class airplane tickets, expensive clothes and liquor and a spacious home that a prosecutor described as the "Khan Majal," authorities said.
"You made history for the wrong reasons – you know that, don't you?" Sullivan told Khan before handing down the sentence.
Khan apologized, saying the crimes occurred during a "very, very dark period of my life."
"I deeply regret this, your honor. I would like for you to know – I can honestly say this to you – I am a transformed person now," he said.
Though prosecutors requested a 15-year sentence, Khan's lawyer asked for 10 years, saying the punishment should be more in line with what other defendants in the case have received. Both sides acknowledged Khan had provided extensive cooperation, including feeding information about his brother and one of his sons, as part of a wide-ranging investigation that so far has yielded guilty pleas from 15 people and one company.
He was also ordered to pay $32.5 million in restitution to the Army Corps of Engineers.
Besides the fraud, prosecutors say they intercepted wiretapped phone calls and text messages in which he told an associate he was pleased that his mistress in the Philippines had been assaulted and said "I'm getting her out of my system, man." In other messages, prosecutors said, he revealed his plans to travel to the Philippines to have sex with a girl described to him as 15 years old. That trip, planned for the summer of 2011, was disrupted by federal agents who dissuaded him from going during a visit to his home.
Sullivan called the texts and phone calls "shocking," and at one point offered Khan's relatives a chance to leave the courtroom so that they didn't have to hear them described in greater detail.
Prosecutors said the bribery scheme spanned several years but unraveled in October 2011 with the assistance of a contractor who cooperated with the FBI and the arrests of Khan and three other men, including his son. The arrests came just as the men were conspiring to steer a planned $1 billion deal to a favored contractor in exchange for even more money.
As part of the scheme, prosecutors said, subcontractors would provide services and equipment included in the contract but also submit fake or inflated invoices for work that was never actually done. The fraudulently inflated amounts, which Khan referred to as "overhead," would be paid out, and the subcontractors would kick back a portion of the payments to Khan and other associates involved in the scheme, prosecutors said. At the time of his arrest, Khan had been paid more than $12 million for his role in the fraud and was owed millions more.
"Kerry Khan had a huge appetite for risk-taking, exhibited extraordinary greed and was a criminal at heart," prosecutor Michael Atkinson told the judge.
There are thousands of government workers and contractors in Washington who decide each day whether they will act honestly or open themselves up to accepting or paying bribes, he said.
"It is the type of willful conduct that people would expect the criminal justice system to deal with harshly," Atkinson said.
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