WASHINGTON -- A former executive with an Alaska Native corporation subsidiary charged in what federal prosecutors call one of the largest government contracting frauds in the country's history will remain behind bars, a judge ruled Tuesday, after prosecutors said they had overwhelming evidence of his participation in a kickback scheme.
Harold F. Babb, the former director of contracts for Eyak Technology LLC, and three other men, including two employees of the U.S. Army Corps of Engineers, were arrested this month and accused in a $20 million bribery and money-laundering scheme. Prosecutors say government work was directed to a favored information technology subcontractor in exchange for kickbacks that paid for real estate, fancy clothes and other luxuries.
The three other men have already been ordered held. They are Kerry F. Khan and Michael A. Alexander, both Army Corps employees, and Lee A. Khan, Kerry's son.
Babb's attorney, Jeffrey Jacobovitz, argued during a hearing in U.S. District Court in Washington that his client should go free because he had no prior criminal record and was not a threat to the community. He said the transcripts of the audio recordings provided by prosecutors were largely irrelevant, non-incriminating and were merely the government's summaries of his client's conversations.
But Prosecutor Michael Atkinson said the recordings between Babb and a government witness show the men discussing "classic kickbacks," bid rigging and the illegal steering of contracts.
Prosecutors say Babb was paid or promised more than $700,000, given first-class air tickets and promised a job in exchange for using his contracting authority at EyakTek to direct government work to a favored subcontractor. They say he's also connected by witness statements and documents to the transfer of $2 million in illicit proceeds to the Bahamas and $218,000 to Panama.
Eyak Technology is a subsidiary of the Eyak Corp., with Virginia operations. It was the prime contractor for a five-year, $1 billion contract administered by the Army Corps of Engineers. Eyak is the village corporation for the Cordova area.
Prosecutors say Khan and Alexander received kickbacks in exchange for causing the government to award contracts to a Virginia-based subcontractor identified in the indictment only as Company A and as a subcontractor for EyakTek. The company's chief technology officer, described as a co-conspirator, submitted fraudulent and inflated invoices to the Army Corps of Engineers, either directly or through EyakTek, and the work was certified as completed, according to the indictment.
About $20 million in fraudulently inflated invoices were then funneled back to the four defendants, the indictment alleges.
The Eyak Corporation has denied any wrongdoing, and its chief executive officer, Rod Worl, has said Babb's alleged actions "constitute a reprehensible breach of trust."
Several members of Congress have called for either investigations or hearings into the allegations.
By ERIC TUCKER