“Al Capone” in Uniform—Former U.S. Air Force Sergeant Pleads Guilty to $37 Million Pentagon Contract Fraud.
WASHINGTON — A former U.S. Air Force master sergeant has pleaded guilty to orchestrating a yearslong scheme that defrauded the Pentagon of roughly $37 million through rigged IT contracts, federal prosecutors said.
The defendant, Alan Hayward James, 51, admitted to conspiracy to commit wire fraud, bribery, and bid-rigging related to contracts with U.S. Pacific Air Forces in Hawaii.
According to the U.S. Department of Justice, James carried out the scheme over nine years beginning in 2016. He conspired with contractors to manipulate bidding processes, directing some companies to submit artificially low bids while others inflated their proposals, ensuring predetermined firms would win contracts at higher prices.
Prosecutors said James referred to himself as “Al Capone” in records linked to the scheme and used coded names for others, including one individual labeled “Godfather.” Funds were funneled through shell companies and disguised as salaries, including payments to family members.
In one instance, investigators said, James instructed a company to submit a deliberately weak bid described as “low and stupid,” allowing a co-conspirator to secure a contract at an inflated rate.
Authorities said proceeds from the scheme were used for personal benefit, including luxury travel. Government funds paid for multi-day resort stays in Hawaii for co-conspirators, with expenses covering activities such as golf, horseback riding, and spa services.
U.S. Attorney Ken Sorenson said the scheme diverted resources from essential military operations.
“Through this bid-rigging scheme, the defendant not only stole from American taxpayers but also undermined services critical to national security,” Sorenson said.
James has agreed to pay at least $1.45 million in restitution to the Department of Defense. He faces a potential sentence of up to 45 years in prison, though final sentencing will be determined by a federal court.
The case highlights ongoing concerns about fraud and oversight in government contracting, particularly in sectors tied to national defense.
