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Billings contractor and companies ordered to pay $4.85 million in fines and restitution

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GREAT FALLS, Mont. -

Billings contractor Kevin David McGovern was sentenced to 24 months of imprisonment, $880,000 in restitution (joint and several with his companies), $800,000 in fines, and 2,000 hours of community service.  All total, McGovern and his companies were required to pay $4.58 million in restitution and fines. McGovern was sentenced yesterday, June 8th, by U.S. District Judge Brian Morris in Great Falls, Montana. 

In November 2016, a federal jury convicted Kevin McGovern and CMG Construction, Inc., of conspiracy, wire fraud, and bribery, all of which was associated with a pay-to-play scheme on the Rocky Boy's Indian Reservation.

For more information, please refer to the press release below.


_____________________________________________________________________________

FOR IMMEDIATE RELEASE   KERI LEGGETT

Thursday, June 08, 2017 (406) 761-7715

WWW.JUSTICE.GOV/USAO/MT

BILLINGS CONTRACTOR AND COMPANIES SENTENCED TO TWO YEARS IN PRISON AND $4.58 MILLION IN FINES AND RESTIUTUTION

GREAT FALLS - The United States Attorney’s Office announced that Kevin David McGovern was sentenced to 24 months of imprisonment, $880,000 in restitution (joint and several with his companies), $800,000 in fines, $500 in special assessments, and 2,000 hours of community service.  CMG Construction, Inc., was ordered to pay $1.0 million in restitution, $1.6 million in fines, and $1,600 in special assessments.  And MC Equipment Holdings, LLC, was sentenced to $380,000 in restitution, $800,000 in fines, and $800 in special assessments.  All total, McGovern and his companies were required to pay $4.58 million in restitution and fines.  The sentencing occurred on June 8, 2017, before U.S. District Judge Brian Morris, in Great Falls, Montana.  

In November 2016, a federal trial jury convicted Kevin McGovern and CMG Construction, Inc., of conspiracy, wire fraud, and bribery, all of which was associated with a pay-to-play scheme on the Rocky Boy’s Indian Reservation. 

Tony James Belcourt was in care, custody, and control of over $85 million of federal and tribal funds for the construction of a rural water project and several disaster relief projects on the reservation.  Of that amount, $52 million was associated with the Rocky Boy/North Central Montana Rural Water System, $11 million was provided by FEMA for the flash floods that occurred in June 2010, and $25 million was provided by the Tribe’s insurance carrier.

Between January 2010 and March 2013, Belcourt’s job duties included serving as a representative in the House of Representatives for the State of Montana, the CEO for the Chippewa Cree Construction Corporation, a member of the Tribe’s Insurance Recovery Team, and the Incident Commander for FEMA.  Belcourt and other tribal officials required contractors to pay kickbacks and bribes in order to receive contracts and contract payments.  Belcourt was previously convicted for accepting bribes and is currently serving a 90-month sentence in federal prison.   

In June 2011, Kevin McGovern and his company, CMG Construction, Inc., received three unadvertised, sole-sourced contracts valued at $2.5 million without being required to submit bids to the Chippewa Cree Construction Corporation.  In return, Belcourt received $324,333 through a company called MT Waterworks, LLC.  Belcourt never provided any services to MT Waterworks, LLC, which was started with $100,000 of embezzled federal funds from the rural water system.  MT Waterworks, LLC, was owned by Belcourt, McGovern, and a third businessman from Billings.    

In July 2011, Belcourt drove from his home in Box Elder, Montana, to Billings, Montana, and gave Kevin McGovern a $200,000 progress payment of federal funds for work performed on FEMA-related disaster projects.  The following day, McGovern gave a personal loan to Tony Belcourt in the amount of $50,000.  Then, at Belcourt’s direction, McGovern sent $25,000 as a donation to the Chippewa Cree Events Committee, which was a known slush fund for a tribal councilman who was previously convicted for accepting bribes. 

The jury convicted McGovern and CMG Construction, Inc., of conspiracy, wire fraud, and bribery of Tony Belcourt.  The jury acquitted McGovern and CMG Construction, Inc., of one count that involved bribery of another tribal official. 

In addition to bribing Belcourt for contracts, McGovern and MC Equipment Holdings, LLC, also pleaded guilty to wire fraud and theft in connection with the February 2012 sale of a “hot plant” to the Chippewa Cree Tribe.  A “hot plant” is a portable industrial paving machine that consists of several interlocking components, including an asphalt tank and silo, drum mixer, conveyor system, and control house that, when properly assembled, produced hot asphalt that can be used on paving projects, such as roads and parking lots.  McGovern inflated the purchase price of the hot plant by $380,000, of which $229,000 he paid to Belcourt.  The “hot plant” was never assembled or used by the Tribe.  It was subsequently sold at a loss by the Chippewa Cree Construction Corporation in June 2015.   

CMG Construction, Inc., also pleaded guilty to a false claims act conspiracy in connection with a March 2013 claim in the amount of $3.8 million submitted by the Chippewa Cree Tribe to FEMA.  This claim contained inflated invoices from CMG Construction, Inc., relating to the demolition of the health clinic.

In a sentencing memo filed in federal court, Ryan G. Weldon and Bryan T. Dake stated, “This case is purely about greed.  McGovern had a multi-million dollar business in Billings, Montana.  His personal bank account had almost $1,000,000.  He had everything.  CMG Construction, Inc., did not have to bribe to obtain business.  It was a thriving and legitimate venture that employed hundreds of people.  McGovern, though his companies, chose to engage in the corrupt practices at the Rocky Boy’s Indian Reservation.” 

Acting United States Attorney Leif Johnson said the conviction and sentence reaffirms the line that exists between corrupt business and those that are merely aggressive:  “Too often, in pursuit of a profit, a businessman seeks an advantage that is one step too far and begins a relationship involving taxpayer monies that seems too good to be true.  It starts with great promise and ends with the loss of everything—reputation, fortune, and freedom.”

The Department of Interior, Office of Inspector General, Western Region, Special Agent In Charge David A. House stated, “This latest corruption conviction involving the Rocky Boy/North Central Montana Rural Water System, a water project designed to deliver safe drinking water to the Chippewa Cree Tribe and several rural Montana communities.  This is another successful effort by the Montana Guardians Project wherein corruption was identified and vigorously prosecuted in an effort to stop unjust personal enrichment.  Prosecutions such as these allow federal agencies, and tribal organizations, to rebuild from criminal impact.  It also demonstrates our commitment to protecting taxpayer funds and our trust responsibilities to Tribes.”  

“IRS Criminal Investigation provides financial investigative expertise while working with our law enforcement partners,” said Steven Osborne, Special Agent In Charge, IRS-Criminal Investigation for Montana.  “Pooling skills of each agency makes a formidable team as we investigate allegations of wrong-doing.  Today’s sentencing demonstrates our collective efforts to enforce the law and ensure public trust.”

The convictions and sentencing of McGovern, CMG Construction, Inc., and MC Equipment Holdings, LLC, are the latest in a series of prosecutions and convictions relating to public corruption, fraud, and theft in federal grants, contracts, and programs brought by the investigators and prosecutors of the U.S. Attorney’s Guardians Project, an anti-corruption strike force created in 2011.  The McGovern, CMG Construction, Inc., and MC Equipment Holdings, LLC, cases were investigated by the Department of Interior, Office of Inspector General, Health and Human Services, Office of Inspector General, and the Internal Revenue Service, Criminal Division. 

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