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FEMA awarded MGUSA contracts of up to $ 30.8 million for the supply of tarps but canceled the agreement due to product quality problems after paying MGUSA $ 3.7 million. (GFR Media)

Washington - An FBI investigation has revealed the case of another company hired by the Federal Emergency Management Agency (FEMA) breached an agreement of more than $ 30 million to provide tarps to mitigate the emergency in Puerto Rich after Hurricane Maria.

According to affidavits filed by the FBI and reviewed by the Daily Beast, the company Textile Corporation of America (TCA), fabricated evidence to obtain, among other things, a contract with FEMA to supply tarps to address the disasters caused by the 2017 hurricanes.

TCA´s sister company, Master Group USA (MGUSA), used fabricated copies of invoices and wire transfers to conceal that it was purchasing the tarps from China, in violation of federal sourcing laws.

FEMA awarded MGUSA contracts of up to $ 30.8 million for the supply of tarps but canceled the agreement due to product quality problems after paying MGUSA $ 3.7 million. FEMA said yesterday that the contract with MGUSA was canceled in January 2018 after its staff questioned whether the tarps met the quality requirements specifications.

By that time, MGUSA had provided 58,324 awnings. FEMA deregulated the remaining contract funds ($ 26.9 million) and made them available for other disaster recovery operations. On April 16, 2018, FEMA suspended Master Group USA and its registered owners, according to a statement from FEMA Regional Office in San Juan.

The MGUSA case joins another case in which OIG Acting Inspector General John V. Kelly, concluded that “Federal Emergency Management Agency (FEMA) did not follow all procurement laws, regulations, and procedures when it awarded more than $30 million for two contracts to Bronze Star for tarps and plastic sheeting as part of its 2017 hurricane Maria response and recovery efforts in Puerto Rico.”

According to the affidavits, TCA fabricated documents of work done at a textile plant in Pikeville, Tennessee, to draw grants from the Tennessee Valley Authority (TVA) – a federally owned corporation – and the state’s Department of Economic and Community Development.

More than one million dollars of the funds granted to TCA were used to finance the operations of its subsidiary MGUSA, which through a $ 30.8 million FEMA contract agreed to provide up to 475,000 tarps.

Instead of operating its Pikeville facility as a manufacturing plant, TCA stored the tarps purchased by MGUSA there.

The Department of Homeland Security OIG conducted its own investigation and determined that MGUSA claimed to have purchased the tarps from a nonexistent Taiwanese company. According to the Inspector General, the company presented fraudulent documents to conceal the fact that it purchased the tarps in China.


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