Additional Conspiracy and Fraud Charges Filed Against Former Director of the Cleveland and Dayton VA Medical Centers

A 65-count superseding indictment was filed today charging the former director of the Cleveland and Dayton VA Medical Centers with a scheme to enrich himself and his conspirators by working as a consultant for, and taking money from, a design firm pursuing more than $1 billion in VA contracts and sharing confidential information about VA construction projects while still employed by the VA, law enforcement officials said.

William D. Montague, 61, of Brecksville, was previously charged with conspiracy to commit honest services mail fraud, bribery, money laundering, multiple counts of wire fraud, mail fraud, disclosing public contract information, and other charges. The charges unsealed today include conspiracy to commit honest services fraud, Hobbs Act conspiracy, violating the Hobbs Act, and additional counts of mail and wire fraud.

“As a Veterans Affairs Medical Center Director, William Montague misled staff and misused his position to enrich himself and businesses pursuing contracts with the Veterans Administration,” said Stephen D. Anthony, Special Agent in Charge of the Federal Bureau of Investigation’s Cleveland Office. “The new charges against Montague reflect law enforcement’s continued dedication to root out corruption at any level.”

“VA directors who use their official position for personal enrichment will be held to account,” said Gavin McClaren, United States Department of Veterans Affairs-Office of Inspector General, Resident Agent in Charge, Cleveland. “Our nation’s veterans deserve public officials and contracts who serve veterans' needs and not their own.”

Montague served as director of the Cleveland VA Medical Center from 1995 until February 3, 2010. On March 11, 2011, Montague began working as director of the Dayton VA Medical Center, a position he held through December 17, 2011, according to the indictment.

The superseding indictment details interactions between Montague and a company identified as Business 75, an integrated design firm with offices throughout the United States, including New York, Illinois, Virginia, Missouri, and California. The company performed work for the VA directly and through its participation in joint ventures and other teaming agreements, according to the indictment.

From January 2010, Montague, Business 75, and employees of the company conspired to defraud the VA of its right to the honest and faithful service of Montague through bribery and kickbacks and to defraud the VA and other potential VA contractors by means of false and fraudulent pretenses, according to the indictment.

Montague secretly used his position as Dayton VA Medical Center director to enrich himself and his designees (including House of Montague, a company Montague operated) by soliciting and accepting gifts, payments, and other things of value from Business 75 in exchange for favorable official actions, according to the indictment.

Montague solicited money and a consulting contract from Business 75 in exchange for information related to VA contracts and projects, which would benefit Business 75, Business 75’s principal and their designees, according to the indictment.

This was done to give Business 75 an advantage in obtaining VA contracts and projects. Montague gave false and misleading information to VA employees about his reasons for requesting VA documents and information, according to the indictment.

For example, on March 1, 2011, Business 75 issued a $20,000 check payable to Montague, which he deposited into the House of Montague’s account. Ten days later, Business 75’s principal sent an e-mail to some employees with Montague’s consulting agreement, explaining, “His job is to help us bring in more work from the VA, in part by helping us access key decision makers,” according to the indictment.

On March 14, 2011, Business 75’s principal sent another e-mail to some employees stating that Business 75 will end the current “$15 [million VA] IDIQ contract with just slightly over $12M in sales. $3M in fee, therefore, will be left on the table…[O]ne of MONTAGUE’s jobs will be to fill up the bucket by directing task orders toward our contract, Going forward, we have two $15M buckets to fill (Central and Eastern regions). That’s a lot of shoveling to get to $30M….BILL has the relationships to help us maximize the contracts….On the VA 'major construction' front here is the list of medical centers and their approximate construction cost in the pipeline: West Los Angeles, CA: $750M; San Francisco, CA: $125M, Reno, NV: $115M, Alameda, CA: $225M. Montague told us about these before they were advertised, which has allowed us to get an early start in developing the team. If we bring him on board, he can help us pull in one or two of these large projects,” according to the indictment.

According to the indictment, on or about April 5, 2011, at approximately 5:50 p.m., Montague sent Business 75’s principal an e-mail from Montague’s sbcglobal.net e-mail account, with a subject line "Major Construction." The e-mail body indicated, "As promised." On or about June 21, 2011, at approximately 11:12 a.m., Business 75 Principal forwarded the e-mail to Business 75 Employee 7, writing, "This is confidential. Please don't distribute. This document is not classified or secret, but it is not intended for public distribution." Business 75 Principal attached a file entitled “Detail of Request.docs.”

On or about July 30, 2011, in response to an e-mail Business 74 employee, BE76, sent on or about July 28, 2011 suggesting that Business 74 “put on hold [Montague’s] quarterly stipends,” Montague sent an e-mail from his sbcglobal.net e-mail account to Business 74 employee, BE76, with a carbon copy to Business 74 employee, BE75, with a subject “Re: VA contract update.” Montague informed Business 74 “I have had dificulty [sic] figuring out what [Business 74] wants or needs. I have just, for example, obtained the priority scored list of all scored projects for next fiscal year. It is unpublished and unavailable elsewhere. This is considered the motherlode [sic] by my other clients, all of whom pay more than $5000 a quarter. These lists would be excellent examples of a project by project system. This is every project in the entire VA in priority order by category. I also have obtained all planned Major projects through 2022,” according to the indictment.

On or about September 12, 2011, at approximately 2:24 p.m., Business 75 Principal sent an e-mail to Business 75 employees in response to a previous e-mail sent by another Business 75 employee on September 6, 2011, at approximately 9:48 p.m., which announced Business 75’s selection as the architect and engineer for the VA West LA VAMC. Business 75 Principal wrote:

"I'm reminded—as I approve Bill Montague’s invoice—that it was Bill Montague (our VA consultant) who alerted me to this project at West LA. I think we may have won this with or without Bill’s early warning, but getting in early on a large VA pursuit is critical. We currently are working four large FY13 VA project leads worth over $1B in aggregate based on information that Bill has provided. I would not have been able to find out what was in the Administration’s FY13 budget until early February, when it is sent to Congress. I think we are ahead of virtually all our competitors on these four. Bill has arranged for a meeting with the medical center director at one of the four locations (Lexington). Business 75 Employee 10 will attend this meeting. The risk is that not all four of these leads may make it into the final version of the bill. But so far, Bill’s info has proved accurate....I would not have come up with this information on my own, regardless of how many hours I invested.  I just don't have access to the VA staffers that control the money.  He has the relationships within Capital Asset Managements. Our contacts are all within CFM. So in my opinion, BILL's contacts and experiences broadens [sic] our understanding of VA Processes and expands our relationships."

On or about September 13, 2011, at approximately 3:46 p.m., in response to an e-mail from Business 75 Employee 6 to Business 75 Principal and Business 75 Employee 5 asking whether Business 75 would expect to keep Montague’s $30,000 per year consulting contract in light of Business 75’s plan to pursue a marketing person to work with Business 75 Principal in the Federal market, Business 75 Principal replied, "Yes, I may want both for a period of time. But I do not see BILL’s contract as running on forever....Currently, BILL is the interim Medical Director of VA Dayton. As such, he has extraordinary access right now to information. When that position ends, his access and influence will begin to diminish," according to the indictment.

On or about September 14, 2011, at approximately 3:46 p.m., Business 75 Employee 5 replied to Business 75 Principal’s e-mail, and included Business 75 Employee 11, "Interesting math—At $30k per year for BILL, we would have to win [$]300,000 in VA fee[s] every year ($30k profit) for us to break even. I think VA West LA is worth $20,000,000," according to the indictment.

Montague further engaged in self-dealing by double-billing the VA and his consulting clients for the same travel expenses. For example, the superseding indictment charges that on May 26, 2011, Montague travelled to Washington DC on official VA business. On June 17, 2011, he caused to be submitted a government expense report seeking reimbursement for $1,204 for hotels, hotel taxes, parking, per diems, and other expenses. On June 12, 2011, Montague caused to be sent a $2,741 invoice to Business 75 for “consulting services” for work performed at “Wash/Cleve/Dayton.” The invoice included $211 for hotel and $30.60 for hotel taxes incurred on May 26, 2011, according to the indictment.

The case was prosecuted by Assistant United States Attorneys Antoinette T. Bacon and Nancy L. Kelley following an investigation by the FBI and United States Department of Veterans Affairs-Office of Inspector General.

If convicted, the defendant’s sentence will be determined by the court after review of factors unique to this case, including the defendant’s prior criminal record (if any), the defendant’s role in the offenses and the characteristics of the violations. In all cases, the sentences will not exceed the statutory maximum, and in most cases they will be less than the maximum.

An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.