Former shipbuilding Project Manager pleads guilty to wire fraud in $1.5 million false invoice scheme

SEATTLE - A former project manager for Portland, Oregon-based shipbuilder Vigor Marine LLC, pleaded guilty today to wire fraud related to his scheme to defraud his employer out of approximately $1.5 million, announced U.S. Attorney Brian T. Moran.  SHELTON LAYNE SMITH, 50, of Portsmouth Virginia, is scheduled to be sentenced by U.S. District Judge Robert S. Lasnik on December 19, 2019.

According to records in the case, in 2016 and 2017, SMITH served as the project manager on the renovation of two U.S. Coast Guard cutters called the “Bertholf” and the “Waesche.”  The renovations took place at Vigor’s Seattle facility. SMITH was responsible for selecting vendors and approving payments to them for equipment and services related to the renovations.  In this role, SMITH fabricated invoices from a fictitious company called “Marine Service Solutions” (MSS).  The fraudulent invoices caused Vigor to pay out approximately $1.5 million for work that was never done and equipment that was never provided. 

SMITH’s scheme to defraud was an elaborate charade.  SMITH persuaded a legitimate Vigor vendor to serve as a “pass-through” entity that received invoices from MSS, marked up the cost of the services, and passed on the fraudulent expenses to Vigor.  The local vendor was not aware that Marine Service Solutions was not a real company.  SMITH also misled a long-time acquaintance in Mississippi into setting up a bank account for MSS, cashing the checks, and funneling most of the proceeds to SMITH.  In emails, SMITH posed as the Mississippi man, making it appear as if the Mississippi man was the owner of MSS. When questioned by the FBI, SMITH repeatedly lied about MSS and encouraged his acquaintance in Mississippi to stick to a false story about the company.

Vigor terminated SMITH in 2017 after discovering that SMITH had mishandled the Bertholf project.  SMITH’s successor discovered the fraud, and Vigor reported the crime to the FBI. 

SMITH has agreed to make restitution to Vigor of $1,483,802. As part of that restitution he will forfeit his right, title, and interest in any and all property, real or personal, that constitutes or is derived from proceeds traceable to the offense of Wire Fraud.

Wire fraud is punishable by up to 20 years in prison and a $250,000 fine.  The ultimate sentence will be determined by the court based on the advisory Sentencing Guidelines and other statutory factors.

The case is being investigated by the FBI.  The case is being prosecuted by Assistant United States Attorney Seth Wilkinson.