Former Army Energy Program Manager At Fort Knox Guilty Of Violating Conflict Of Interest Laws

LOUISVILLE, Ky. – Gary Thomas Meredith, age 68, of Leitchfield, Kentucky, has pleaded guilty in Federal District Court in Louisville, Kentucky, to violating conflict of interest laws.  After one day of trial, Meredith, a retired federal employee, admitted that while he was a federal employee he was personally and substantially involved in the creation of a contract in which he had a direct financial interest announced United States Attorney John E. Kuhn, Jr.

For over 20 years Meredith was the Energy Manager at Fort Knox.  As the Energy Manager, Meredith was responsible for developing and implementing energy savings measures at Fort Knox.  As part of those duties, Meredith had worked closely Nolin Rural Electric Cooperative Corporation (Nolin) on nearly 100 energy conservation projects, worth over $250 million.

Due to an increasing work load, in 2005 Fort Knox began to consider developing a contractor position, called a Resource Efficiency Manager (REM), to perform the same duties as the Energy Manager, and to work in tandem with the Energy Manager.  The REM was going to be hired through Nolin.   Gary Meredith was interested in retiring and becoming the REM after his retirement, and in April 2005 he sent emails to Nolin and another company in which he discussed working for them as the REM at Fort Knox.  In one email, Meredith, discussing the REM position, stated “have considered doing it myself . . . retire (and I can), and come back on Monday as a REM, IN THE SAME CHAIR, probably same office and be off the Government rolls.”  In a subsequent emails Meredith stated “It’s about money.”

While he was still a federal employee, Meredith reached an agreement with Nolin that he would work for Nolin as a REM contractor when he retired.  Fort Knox officials were unaware of Meredith’s arrangements with Nolin and Meredith’s interest in the REM position.  In October 2005 Meredith began drafting the documents necessary to create the REM position, and in September 2006 Meredith secretly misappropriated over $582,000 to provide future funding for the REM position.  In December 2006, while still a federal employee, Meredith completed all of the Fort Knox documents necessary to create the REM position, and he also created Nolin’s proposal for the REM position.  Meredith also negotiated the pricing of the REM position with Nolin on behalf of Fort Knox, even though he already had an arrangement with Nolin that he was going to be the REM when he retired.

In July 2007 Meredith obtained an ethics opinion from a Fort Knox ethics advisor which stated that Meredith could work for Nolin as a REM contractor.  The ethics advisor was unaware that Meredith had a personal financial interest in the REM position dating back to April 2005, that Meredith had misappropriated over $582,000 to fund the REM position, and that Meredith had prepared Nolin’s proposal.  Meredith retired from the Army on August 31, 2007, and became Nolin’s REM on October 1, 2007.  Meredith was earning over $80,000 per year when he retired, but earned over $165,000 per year as the REM.

After Meredith became the REM, he instructed Nolin to intentionally overbill Fort Knox for natural gas, even though the contract between Nolin and Fort Knox set the contract price and did not permit any additional billings.  Nolin billed Fort Knox as instructed, and Meredith approved Nolin’s invoices for payment, resulting in over $900,000 in overbillings to Fort Knox.

After Meredith became the REM he also began invoicing in advance for his REM salary.  For example, in October 2009 he invoiced Nolin for one year of salary in advance, over $177,000.  Nolin paid Meredith’s salary in advance, even though Nolin employees were unaware of any other Nolin employee or contractor who was paid in advance.  Nolin then immediately charged those costs to Fort Knox and Meredith approved Nolin’s invoices for payment, even though Meredith knew that Nolin could not legally require Fort Knox to pay for services in advance.  As a result of these advance payments, Fort Knox lost thousands of dollars of interest.

Meredith’s guilty plea brought to a close a five and a half year criminal investigation of the Fort Knox Energy Program.  On September 8, 2014, the Department of Defense, Office of the Inspector General (OIG), published the results of an audit of the Fort Knox Energy Program Meredith oversaw prior to his retirement.  In the audit, the OIG found that Fort Knox had improperly awarded and administered over $250 million in energy-savings projects with Nolin.  The report found that Fort Knox failed to establish internal controls, failed to determine whether the government paid fair and reasonable prices, and “spent millions on projects that may not have achieved sufficient energy savings.”

On October 1, 2014, Matthew Bowman, a former Ft. Knox ethics attorney and procurement fraud advisor, pleaded guilty to providing a false document to Defense Criminal Investigations Service (DCIS) Special Agent Jared Camper in 2010 in a failed attempt to shut down the investigation into Meredith.  Bowman was sentenced to one year of probation, and was subsequently debarred from working on any government contracts.

On April 9, 2015, Nolin and the United States entered into a Non-Prosecution Agreement in which Nolin agreed to pay over $7.6 million in civil penalties and forfeitures resulting from its business dealings with Meredith and Fort Knox.

The case was investigated by the Defense Criminal Investigative Service, Dayton Resident Agency.  The Army Criminal Investigations Command, Columbus Resident Agency, the Defense Contract Audit Agency, also assisted with the investigation.  The case was prosecuted by Assistant United States Attorneys David Weiser and Marisa Ford.  Meredith is scheduled for sentencing on March 9, 2016.

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