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Case Number: 1:16-cr-00237
Judge: Richard W. Story
Court: United States District Court for the Northern District of Georgia (Fulton County)
Plaintiff's Attorney: United States Attorney’s Office in Atlanta
Description: Atlanta, Georgia criminal defense lawyer represented Defendant charged with conspiring to defraud Georgia Tech and the Central Intelligence Agency (CIA).
James G. Maloney’s conspirators, James J. Acree and James D. Fraley, III, pleaded guilty in 2016.
“These defendants violated the trust placed in them by Georgia Tech and the CIA in allowing their judgment to be clouded by greed,” said U.S. Attorney Ryan K. Buchanan. “The seven-year delay in resolving Maloney’s case resulted from Maloney’s ploy to evade criminal liability by threatening to reveal classified information during the course of his trial in a failed attempt to force the government to dismiss the case. But as Maloney discovered, the government will not be bullied or threatened by a criminal defendant.”
“Maloney’s guilty plea should send a clear message to anyone seeking to abuse their positions for personal gain, the FBI will find you and hold you accountable”, said Keri Farley, Special Agent in Charge of FBI Atlanta. “Thanks to our extraordinary partnership with Georgia Tech, even with Maloney’s defense tactics he was unable to avoid the consequences of his crimes. He will now be sentenced with his coconspirators, closing out this lengthy case.”
According to U.S. Attorney Buchanan, the charges, and other information presented in court: From early 2007 through late 2013, Maloney, Acree, and Fraley engaged in a scheme to defraud Georgia Tech and the CIA. They are experts in electromagnetic analysis and measurements and were assigned to GTRI’s Advanced Concepts Laboratory (ACL), where they worked on projects funded by the United States Department of Defense, various intelligence agencies, and private industry.
As part of his duties and responsibilities at GTRI, Fraley had access to a Georgia Tech credit card known as a “PCard.” Fraley was supposed to use his PCard only to purchase materials and supplies for official Georgia Tech business. Neither Fraley nor anyone else was allowed to charge personal expenses on a PCard.
Maloney, Acree, and Fraley falsely led GTRI to believe that all of their PCard charges were for official business. In fact, Maloney, Acree, and Fraley charged approximately $200,000 in personal expenses on Fraley’s PCard, including, two four-wheelers and a trailer, two Sony 52-inch flat-screen televisions, Apple computers, iPads, OtterBox protective cases, iPods, Kindle E-readers, Leica and Nikon digital cameras, video cameras, a mini micro pinhole video camcorder pen, a night vision monocular, two pairs of binoculars, Bose headphones, a 3D printer, sports watches with heart-rate monitors, sunglasses, materials used to perform private consulting contracts, computer monitors and solar panels for a private hunting club, a personal video network for home use, and an uninterruptible power supply for a tennis ball machine. Maloney and Fraley also used Fraley’s PCard to pay for remodeling and maintenance expenses related to six rental properties they owned together in the name of a Georgia corporation called J’s Services, Inc.
Some of the fraudulent PCard charges and some of the remodeling and maintenance expenses for Maloney and Fraley’s rental properties were charged to a classified GTRI contract that was funded by the CIA.
Fraudulent Consulting Activity
In February 2007, Maloney and Acree were reprimanded by GTRI for engaging in outside consulting activity that violated Georgia Tech’s conflict-of-interest policy. Maloney and Acree sent a letter to their supervisor at GTRI, acknowledging that they had used facilities and equipment owned by Georgia Tech for their personal gain and benefit and promising that they would never do it again. But Maloney and Acree continued to engage in outside consulting activity that harmed Georgia Tech, and they were soon joined by Fraley.
From December 2007 through March 2013, while they were employed full-time by Georgia Tech, Maloney, Acree, and Fraley received approximately $500,000 from Picatinny Arsenal, SRA International, and the U.S. Air Force. They obtained those consulting contracts by using Acree’s former employer, Tec-Masters, Inc., as a billing pass-through. Tec-Masters, a defense contractor located in Huntsville, Alabama, performed no labor on any of the projects but merely facilitated the transfer of money from the customers to Maloney, Acree, and Fraley. Maloney, Acree, and Fraley falsely led those customers to believe that the work would be done by GTRI. They fostered this false impression by using their official GTRI telephone numbers and GTRI email addresses in their communications with customers. In addition, they met with customers at GTRI’s headquarters on the Georgia Tech campus and gave customers tours of GTRI’s labs and other facilities. Maloney called this “hiding in plain sight.”
Spectra Research, Inc.
From December 2010 through July 2013, Maloney and Fraley also moonlighted as consultants for Spectra Research, Inc., a defense contractor located in Dayton, Ohio. Spectra paid J’s Services $196,000 for this work. Maloney and Fraley directed Georgia Tech employees under their supervision at GTRI to help perform this consulting work for Spectra. Maloney and Fraley also directed those Georgia Tech employees to bill time for Spectra work to a classified CIA contract, even though that contract had nothing to do with Spectra.
In competing and billing for, and performing, their outside consulting work, Maloney, Acree, and Fraley violated Georgia Tech’s conflict-of-interest policy and code of business conduct; diverted customers and revenue away from Georgia Tech for their personal gain and benefit; and used Georgia Tech facilities and equipment for their personal gain and benefit.
During a routine audit in early 2013, Georgia Tech discovered problematic charges on Fraley’s PCard and scheduled a meeting with him. Maloney suggested to Acree and Fraley that they meet to “get our story straight.” Fraley, fearing that Maloney would seek to shift all the blame to him, recorded the cover-up meetings and provided those recordings to the FBI.
In their cover-up meetings, Maloney asked Acree and Fraley to help him “weave a story around” a fictitious set of facts designed to mislead Georgia Tech auditors. Maloney also suggested that they try to force Georgia Tech to shut down the audit by telling the auditors that the items charged to Fraley’s PCard were purchased for use on a classified CIA contract, and that the auditors did not need to know further details. That false narrative foreshadowed Maloney’s planned defense in the criminal case.
James G. Maloney, 57, of Marietta, Georgia, pleaded guilty on May 22, 2023, to conspiracy to commit mail and wire fraud. Sentencing for all three defendants will be scheduled at a later date, before Senior U.S. District Judge Richard W. Story.
This case is being investigated by the Federal Bureau of Investigation.
Assistant U.S. Attorneys Russell Phillips and Stephen H. McClain, and Trial Attorney Emma D. Ellenrieder of the Department of Justice National Security Division’s Counterintelligence and Export Control Section are prosecuting the case.
Outcome: Defendant pleaded guilty.
05/22/2023 212 ORDER Pursuant to the Due Process Protections Act as to James G. Maloney. Signed by Judge Richard W. Story on 05/22/2023. (sk) (Entered: 05/22/2023)
05/22/2023 213 Minute Entry for proceedings held before Judge Richard W. Story: Change of Plea Hearing as to James G. Maloney, PLEA of GUILTY by James G. Maloney (1) Guilty Count 1. Defendant sworn. Guilty Plea and Plea Agreement was executed, verified, and presented. The Court accepted and entered the plea of guilty. Defendant was adjudged guilty as charged in Count One of the Indictment. Sentence date will be determined following completion of a presentence report by U. S. Probation. Defendant to remain on bond under all previously imposed terms and conditions. (Attachments: # 1 GUILTY PLEA AND PLEA AGREEMENT) (Court Reporter Shannon Welch) (rsg) (Entered: 05/22/2023)
05/22/2023 214 ORDER Pursuant to the Due Process Protections Act as to James G. Maloney. Signed by Judge Richard W. Story on 05/22/2023. (rsg) (Entered: 05/22/2023)