A former western Wisconsin man has been sentenced in federal court to 10 years in prison for committing fraud to obtain military contracts.
Craig Klund, of Yankton, South Dakota, was convicted of wire fraud, money laundering and aggravated identity theft for defrauding the U.S. Department of Defense by using shell companies, aliases and other deceptive practices.
U.S. District Judge James D. Peterson on Thursday also ordered Klund to pay nearly $436,000 in restitution and serve three years on supervised release after his prison time, the Leader-Telegram reported.
U.S. Attorney Timothy O’Shea said the former Chippewa Falls man moved his company from Wisconsin to South Dakota to evade inspectors from the Defense Contract Management Agency who were suspicious about his actions. O’Shea said Klund had previously been convicted of defense contracting fraud.
Using his shell companies Klund won more than 1,900 military contracts worth about $7.4 million from 2011 to 2019 and was paid nearly $3 million.
According to prosecutors, Klund knowingly shipped nonconforming parts to the military and requested payment for them. Electrical parts Klund supplied had a number of uses, including in the Patriot Missile System and F-16 jet fighter.
In addition to securing the contracts through fraud, Klund also concealed proceeds from them by not reporting that money on his federal income tax returns and laundering the funds between different accounts.