Essex County Man Admits Defrauding U.S. Department of Defense and Agreeing to Rig Bids for U.S. Department of Defense Contracts

NEWARK, N.J. - An Essex County, New Jersey, man today admitted engaging in multiyear schemes to defraud the U.S. Department of Defense (DoD) by providing military equipment parts that were not authorized under the governing contracts and agreeing with another individual to rig bids for DoD contracts, U.S. Attorney Philip R. Sellinger announced.

Alan Aranowitz, 75, of Roseland, New Jersey, pleaded guilty before U.S. District Judge Julien X. Neals in Newark federal court to an information charging him with two counts of wire fraud conspiracy.

According to documents filed in this case and statements made in court:

Count One

From 2015 through August 2018, Aranowitz conspired with others to defraud the DoD and one of its combat logistic support arms, the Defense Logistics Agency (DLA), by engaging in a pattern of unlawful product substitution. Aranowitz owned and operated Arlo Corporation (Arlo), which entered into contracts with the DoD to supply replacement parts for the military, such as screws, nuts, and bolts. Aranowitz conspired with two owner/operators of two companies to provide cheaper counterfeit and/or non-conforming parts to the DoD.

For instance, Aranowitz sometimes falsely represented that the parts would be MIL-SPEC, that is, suitable for military use because the parts had met certain specific requirements-when in fact, he submitted such bids intending to provide parts that were not MIL-SPEC. Aranowitz sometimes falsely represented that the parts would be "Exact Product," that is, that they derived from a particular manufacturer, when, in fact, he submitted such bids intending to provide parts that were not Exact Product. He also sometimes falsely represented that Arlo or one of the companies he conspired with would be the manufacturer of the parts, when in fact he knew that Arlo or that company would notbe the manufacturer. Aranowitz sometimes submitted bids to the DoD in the name of one of the companies with the owner/operator's knowledge and approval. By committing these acts, Aranowitz and his conspirators increased their own profits. DLA received numerous Product Quality Deficiency Reports (PQDRs) from U.S. military end users reporting that a particular part supplied by Arlo did not physically conform to the contract specifications.

As part of the plea, Aranowitz agreed to forfeit $684,168 in proceeds of the fraudulent scheme charged in Count One and to pay restitution in the amount of $878,644 to the DoD.

Count Two

From 2017 through August 2018, Aranowitz conspired with the owner operator of a company to defraud the DoD and DLA by coordinating bid prices, engaging in bid rigging, with another DoD contractor. Arlo, like all DoD contractors, was required to certify that it had arrived at its bids independently and without consulting or colluding with any other offeror or competitor. On the contrary, Aranowitz regularly consulted with another DoD contractor regarding the bids that each was submitting.

The charges of wire fraud conspiracy each carry a statutory maximum of 20 years in prison, and a $250,000 fine, which could run consecutively. Sentencing is scheduled for Oct. 29, 2024.

U.S. Attorney Sellinger credited special agents of U.S. Department of Defense, Office of Inspector General, Defense Criminal Investigative Service, Northeast Field Office, under the direction of Acting Special Agent in Charge Brian J. Solecki, and special agents of Homeland Security Investigations Newark, under the direction of Acting Special Agent in Charge William S. Walker, with the investigation leading to the guilty plea.

The government is represented by Assistant U.S. Attorney Elisa T. Wiygul of the Criminal Division in Camden.