Husband, son & nephew convicted of receipt of stolen federal government property and conspiring with former U.S. Dept. of Education employee in $350,000 scheme. Washington, DC, November 8, 2002

Published by the Department of Education, Office of Inspector General on 2002-11-08.

Below is a raw (and likely hideous) rendition of the original report.

OIG Investigative Reports, Husband, Son and Nephew Convicted of Receipt of Stolen Federal Government Property
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Friday, November 8, 2002
U.S. Department of Justice
Judiciary Center
555 Fourth St. N.W.
Washington, D.C.  20530
For Information Contact Public Affairs
Channing Phillips (202) 514-6933
Husband, Son and Nephew Convicted of Receipt of Stolen Federal Government Property and Conspiring with Former U.S. Department of Education Employee in $350,000 Scheme
Washington, D.C. - United States Attorney Roscoe C. Howard, Jr., Van A. Harp, Assistant Director in Charge of the FBI's Washington Field Office, John P. Higgins, Jr., Department of Education Acting Inspector General, and Environmental Protection Agency Inspector General Nikki L. Tinsley announced today that Luther E.  Mellen, III, 54, Branch Chief in the Architecture, Engineering and Real Estate Branch of the Environmental Protection Agency, and Philip C. Burroughs, 29, a manager at Ken Dixon Auto in Waldorf, Maryland, both formerly of Mechanicsville, Maryland, were found guilty yesterday by a federal jury of Conspiracy to Defraud the United States and Receipt of Stolen Government Property.  Burroughs was also found guilty of Theft of United States Government Property.  In addition, Jeffrey L. Morgan, 29, Technology Specialist at the Department of Education and formerly of Waldorf, Maryland, was found guilty of Receipt of Stolen Government Property.
The Honorable Emmet G. Sullivan, who presided over the trial, ordered Burroughs and Mellen detained pending a bond determination on Tuesday, November 12, 2002.  Sentencing dates for all three defendants will be set at that time.  Mellen faces up to a possible sentence of 15 years in prison and a $500,000 fine; Burroughs faces up to 20 years in prison and a $750,000 fine; and Morgan faces up to ten years in prison and a $250,000 fine.
During the trial the government's evidence demonstrated that Elizabeth C. Mellen, wife of defendant Luther Mellen, was a Telecommunications Specialist in the Office of Chief Information Officer at the United States Department of Education (Department), who managed the Department of Education's contract with  the former Bell Atlantic Federal Systems (Bell Atlantic) (now Verizon, Inc.).  In that capacity, Elizabeth Mellen, who previously pled guilty to Theft of Government Property and Conspiracy to Defraud the Government, was responsible for the technical aspects of any project relating to the contract and served as the technical liaison between Bell Atlantic and the Contract Officer.  Under the contract, materials necessary for the completion of the contract, such as wiring, telephones, and other equipment used for the installation of the telephone service, were ordered by Elizabeth Mellen through Robert Sweeney, a Bell Atlantic telephone technician who was assigned full-time to the Department and who previously pled guilty to Theft of Government Property and agreed to cooperate with the government.  In turn, Bell Atlantic would order the necessary products through vendors who would deliver the products to Bell Atlantic's Washington, D.C., warehouse.  Sweeney would pick up the items and deliver them to locations specified by Elizabeth Mellen. The Department was ultimately held responsible for the cost of the items.
In or before 1997, Elizabeth Mellen began asking Sweeney to order materials for her personal use and that were not related to the performance of the Department's contract.  Initially these orders were sporadic and limited to telephones.  The orders increased in amount and frequency in early 1997 when Elizabeth Mellen ordered a Gateway 2000 Destination computer for the house she and defendant Mellen shared.  The next high-dollar item was a laptop computer that she ordered  for her stepson at the request of  defendant  Mellen, in April 1997.  Once these orders went through without any difficulty, Elizabeth Mellen began to order large quantities of electronic equipment which she kept for herself or gave to various family members or friends including her son, defendant Burroughs from a previous marriage and her nephew, Jeffrey Morgan.
Other family members joined in by communicating their personal requests to Elizabeth Mellen.  The value of her orders increased until she was ordering multiple high-dollar items at a time.  In the summer of 1999,  Elizabeth Mellen caused to be delivered to the home of her sister, Jeffrey Morgan's mother, a stolen Gateway Computer and multiple accessories which Morgan converted to his own use.  She also gave several of her relatives, including defendant Burroughs, cellular telephones paid for with Department funds and she ordered the use of Department funds to pay for the monthly costs associated with calls made on the telephones.  In addition, on various occasions, Elizabeth Mellen provided the services of the Bell Atlantic technicians and another Department employee to install wiring or phone lines at the homes of various relatives at the Department's expense and to perform such menial tasks as washing the deck of defendant Philip Burroughs, doing lawn work at his home and cleaning up yard debris. At Elizabeth Mellen's direction, the technicians in turn claimed false overtime.
This continued until December 9, 1999, when law enforcement agents executed search warrants and conducted consent searches at the home of Elizabeth Mellen and defendant Luther Mellen and the homes of several of her relatives including defendants Philip Burroughs and Jeffrey Morgan.  Subsequent investigation revealed that, overall, Elizabeth Mellen ordered for her personal use and for the use of defendants and other family members and close associates, more than $350,000 worth of goods paid for by the Department and generated over $934,000 in fraudulent labor and overtime claims.  There were originally 18 co-conspirators charged in this scheme.  Fourteen, including Elizabeth Mellen, pled guilty, seven of whom agreed to cooperate with the government and who testified at the trial.  One defendant was convicted following a jury trial in February 2002.
In announcing the verdict, United States Attorney Howard, Assistant Director Harp,  Inspector General John P. Higgins, Jr., and Inspector General Nikki L. Tinsley commended the following persons for the outstanding contributions to this case: Special Agent in Charge Gary Mathison, Special Agents Brian L. Hickey and John J. Hendrickson of the Department of  Education Office of the Inspector General; Special Agent Thomas Chadwick of the Federal Bureau of Investigation; and Special Agent In Charge of Northeastern Investigations, Gary Fugger and Special Agent Mathew A. Walinski of the Environmental Protection Agency.  They also praised the outstanding work of Law Clerk Benjamin Peltier and Assistant United States Attorneys Laura A. Ingersoll and Debra L. Long-Doyle who tried the case and Assistant United States Attorney Barbara A. Grewe who indicted the case.
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Last Modified: 02/28/2005
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