Warrant Affidavit Shows How Easy It Is To Bilk The Government Out Of Excess Equipment


Seamus Hughes, the Deputy Director of George Washington University’s Program on Extremism, happened across an extraordinary story — told in warrant affidavit form — of a man who faked up a research lab and started scoring himself truckloads of free equipment from the US government.

According to the allegations in the warrant [PDF], Patrick R. Budic discovered a nifty way to exploit government excess equipment giveaways, utilizing a nonexistent company to make off with nearly $11 million in equipment ranging from GPS units to aircraft radios to hospital beds. The figure might have been much, much higher. The affidavit shows Budic tried (but failed) to acquire aircraft on more than one occasion.

The setup echoes the sting operation the Government Accountability Office performed as part of its investigation of the Defense Department’s 1033 program. The GAO set up a fake law enforcement agency and was able to obtain over $1 million in excess military gear before wrapping up its investigation. In that case, there appeared to be almost zero follow-up by the agencies in charge of disbursement. No one called. No one visited the fake address to verify the fake law enforcement agency’s existence.

Some of that appears to have come into play here. Budic — along with David G. Rosseau, a US Navy engineer — allegedly set up a fake nonprofit called Northridge National Laboratories (NNL) in Wyoming. According to the state’s Department of State, Wyoming does not engage in much regulation of registered nonprofits. No follow-up was done to ensure the nonprofit actually existed and the only verification the state required for its nonprofit status was… the declaration it was a nonprofit on the registration paperwork. However, the principal address for NNL was Milwaukee, Wisconsin, where Budic lived.

Budic also set up a for-profit company, PMR Research, and got it registered with the Government Services Administration’s (GSA) award management system.

Using these two companies and some allegedly false claims about being a Defense Department contractor, Budic went to work. He began exploiting the GSA’s surplus property program, which allows government agencies (at all levels) and their contractors to obtain excess equipment for little to no cost.

It all began to fall apart when Budic started thinking big. He ran into problems trying to acquire a Learjet. Closer vetting apparently begins when the requested property runs into the millions of dollars per unit. The specialist assisting Budic couldn’t find anything verifying Budic’s claim NNL was a Defense Dept. contractor “working on top secret research.” Budic admitted NNL wasn’t a federal laboratory “yet,” but was “on its way” to becoming one. “This is how you get there,” he told the specialist.

Actually, this is how you get got.

The GSA Inspector General stepped in and made a recorded call to Budic. Budic claimed he needed the aircraft for Defense Dept. research, claiming he had research labs “all over the place,” but principally operated out of Wisconsin.

Following that, Budic was interviewed by an undercover GSA agent and a Defense Criminal Investigative Service (DCIS) agent. Budic thought he was there to complain about the holdup on his aircraft order. The story started to change the more Budic talked. The million-square-foot lab Budic said NNL already owned in his earlier phone call became a lab NNL was trying to acquire. Asked where all the government equipment he already had obtained was, Budic said some was in Wisconsin but the rest of it was in California.

Based on this information, the agents were able to locate the Wisconsin storage unit. Talking to the unit’s owner, the GSA discovered Budic was behind on his rent and was locked out. The owner also said Budic had “offered him a laptop” in an effort to get back into his storage space. According to the owner, the storage unit contained computers, a large printer, docking stations, more than a dozen servers, and “a lot of other stuff.”

Undeterred by his inability to score an airplane, Budic next tried to acquire a 27′ boat. He claimed in his request he was authorized to receive it under law and it would be used for “development projects pertinent to national security.”

As the investigation continued, Budic became more evasive. He refused to divulge the location of his apparently fake lab, citing national security reasons. He did the same when asked for proof of the lab’s ties to the DoD. When asked where the requested aircraft was headed, Budic said operational security prevented him from speaking about it. Those asking questions were told to take it up with other agencies. Budic called someone “Colonel” to imply he was close to DoD officials but couldn’t provide a name.

The conversations — many of them partly-transcribed in the warrant application — are an amazing read. Budic dodged questions by stating he was on medication or replied with veiled threats more questioning would rain down DoD hell on the people standing between him and “his” aircraft.

Apparently, Budic was quite the bullshitter. For a brief period of time, he talked his way into office space on a military base. When not hauling away whatever the GSA would part with, Budic was going after the GSA for “unfairly” denying him millions of dollars worth of equipment, including a plane, a boat, and a $10 million supercomputer.

Among the things Budic was able to obtain were chemicals from a Defense Dept. chemical disposal facility, a seismograph from the Dept. of the Interior, and pharmacy equipment from Veterans Administration.

The entire affidavit reads like a spec script for an unmade blockbuster. Sadly, it also shows what someone can get away with using little more than some letterhead, a plausible backstory, and a decent knowledge of government acquisition programs.

Filed Under: , ,

Rate this comment as insightful
Rate this comment as funny
You have rated this comment as insightful
You have rated this comment as funny
Flag this comment as abusive/trolling/spam
You have flagged this comment
The first word has already been claimed
The last word has already been claimed
Insightful Lightbulb icon Funny Laughing icon Abusive/trolling/spam Flag icon Insightful badge Lightbulb icon Funny badge Laughing icon Comments icon

Comments on “Warrant Affidavit Shows How Easy It Is To Bilk The Government Out Of Excess Equipment”

Subscribe: RSS Leave a comment
Machin Shin says:

Re: "Free Market" Forces

Well, really I think the only reason the government one stopped at $1M was because they figured they had more than enough for their report. I didn’t get the impression that they ever hit any resistance. They just stopped on their own. Would be curious to see how far they could have gone before getting caught.

Anonymous Coward says:

Lucky for the taxpayer that the accused was greedy

As told here, if he hadn’t gotten greedy and gone for the ultra high value items, he might have gone a lot longer before drawing any investigatory attention. Taxpayers should count themselves lucky that he was greedy enough to provoke a criminal investigation when he did. Left unchecked, he might have liquidated (more?) of the assets and/or permitted their use in other crimes.

The downside is that this may provoke copycats who are more circumspect about their requests, and it’s rather unlikely that the relevant government agencies will take this as a warning to adequately tighten their disbursement procedures.

ECA (profile) says:

Having said, all of the above..

WHO here,
understands/knows that ALL the utility companies have a listing of All the addresses…

So..There is NO EXCUSE for them NOT to know Address’s, or at least Call local police and find out..

It amazes me, that WE are responsible for IF’ we get Flim flammed..and getting any recourse Costs US MONEY..

and the Gov is willingly GIVE AWAY BILLIONS IN GOODS??

Anonymous Coward says:

Keep in mind, the government wants to get rid of crap, if they can’t, they have to dispose of it, so that actually costs money.

The guy got what? Chemicals? That could mean expired Windex (if that stuff actually ever expires, but go with me here) and a seismograph. No idea why anyone would want one of them, maybe sell it on eBay, but whatever.

So he got a bunch of crap, but when he asked for a jet, he got caught. Nice touch asking for a boat too.

Of course, the govt. gave it to him, and we want these folks running healthcare?

Annonymouse (profile) says:

Dumb crooks are greedy crooks.

If he had luquidated some of his earlier acquisitions and paid all the little people above board along the way could have slowed things down and raised warning bells ahead of time.
Also sticking with the small stuff while figuring out what the trip level was would have been smart as well.
But dumb guys also have more ego than brains. The smart ones are doing quite well and are off the radar.

Anonymous Coward says:

Friends of mine own a board game and comic shop. They have to jump through more hoops and provide more documentation to sell Magic the Gather cards and Comic books at retail. This includes providing pictures of their store, and a link to their website. On the comics side they even get the occasional secret shopper making sure that they don’t break release dates because clearly it will destroy the comics industry if the books are sold on Tuesday instead of Wednesday.

orbitalinsertion (profile) says:

Re: Re:

I guess when one has surplus fucking LearJets to give away (or supercomputers, among other things), they make it easy for highly organized kleptos or thieves, and for the local police fiefdoms across the land.

But where should we cut government spending to fund something as insanely awful as a border wall? FEMA? Healthcare? Certainly not military spending, overspending, and the resultant giveaway system. And not when troops still don’t get the actual support they need, in places they should never have been, creating perpetual enemies out of whole cloth. (And heaven forbid they get much help when they rotate back home, unless it is a nice job with one of the burgeoning "security consultant" firms.)

Nope, well hand over half-tracks and grenade launchers to cops, and deliver "surplus" servers to decay on a storage lot. For law and order.*

*Great Justice has taken a leave of absence.

Add Your Comment

Your email address will not be published. Required fields are marked *

Have a Techdirt Account? Sign in now. Want one? Register here

Comment Options:

Make this the or (get credits or sign in to see balance) what's this?

What's this?

Techdirt community members with Techdirt Credits can spotlight a comment as either the "First Word" or "Last Word" on a particular comment thread. Credits can be purchased at the Techdirt Insider Shop »

Follow Techdirt

Techdirt Daily Newsletter

Techdirt Deals
Techdirt Insider Discord
The latest chatter on the Techdirt Insider Discord channel...