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Couple sentenced in huge State Department fraud scheme

Dec. 6, 2013 - 07:11PM   |  
By SEAN REILLY   |   Comments

A former State Department contractor and her husband were sentenced to prison Friday for orchestrating a multimillion dollar fraud scheme.

Kathleen McGrade will serve two years under the sentence meted out in federal court; Brian Collinsworth will serve 18 months for his role in the convoluted scam, according to court filings and a news release from the U.S. attorney’s office for the eastern district of Virginia.

In an August plea agreement, the couple admitted to defrauding the government and money laundering. Along with prison time, they have to forfeit houses, a yacht, a Steinway piano and other property valued at almost $7.9 million, the release said.

McGrade was a contractor in the State Department’s office of acquisition management while Collinsworth worked for a company that received contracts through the office for heating, ventilation and air conditioning work at embassies around the world. When the two wed in 2006, they did not tell State Department employees out of concern that McGrade would then be barred from working on matters involving her new husband. They had already formed a company called Sterling Royale Group, or SRG, with McGrade as president and Collinsworth as vice president.

Between 2008 and 2011, McGrade led State Department contracting officers to sign off on heating and ventilation jobs for SRG worth almost $53 million. By the time McGrade was fired in 2011, State had paid the firm about $39 million, with the couple using some of the money to buy the property that must now be forfeited, the release said.

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