UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF NORTH CAROLINA WESTERN DIVISION

v.

) ) ) ) )

FILED IN OPEN COURT

ON q, ~3-;;Ot{) rtt-

Dennis P. Iavarone Clerk US District Court ' Eastern District of NC

UNITED STATES OF AMERICA

I N D I C T MEN T

JOSEPH J. MARAK

The Grand Jury charges that:

INTRODUCTION

1. Defendant Joseph J. MARAK was a Medical Plans Specialist

at the Command Surgeons Office, US Army Special Operations Command

(USASOC) from October, 2001 until he left government service on

June 10, 2006.

Among other missions, USASOC purchas.es emergency

medical, search, and rescue equipment for the military. To this

end, USASOC employs a medical plans specialist, who "develops,

coordinates, and implements medical plans, policies and programs.

. . concerning the readiness of the ARSOF [Army Special Operations

Forces] soldier." Such duties include recommending the purchase of

specific equipment needed by the Army, and additionally, giving

input on the issuance of National Stock Numbers (NSN).

2. An NSN is a label assigned to an item that is bought and

used often by the United States.

When an NSN is assigned, the

government sets an official description of the item along with

manufacturer I S part number, price history, plus physical and

Case 5:10-cr-00332-FL Document 1 Filed 09/23/10 Page 1 of 10

performance characteristics.

Items from different manufacturers

havipg the same characteristics, the same function, and the same size, share the same NSN. NSNs are managed and assigned by the Defense Logistics Information Service (DLIS) in Battle Creek,

Michigan.

While a manufacturer of an item can request its

government customer obtain the assignment of an NSN,

the formal

request to DLIS must come from the government agency or service. The Medical Plans Specialist has significant input over whether or not a formal request for an NSN is made.

3. In his position as Medical Plan Specialist, MARAK reached out for persons known to the Grand Jury in July 2002, requesting the design and development of a two-part litter pack that could be mounted on vehicles, tear away from the vehicle easily to provide first aid/retrieve injured or deceased at a distance from the vehicle, yet later easily provide secure re-attachment of the litter to the vehicle for transport. The product was known as a CASEVAC MES. By March 2003, a prototype had been designed, and a small order placed by USASOC. By April of 2004, the CASEVAC had been modified, and again, a small order placed by USASOC.

4. In Spring 2005, MARAK approached persons and companies known to the Grand Jury about forming a joint venture in order to

design and develop an updated version of the CASEVAC.

In July

2005, a written agreement was proposed between those companies to

2

Case 5:10-cr-00332-FL Document 1 Filed 09/23/10 Page 2 of 10

jointly produce a CASEVAC kit for the military.

MARAK was largely

responsible for the design of this updated CASEVAC System, and marked his drawings "Property of Joseph J. MARAK. /I MARAK evaluated all prototypes produced and suggested changes. MARAK asked the involved companies to keep this project on a "need to know" basis and arranged for product development meetings at hotel rooms in the Fayetteville, NC, utilized a non government e-mail account, and had

prototypes sent to his personal residence.

(At least as early as

November, 2005, Marak began using the private email address XMedGroup@aol.com for certain communications involving the

CASEVAC) .

5. In January 2006, MARAK notified the two involved companies that he intended to leave government April 30, 2006 and his "deadline is shorter than that to attempt to acquire USASOC approval and funding to purchase this kit as a solution to the

CASEVAC requirement .

"

In spring, 2006, USASOC approved the

CASEVAC design.

From April 2006 through September 2006, USASOC

purchased 2,764 CAS EVAC Kits for an approximate $3,817,641, approximately a three-fold increase over the previous year's sale of CASEVAC.

6. In regard to the issuance of NSNs, the CASEVAC was a

highly specialized product.

Once an NSN is gained for it, a

competing manufacturer would need to reverse engineer the product

3

Case 5:10-cr-00332-FL Document 1 Filed 09/23/10 Page 3 of 10

in order to meet the standards of the issued NSN. In addition, if

the item is patented and/or the subject of a trademark, it would be

virtually impossible for a competing company to be listed as an

additional supplier under an established NSN.

Marak pushed the

persons/ companies known to the Grand Jury to patent and use

trademarks on the products which he then included in the CASEVAC

NSN specification request.

Through the efforts of MARAK, the

CASEVAC NSN and several subpart NSNs, were set up for the company

known to the Grand Jury.

7. Beginning in the Spring of 2005, when MARAK first

proposed the joint venture between the two companies known to the

Grand Jury and while still employed by the United States, MARAK

began exerting pressure on each company to compensate him for his

contributions to the product. His pressure was communicated by e-

mail and in person, and included demands for "important money," and

"royalties. II In the demands, MARAK pitted the companies against

one another, and made threats to withhold or even withdraw NSNs,

citing at least one occasion where he had previously done so

against a different company.

Records indicate that between

September, 2005 and June, 2006, while MARAK was employed by the

United States, he received nearly $13,000 in traveler's checks,

from at least one person/company known to the Grand Jury

8. By late 2005, MARAK was demanding post-government

employment in addition to immediate financial compensation as part

4

Case 5:10-cr-00332-FL Document 1 Filed 09/23/10 Page 4 of 10

of his continued cooperation with the CASEVAC contracts and NSNs.

At least one person/company known to the Grand Jury acquiesced to

these demands, paying MARAK monies and employing MARAK after he

left his position with the United States.

9. Further payments, based on threats made prior to Marak's

departure from the United States employ, were made.

Records

indicate MARAK received $350,000 from one person/company known to

the Grand Jury between July and December, 2006.

10. On June 8, 2006, MARAK completed a post-government

service ethics questionnaire, stating that upon his separation from

government service, he intended to start his own business designing

and developing medical solutions for austere environments; that he

had not taken any employment actions at the time of the writing;

and that his first step towards employment would follow his June

10, 2006 termination with the initiation of a business plan and a

gap assessment.

11. The allegations set forth in the foregoing Introduction

are hereby incorporated by reference into each count of this

Indictment and re-alleged therein.

COUNT ONE

12. Beginning on or about April 2005, and continuing through

August, 2010, in the Eastern District of North Carolina and

elsewhere, defendant JOSEPH J. MARAK did obstruct, delay, and

affect commerce and the movement of articles and commodities in

5

Case 5:10-cr-00332-FL Document 1 Filed 09/23/10 Page 5 of 10

commerce by extortion and attempted to do SOi that is, defendant obtained the property and monies of companies and persons doing business with the United States Army Special Operations Command ( "USASOC"), with the companies' and persons' consent, induced under

color of official right, in violation of Title 18, United States Code, Section 1951.

COUNTS TWO THROUGH EIGHTEEN

13. On or about each of the dates reflected below, in the Eastern District of North Carolina and elsewhere, defendant JOSEPH J. MARAK, a public official as defined in Title 18, United, States Code, Section 201 (a) (1), directly and indirectly did corruptly

demand, seek, receive, accept, and agree to receive and accept something of value personally, in return for being influenced in the performance of an official act; that is, MARAK, being employed as a Medical Plans Specialist at the United States Army Special Operations Command ("USASOCII), accepted payments from a company and persons doing business with 'the Government, in return for increasing the amount of federal contracts with that company and persons, as further set forth below:

Count Date Amount Type
2 10/04/2005 $500.00 AAA traveler's checks
3 11/23/2005 $200.00 AAA traveler's checks
4 11/25/2005 $800.00 AAA traveler's checks
5 11/28/2005 $3000.00 AAA traveler's checks 6

Case 5:10-cr-00332-FL Document 1 Filed 09/23/10 Page 6 of 10

6 12/03/2005 $700.00 AAA traveler's checks
7 12/05/2005 $300.00 AAA traveler's checks
8 02/15/2006 $300.00 American Express
traveler's checks
9 04/28/2006 $2000.00 AAA traveler's checks
10 OS/22/2006 $1000.00 AAA traveler's' checks
11 OS/24/2006 $100.00 AAA traveler's checks
12 OS/25/2006 $1000.00 AAA traveler's checks
13 OS/27/2006 $300.00 AAA traveler's checks
14 OS/29/2006 $100.00 AAA traveler's checks
15 05/30/2006 $100.00 AAA traveler's checks
16 05/31/2006 $1100.00 AAA traveler's checks
17 06/01/2006 $100.00 AAA traveler's checks
18 06/02/2006 $200.00 AAA traveler's checks each entry in the above table consisting of a separate violation of

18 U.S.C. s 201(b) (2).

COUNTS NINETEEN through THIRTY-FIVE

14. On or about each of the dates reflected below, in the

Eastern District of North Carolina and elsewhere, defendant JOSEPH

J. MARAK, a public official as defined in Title 18, United States

Code, Section 201(a) (1), otherwise than as provided by law for the

proper discharge of official duties, directly and indirectly did

demand, seek, receive, accept, and agree to receive and accept

something of value personally for and because of an official act

performed and to be performed by such officialj that is, MARAK,

being employed as a Medical Plans Specialist at the United States

7

Case 5:10-cr-00332-FL Document 1 Filed 09/23/10 Page 7 of 10

Army Special Operations Command (\\USASOC"), accepted payments from

a company and persons doing business with the Government, because

he did increase the amount of federal contracts with that company

and persons, as further set forth below:

Count Date Amount Type
19 10/04/2005 $500.00 AAA traveler's checks
20 11/23/2005 $200.00 AAA traveler's checks !
I
i
21 11/25/2005 $800.00 AAA traveler's checks
22 11/28/2005 $3000.00 AAA traveler's checks
23 12/03/2005 "$700.00 AAA traveler's checks
24 12/05/2005 $300.00 AAA traveler's checks
25 02/15/2006 $300.00 American Express
traveler's checks
26 04/28/2006 $2000.00 AAA traveler's checks
27 OS/22/2006 $1000.00 AAA traveler's checks
28 OS/24/2006 $100.00 AAA traveler's checks
29 OS/25/2006 $1000.00 AAA traveler's checks
30 OS/27/2006 $300.00 AAA traveler's checks
31 OS/29/2006 $100.00 AAA traveler's checks
32 05/30/2006 $100.00 AAA traveler's checks
33 05/31/2006 $1100.00 AAA traveler's checks
34 06/01/2006 $100.00 AAA traveler's checks
35 06/02/2006 $200.00 AAA traveler's checks each entry in the above table consisting of a separate violation of

18 U.S.C. § 201(c)(1)(B).

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Case 5:1 0-cr-00332-FL Document 1 Filed 09/23/10 Page 8 of 10

FORFEITURE NOTICE

JOSEPH J. MARAK is given notice of the provisions of 18 U.S.C. § 981(a) (1) (C), as made applicable herein by 28 U.S.C. § 2461, that all of his interest in all property specified herein is subject to forfeiture.

As a result of the foregoing offenses as alleged in this information, the defendant shall forfeit to the United States any and all property constituting, or derived from, any proceeds the said defendant obtained directly or indirectly as a result of the said offense, or any property traceable to such property.

The forfeitable property includes, but is not limited to: (1) real property,

(2) personal property, and

(3) the gross proceeds of the defendants' illegal acts, in an amount of at least six hundred ninety-eight thousand dollars ($698,000). If any of the above-described forfeitable property, as a result of any act or omission of the defendant,

(1) cannot be located upon the exercise of due diligence; (2) has been transferred or sold to, or deposited with, a third person;

(3) has been placed beyond the jurisdiction of the court; (4) has been substantially diminished in value; or (5) has been commingled wi th other property which cannot be subdivided without difficulty;

Case 5:10-cr-00332-FL Documer?t 1 Filed 09/23/10 Page 9 of 10

it is the intent of the United States, pursuant to Title 21, United

States Code, Section 853 (p), to seek forfeiture of any other

property of said defendants up to the value of the above

forfeitable property.

t'

GEORGE E.B. HOLDING United States Attorney

MtUlt- D. Jt,~hL.4.-1 -

BY: BARBARA D. KOCHER

Assistant United States Attorney

Case 5:10-cr-00332-FL Documertt°1 Filed 09123/10 Page 10 of 10

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