Virginia Government Contractor Facing Federal Indictment for Allegedly Selling Chinese-Made Products to US Government

On July 6, 2020, a federal grand jury returned an indictment charging Arthur Morgan, of Lorton, Virginia, with federal wire fraud charges.

Morgan is the Chief Executive Officer (CEO) of Surveillance Equipment Group, Inc. (SEG). SEG, through Morgan, entered into General Services Administration (GSA) contracts with the federal government to provide helmets, body armor, and other items to military and other federal entities.

All GSA contracts must comply with the Trade Agreements Act (TAA), which requires that all products listed in the contracts must be manufactured or “substantially transformed” in a “designated country,” and the contractor must certify that the products comply with the TAA requirements. China is not a designated country.

The indictment alleges that Morgan falsely certified the items he sold were from designated countries. Morgan, however, knew that the products under the contract were manufactured in China, violating both the TAA and the contract.

In one specific instance, the Navy placed an order with SEG for helmets. Morgan told the Navy that there was a delay of the helmet production at SEG’s factory in Virginia. The helmets, however, allegedly, were manufactured in China.

For all orders, government agencies paid SEG over $480,000.

Morgan faces two counts of wire fraud, each carries a maximum sentence of up to 20 years in federal prison.