Federal Criminal Lawyer Secures Reduced Sentence for Former State Department Worker

Written by a staff writer with the firm

A 64-year-old woman was sentenced to two years in prison on Friday after she and her husband pleaded guilty to fraud charges for using her job at the State Department to rake in millions of dollars in government contracts.

Prosecutors said Kthleen D. McGrade of Stafford, Virginia used her position as a management analyst for the State Department to give the construction business she and her husband own — the Sterling Royale Group — a major edge over the competition for contracts related to heating, air conditioning, and ventilation work at U.S. embassies around the world. By the time the scheme was discovered, authorities charged, McGrade had collected roughly $39 million in payments and had scored $53 million in government contracts. McGrade used that money to purchase a flashy mix of luxury goods, including a $500,000 yacht; a $73,000 Lexus; and $223,000 in jewels.

Both McGrade and her husband, 47-year-old Brian C. Collinsworth, pleaded guilty in August to charges of major fraud against the United States government, conspiracy to launder monetary instruments, and engaging in unlawful monetary transactions.

The pair were wed in 2006 and McGrade never notified the State Department of her marriage. The government contract negotiator and her husband then started their construction company, and McGrade quickly secured a government contract enabling her company to do work at embassies without disclosing her family ties to the construction firm. That included not only her husband, who was SRG’s Vice President, but also her daughter from a previous marriage, who was listed as the company’s president and CEO.

The pair found themselves under federal investigation after a 2011 article, by a news website called the Daily Caller, revealed that they were married. The ensuing investigation did find that the work was completed after the couple subcontracted the jobs to other construction companies. The fraud was based on McGrade using her position as a contract negotiator to give her construction business an unfair advantage for securing the plush government contracts. At the crux of the case, according to prosecutors, was a document the couple fabricated that made their construction company eligible for the embassy work, and their efforts to persuade a State Department contracting officer to sign and approve that document without careful review.

During sentencing, McGrade insisted that she did not have the authority to clear the contracts on her own and that as far as she knew, her company was legally awarded the work. Collinsworth was much more contrite and cried when he told the court that he was proud of the work they did, but he was ashamed with the way they had secured the contracts and they knew it was wrong. Federal criminal lawyers representing the defendants noted the completion of the construction jobs when asking the court for leniency in sentencing. Their efforts were rewarded when the judge sentenced McGrade to two years behind bars, rather than the five years and 10 months called for in federal sentencing guidelines. Her husband received a sentence of a year and a half in prison.

In his ruling, United States Federal Judge Liam O’Grady said he appreciated the fact that the work was done. But the judge did not appear amused by the lavish lifestyle the couple had led thanks to their fraudulent scheme. As he listed some of the more expensive items purchased by the pair, O’Grady said, “You were rocking and rolling until you got caught, weren’t you?”

For more information on government fraud and other white collar criminal matters, click here.