GREENBELT -- A former private security company executive admitted yesterday that he bribed a government official to secure $130 million in contracts as part of what federal authorities call one of the largest public corruption operations ever prosecuted in Maryland.
Michael B. Holiday, 50, of Silver Spring pleaded guilty in U.S. District Court in Greenbelt to bribery and tax evasion in connection with rigging three federal government contracts awarded to his Montgomery County company for private security guards at federal buildings in California and Maryland.
According to court papers filed in the case, Holiday, a former Montgomery police officer, plied a government contracting official with $100,000 in cash and paid for her $7,000 Caribbean cruise. In exchange, prosecutors said, the General Services Administration employee granted favorable treatment in the bidding process to Holiday's company.
Court papers indicate that the former government official and another former company official are expected to plead guilty in the continuing investigation.
Among the agencies that awarded contracts to Holiday International Security was the Social Security Administration, which continues to use guards from the renamed company at its Woodlawn headquarters and several other buildings in the Baltimore region, federal officials said.
The Silver Spring company, which changed its name to USProtect when it was sold in May 2003, provides armed and unarmed security guards for 18 federal agencies at 120 installations in 32 states and territories.
"USProtect has significant experience managing large, complex, multi-site contracts and understands the special needs required by various facilities," its Web site states. "We have assumed contracts efficiently without compromising our ability to outfit our security officers with the proper uniforms, firearms, and equipment."
A spokesman for the company, which has about 1,800 employees, did not return a call for comment yesterday.
"In terms of the value of federal government contracts secured through bribery, this is the largest corruption case ever prosecuted in Maryland," U.S. Attorney Rod J. Rosenstein, the top federal prosecutor in the state, said at a news conference yesterday. "It is just one in a series of corruption cases that we have pursued in Maryland in order to send the strongest possible message to corrupt government employees and people who bribe them."
Prosecutors based their description of the case on the sum of the multimillion-dollar contracts. What was unclear yesterday was how much the government lost because of the ill-gotten contracts awarded to Holiday's company.
"There are a lot of factors in the bidding process, and it's not always the low bid that receives the contract," Rosenstein said.
Holiday's attorney, Bruce L. Marcus, said yesterday that "it would be inappropriate to comment on the case" until sentencing, which is scheduled for January.
Prosecutors allege that the former GSA contracting official, Dessie Ruth Nelson, 65, of Oakland, Calif., received a shopping bag filled with $35,000 in cash and an envelope stuffed with $10,000 from Holiday, in addition to the cruise, among other benefits. In turn, between 2000 and 2003, Nelson steered millions of dollars worth of contracts to Holiday's company, federal authorities charged.
Nelson's attorney did not return a call for comment yesterday. The charging document against Nelson, known as a criminal information, usually indicates in federal court that the defendant plans to plead guilty.
In one case, federal buildings in San Diego and three other counties in Southern California needed security services in 1999 and Holiday's company submitted a bid of about $50 million, court papers state.
The company's bid was almost $10 million higher than the lowest bid received by Nelson's agency, but prosecutors wrote that she awarded the contract to Holiday's company in May 2000.
In February 2001, the GSA again solicited bids to provide security to federal facilities, this time in San Francisco and seven other counties in Northern California.
Nelson awarded the $30.5 million contract to Holiday's company in June 2001, even though his company was not the lowest bidder, court papers state.
In the contract for the Social Security Administration in Maryland, prosecutors accuse Nelson of misleading the agency because she did not report performance problems Holiday's company experienced on other contracts. The agency has paid the company more than $50 million on the contract to date.
In court papers, Holiday also admits he received compensation from companies he controlled from 2001 to 2004 but failed to pay more than $400,000 in taxes and tried to conceal his income inside company bank accounts.
Federal prosecutors also charged a former officer of Holiday's company, Richard S. Hudec, 44, of Naples, Fla. Prosecutors allege that Hudec, whose wife bought the company in May 2003, concealed relevant information from federal contracting officials about his criminal background, which includes four felony convictions.
A message left for Hudec's attorney was not returned yesterday.
In addition to the bribery and tax charge, Holiday also admitted as part of his guilty plea that in April 2004, he sent a video file depicting a young girl engaging in sex with an adult male to an undercover FBI agent in New York. He could be sentenced to a maximum of 15 years in prison for bribery and 20 years for transporting child pornography.
matthew.dolan@baltsun.com
USProtect's clients
Here is a partial list of the federal agencies where USProtect provides security services:
U.S. Customs and Border Protection
U.S. Immigration and Customs Enforcement
Federal Emergency Management Agency
Department of Defense
Defense Finance and Accounting Service
U.S. Air Force
U.S. Army
Department of Justice
Drug Enforcement Administration
Federal Bureau of Investigation
Bureau of Alcohol, Tobacco, Firearms and Explosives
Treasury Department
Department of Agriculture
Department of State
Department of Health and Human Services
Food and Drug Administration
Department of the Interior
U.S. Geological Survey
Social Security Administration
U.S. Court of Appeals
[Source: USProtect Web site]