A Tale Of Phantom Fuel Deliveries

on an alleged fuel fraud scheme at Bagram air base in Afghanistan was based on a tip and this complaint. According to court documents, authorities arrested two former Kellogg, Brown and Root (KBR) employees in early October. The two men are Wallace A. Ward and James N. Sellman both from Virginia. The charges paint them as small players in a larger scheme that cost the U.S. government millions of dollars.

Ward and Sellman allegedly became involved in the scheme with another KBR employee – court documents refer to this person as R.L. and indicate R.L. had an unnamed "associate". One source says Afghani fuel delivery drivers were also involved in the scam.

Here is how authorities say the plan worked: Red Star Enterprises – a British fuel company was in charge of delivering aircraft fuel to Bagram. Once on base, KBR employees were responsible for signing receipts that proved how much fuel was received. Receipts were then submitted to the U.S. government by Red Star for payment.

However, R.L. allegedly paid Sellman and Ward to sign for fuel that was never received and Red Star then submitted those false receipts to defense officials for payment. In August 2006, court documents say Pentagon auditors began asking if all the fuel that was being billed for was actually delivered.

According to the documents, defense officials pieced together the fraud and came to the conclusion that between May and September 2006, "approximately 80 trucks for which Red Star had submitted claims for fuel delivered appeared never to have entered the air base and delivered fuel." It has been reported elsewhere that Red Star got the fuel contract with the Pentagon as far back as 2003 and it is valued at over $170 million.

Court filings also show that trucks filled with fuel were "diverted and sold illegally." Sellman apparently admitted to investigators that he was involved with diverting 45-to-50 fuel shipments. Fuel truck drivers asked Sellman to falsify their meter readings "to show they had delivered more fuel that they had in fact delivered."

Ward's attorney says his client maintains his innocence and has no comment. Sellman's court appointed attorney also had no comment.