$30 Million Scheme To Defraud Government


By Debbie Gregory.

An alert customs inspector unraveled a cross-border scheme to defraud the federal government of more than $30 million. The inspector’s observation set in motion a criminal investigation that led to the owners of Barrier Wear forfeiting $2.1 million to the federal government, and facing probation.

Loose tags on a 2009 shipment of trousers at the Mariposa Port of Entry in Nogales, AZ had loose country-of-origin labels. Permanently affixed labels are required by federal law.

The loose labels read “Assembled in Mexico of U.S. components” and identified the trousers as “Official Army Use.” According to the invoice, the shipment left a factory in Sonora run by Barrier Wear de Mexico, bound for the Colorado-based company’s facility in Nogales.

On December 9, 2015, Barrier Wear owners Paul Grillo and Raymond Lawson pleaded guilty to one felony count of obstructing a federal auditor.

From 2008 to 2012, the company was a subcontractor for Atlantic Diving Supply in Virginia, which holds a contract with the Department of Defense to supply cold-weather trousers and jackets.

According to the DoD’s Criminal Investigative Service, Barrier Wear “falsely certified that the Army’s purchase of the clothing complied with the Berry Amendment,” which requires the DoD to buy clothing and other goods produced domestically.

The Berry Amendment is a statutory requirement that restricts the Department of Defense (DoD) from using funds appropriated or otherwise available to DoD for procurement of food, clothing, fabrics, fibers, yarns, other made-up textiles, and hand or measuring tools that are not grown, reprocessed, reused, or produced in the United States.

The Berry Amendment has been critical to maintaining the safety and security of our armed forces, by requiring covered items to be produced in the United States. With respect to textiles and clothing, the Berry Amendment has been critical to the viability of the textile and clothing production base in the United States.

Barrier Wear employees were ordered to remove the country-of-origin labels after normal business.

Grillo and Lawson agreed to forfeit the $2.1 million and to serve a term of probation, not to include any form of confinement. A sentencing hearing is scheduled for March 7.

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