Essex County Business Owner Scammed U.S. Military: Feds

ESSEX COUNTY, NJ — An Essex County business owner helped to run a scam on the U.S. military by unlawfully swapping out parts for cheaper versions and rigging bids for contracts with the U.S. Department of Defense, prosecutors announced this week.

Alan Aranowitz, 75, of Roseland, pleaded guilty to two counts of wire fraud conspiracy in federal court, according to the U.S. Attorney’s Office.

The charges of wire fraud conspiracy each carry a statutory maximum of 20 years in prison, and a $250,000 fine, which could run consecutively. Sentencing is scheduled for Oct. 29, authorities said.

Prosecutors released the following allegations against Aranowitz and his Roseland-based company, Arlo Corporation.

'UNLAWFUL SUBSTITUTIONS'

Prosecutors said that from 2015 to August 2018, Aranowitz conspired with others to defraud the U.S. Department of Defense (DoD) and one of its combat logistic support arms, the Defense Logistics Agency (DLA), by engaging in a pattern of “unlawful product substitution.”

According to prosecutors, Aranowitz owned and operated Arlo Corporation (Arlo), which entered into contracts with the DoD to supply replacement parts for the military, such as screws, nuts and bolts.

Aranowitz conspired with two owner/operators of two companies to provide cheaper counterfeit and/or non-conforming parts to the DoD, authorities said.

“For instance, Aranowitz sometimes falsely represented that the parts would be MIL-SPEC, that is, suitable for military use because the parts had met certain specific requirements—when in fact, he submitted such bids intending to provide parts that were not MIL-SPEC,” prosecutors alleged.

Prosecutors continued:

“Aranowitz sometimes falsely represented that the parts would be ‘Exact Product,’ that is, that they derived from a particular manufacturer, when, in fact, he submitted such bids intending to provide parts that were not Exact Product. He also sometimes falsely represented that Arlo or one of the companies he conspired with would be the manufacturer of the parts, when in fact he knew that Arlo or that company would not be the manufacturer. Aranowitz sometimes submitted bids to the DoD in the name of one of the companies with the owner/operator’s knowledge and approval. By committing these acts, Aranowitz and his conspirators increased their own profits. DLA received numerous Product Quality Deficiency Reports (PQDRs) from U.S. military end users reporting that a particular part supplied by Arlo did not physically conform to the contract specifications.”

As part of the plea, Aranowitz agreed to forfeit $684,168 in proceeds and to pay $878,644 in restitution to the DoD, prosecutors said.

'RIGGED BIDS'

Prosecutors said that from 2017 through August 2018, Aranowitz conspired with the owner operator of a company to defraud the DoD and DLA by coordinating bid prices, engaging in bid rigging, with another DoD contractor.

“Arlo, like all DoD contractors, was required to certify that it had arrived at its bids independently and without consulting or colluding with any other offeror or competitor,” prosecutors said.

“On the contrary, Aranowitz regularly consulted with another DoD contractor regarding the bids that each was submitting,” prosecutors alleged.

Send local news tips and correction requests to eric.kiefer@patch.com. Find out how to post announcements or events to your local Patch site.