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Former Eglin AFB Contractor Sentenced to Federal Prison
10/13/09 - 02:58 PM

U.S. Department of Justice

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United States Attorney Thomas F. Kirwin, Northern District of Florida, announced today that Mark A. O’Hair, 49, and Richard Schaller, 57, both of Niceville, Florida were sentenced to prison terms for their role in conflict of interest-related federal crimes. O’Hair entered pleas of guilty to making false statements and conflict of interest. Senior United States District Judge Lacey A. Collier sentenced O’Hair to six months concurrent imprisonment on the two counts of conviction, followed by three years of supervised release. O’Hair was ordered to pay a fine of $2,500 and a $200 special monetary assessment. Schaller was convicted following a week long in July 2009 of obstruction of justice, perjury, and making false statements to the United States Air Force in a debarment proceeding, and 29 counts of conflict of interest. Judge Collier sentenced Schaller to 18 months concurrent imprisonment, followed by five years of supervised release on the obstruction of justice charge and three years of supervised release on the remaining counts of conviction, to run concurrently. Schaller was ordered to pay a $1,000 fine and $3,200 special monetary assessment. Co-Defendant Theodore S. Sumrall, 53, Fort Walton Beach, Florida, was previously sentenced on his pleas to four years probation and a fine of $5,000.

The Air Force Research Laboratory was made up of nine technology directorates located throughout the United States, including the AF Research Lab Munitions Directorate (“AF Research Lab/RW” formerly known as “AF Research Lab/MN”) located at Eglin Air Force Base, Florida. The AF Research Lab/RW was tasked with rapid improvement of war fighting capability under the “Battlefield Airman Program.” Under that program, the Lab contracted with educational institutions, non-profit organizations and private industry for research in tactical capabilities.

The conflict of interest involved co-defendant Mark A. O’Hair, who was a senior electronics engineer for the Air Force Research Laboratory Munitions Directorate (“AF Research Lab/RW” formerly known as “AF Research Lab/MN”). O’Hair was program manager for contracts awarded through the Battlefield Airman Program, during which service he participated in the award of contracts to “Schaller Engineering, Inc.” (“SEI”), a small business in Northwest Florida founded and owned by Schaller in 2003 and incorporated in 2005. SEI’s primary customer and source of income was AF Research Lab/MN. In 2005, SEI’s Florida corporate filings listed Schaller as President and Director, O’Hair as Director, and Theodore S. Sumrall as Director and Vice President. The evidence at trial showed that O’Hair regularly traveled on government business on SEI aircraft, that he did not pay for the expenses associated with those flights, and that he billed the United States Air Force for expenses associated with those flights by way of fraudulent invoices created with the assistance of Schaller. The evidence also established that O’Hair obtained $60,000 from SEI through two conduit companies. The $60,000 came from a $200,000 SEI invoice which had been approved by O’Hair was program manager.

Schaller was also convicted for obstruction of justice for altering and removing a portion of SEI’s corporate record book pertaining to O’Hair’s position as Director (Count One). Schaller was also convicted of perjury for making materially false declarations before the Federal Grand Jury about that activity (Count Two) and making materially false statements to Air Force in a response to his suspension and debarment.

The investigation involved agents of the Air Force Office of Special Investigations (AFOSI) and the Defense Criminal Investigative Service (DCIS). The case was prosecuted by Assistant United States Attorney Stephen P. Preisser and Special Assistant United States Attorney David Armstrong.