Former Air Force Master Sergeant Pleads Guilty to $37 Million IT Contract Fraud Scheme

A former U.S. Air Force Master Sergeant from Devine, Texas, admitted in federal court Wednesday to orchestrating a nine-year scheme that inflated IT contracts for the Pacific Air Forces by at least $37 million, funneling bribes to a military official the group codenamed "Godfather."

Alan Hayward James, 51, pleaded guilty in U.S. District Court in Honolulu to three charges: conspiracy to commit wire fraud, bribery, and conspiracy to rig bids. His 38-page plea agreement implicates at least five companies and eight individuals in a fraud operation targeting IT services across U.S. Air Force installations in Hawaii, Japan, and Korea from April 2016 through approximately April 2025.

At the center of the conspiracy was an unidentified federal public official within the U.S. Pacific Air Forces, whom James and his co-conspirators referred to as "Godfather." That individual received bribes in exchange for facilitating the fraudulent contracts. James has agreed to testify in future proceedings involving co-defendants and to cooperate fully with law enforcement.

To move scheme funds, James established a shell company in November 2017 called T.R.A.P. The fraud financed lavish spending, including a three-night all-expenses-paid retreat in October 2023 to a luxury resort on the North Shore of Oahu that cost more than $234,000. The itinerary included golf, horseback riding, and massages, and covered airfare for the group's "off-island crew," according to an email cited in court documents.

James and co-conspirators generated fraudulent invoices, fabricated quotes, and fake labor records to justify inflated pricing. From May 2019 through October 2022, James also directed co-conspirators on the exact dollar amounts to submit in what was supposed to be a competitive bidding process, ensuring the government never received a legitimate bid. Excess funds were distributed among James, his family members, the family of an Air Force civilian employee, and other co-conspirators.

Acting Deputy Assistant Attorney General Daniel Glad of the Justice Department's Antitrust Division stated: "Over thirty-seven million dollars — that's how much the U.S. Air Force overpaid because of the scheme that the defendant admitted to, under oath and in open court. Criminals who rig bids and commit fraud on government contracts steal from taxpayers and threaten the public's confidence in government institutions."

U.S. Attorney Ken Sorenson for the District of Hawaii said the scheme "not only defrauded taxpayers and harmed honest competitors but also diverted resources from essential military services." Christopher Bjornstad, Special Agent in Charge of the GSA Office of Inspector General's Western Investigations Division, added that "bribery, bid rigging, and wire fraud are not victimless crimes; they erode public trust, distort fair competition, and harm honest businesses who play by the rules."

James faces a combined statutory maximum of 45 years across the three counts: 20 years for wire fraud conspiracy, 15 for bribery, and 10 for the Sherman Act bid-rigging charge. Despite $37 million in government losses, his plea agreement calls for restitution of just $1,451,656.80. He remains out on a $50,000 bond pending sentencing on October 7 before U.S. District Judge Shanlyn Park.

The case was investigated by the Defense Criminal Investigative Service, the Air Force Office of Special Investigations, and the GSA Office of Inspector General, and is being prosecuted by the DOJ Antitrust Division's San Francisco Office and the U.S. Attorney's Office for the District of Hawaii as part of the Procurement Collusion Strike Force, an interagency task force formed in 2019 that has opened more than 145 criminal investigations since its inception.