Family members who conspired to defraud U.S. sentenced in San Antonio

Date: Sept. 6, 2024

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SAN ANTONIO - Kenneth, Christopher, and Irma Flores, the three San Antonio family members who pleaded guilty to government fraud and gratuities charges in August 2023, were sentenced in federal court Friday.

According to court documents, Kenneth Flores, Christopher Flores, and Irma Flores conspired together to defraud the United States by eliminating competition and fixing contract awards and prices on Army contracts for the housekeeping and janitorial services at Army Hospitals and Medical Centers. Kenneth Flores pleaded guilty to conspiracy to defraud the U.S. government; Irma and Christopher Flores pleaded guilty to paying gratuities to government officials who helped in the scheme to defraud government contracts. The scheme involved a corrupt partnership between the three Flores family members and co-conspirator government employees. Karisa Waysepappy Kelley and John Jordan "Chip" Mathes. The scheme brought in millions of dollars in work on Army healthcare housekeeping and janitorial services contracts to the Flores family in return for bribes and kickbacks, which helped induce Kelley and Mathes to aid the Flores' in eliminating competition in the process.

From Nov. 15, 2018, until June 25, 2020, Christopher Flores's company, Alliance Supply, paid $216,710.46 to Mathes' company, C & S Consulting. From Feb. 21, 2019, until July 17, 2020, Alliance Supply paid Kelley's company Waysepappy Consulting $57,906.50. Irma Flores served as the bookkeeper for Allegiance Environmental Services, a company owned by Kenneth Flores, under which Alliance operated. Mathes and Kelley pleaded guilty in February 2023. Both are scheduled to sentenced in the coming weeks.

On Friday, U.S. District Judge Fred Biery sentenced Kenneth Flores to four years in prison, Christopher Flores to two years in prison, and Irma Flores to five years of probation. As part of their plea agreements, they agreed to pay restitution in the amount of $3.7 million.

"The actions of these three family members-defrauding our institutions and corrupting the integrity of government contracts intended to support military facilities-were a betrayal of the public trust," said U.S. Attorney Jaime Esparza for the Western District of Texas. "Our office remains committed to rooting out corruption and holding those accountable those who seek to exploit government resources for personal gain."

"It is fitting that the sentences for these felons are handed down in Military City USA. Whether you're from San Antonio or anywhere else in our country, defrauding our nation's armed forces is a level of greed that shouldn't be explored," said Acting Special Agent in Charge Lucy Tan of IRS Criminal Investigation's (IRS-CI) Houston Field Office. "Today's sentences underscore our unwavering commitment to partner with other law enforcement agencies to bring to justice those who engage in bribery and corrupt practices, regardless of their position or influence."

IRS-CI, DCIS, Army CID, and GSA-OIG investigated the case.

"The Department of Defense (DoD) Office of Inspector General, Defense Criminal Investigative Service, is committed to protecting the integrity of the DoD procurement process," said Acting Special Agent in Charge Ryan Settle for the DCIS Southwest Field Office, "Today's outcome represents the extraordinary efforts by our law enforcement partners, alongside the Department of Justice, to hold accountable those who seek to enrich themselves by fraudulent means and pilfer precious taxpayer resources."

"Today's sentencing illustrates Army CID's commitment to protecting the integrity of the Army's procurement process and ensuring that Department of the Army resources are safeguarded against unlawful and unfair practices," said Special Agent in Charge Maria E. Thomas for the Department of the Army Criminal Investigation Division's Central Texas Field Office. "We'll continue to work diligently with our law enforcement partners to expose fraudulent activity and hold individuals accountable who attempt to defraud the U.S. Army and government for services Soldiers and families rely on."

"Government contracts support the missions of the United States and its military," said Special Agent in Charge Jamie Willemin for the U.S. General Services Administration Office of Inspector General's Southwest and Rocky Mountain Investigations Division. "Those who do business with the federal government are expected to engage in fair and honest business practices. GSA OIG will work diligently with investigative partners to investigate fraudulent activity and hold offenders accountable for their actions."

Assistant U.S. Attorneys Kelly Stephenson, Joe Blackwell, former AUSA William Lewis, and Special Assistant United States Attorney Jay Porier prosecuted the case.

IRS-CI is the criminal investigative arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money-laundering, public corruption, healthcare fraud, identity theft and more. IRS-CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, obtaining a more than a 90 percent federal conviction rate. The agency has 20 field offices located across the U.S. and 12 attaché posts abroad.

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