(WFRV) – A man who was paid nearly $3 million during an eight-year fraud scheme and relocated his business operations from Wisconsin to South Dakota to evade government inspectors was sentenced to prison.

According to authorities, 58-year-old Craig Klund formerly from Chippewa Falls pleaded guilty to wire fraud against the U.S. Department of Defense (DoD). He also pleaded to aggravated identity theft when he used another person’s identity as a nominee owner of one of Klund’s defense contracting entities.

Klund’s total prison sentence is 120 months, followed by three years of supervised release. In addition to his prison sentence, Klund was ordered to pay $435,822.71 in restitution.

The indictment said that Klund was a military contractor who supplied electrical parts to multiple branches of the U.S. military. For eight years, between 2011 and 2019, Klund defrauded the DoD by getting defense contracts under false pretenses.

Officials broke down Klund’s scheme into ten parts:

  1. Use of 15 shell corporations to hide his control of entities bidding on DoD contracts
  2. Use of multiple aliases
  3. Repeated identity theft
  4. Collusive bids submitted by multiple klund entities on the same contract
  5. Knowingly shipping nonconforming parts and requesting payment for these parts
  6. Signing Federal Acquisition Regulation certificates using fake names
  7. Lying to Defense Contract Managemnt Agency (DCMA) inspectors by claiming to be someone other than himself
  8. Relocating his buiness from Wisconsin to South Dakota to evade DCMA inspectos who were questioning his operations in Wisconsin
  9. Concealing receipt of DoD proceeds by not reporting these monies on his federal income tax returns
  10. Laundering DoD proceeds by moving funds between accounts

Klund reportedly submitted 5,750 bids and was awarded 1,928 contracts worth $7,468,638. The contracts were for parts for the U.S. Army, Air Force, Navy and Marine Corps. He was reportedly paid $2,905,484 during the scheme.

U.S. District Judge James Peterson told Klund that he thought he was a liar and his previous criminal history was an important factor in the sentencing.