Ex-CF military contractor gets 10 years in prison

Jan. 20—EAU CLAIRE — A federal judge in Madison sentenced a former Chippewa Falls man to 10 years in federal prison Thursday for fraudulently getting military contracts.

U.S. District Judge James D. Peterson handed down the sentence to Craig Klund, 58, of Yankton, S.D., for convictions on wire fraud, money laundering and aggravated identity theft.

Following his prison sentence, Klund will serve three years on supervised release. Peterson also ordered Klund to pay $435,823 in restitution.

According to a news release from the office of Timothy O'Shea, U.S. Attorney for the Western District of Wisconsin, Klund executed a scheme from 2011 to July 2019 to defraud the Department of Defense by obtaining contracts through fraud.

Klund, who had previously been convicted twice of defense contracting fraud, used shell companies, aliases and other deceptive practices to dupe the government into buying from someone it otherwise would not award contracts to, according to O'Shea.

Using his shell companies, Klund won 1,928 military contracts worth a total of nearly $7.47 million. During the fraud scheme, he was paid $2.9 million.

Electrical parts Klund supplied were used by the U.S. military for multiple uses, including in the Patriot Missile System and F-16 jet fighter.

Klund had also knowingly shipped nonconforming parts and requested payment for them, based on O'Shea's news release.

In addition to securing the contracts through fraud, Klund also concealed proceeds from them by not reporting that money on his federal income tax returns and laundering the funds between different accounts, according to the news release.

While Klund's company previously had been located in the Chippewa Valley, he moved it to South Dakota to evade Defense Contract Management Agency inspectors who were suspicious of him in Wisconsin, O'Shea stated.