News

June 25, 2007

Outsourced flag patches called fraud

Mount Pocono embroidery factory owner is accused of defrauding U.S.

By Terrie Morgan-Besecker tmorgan@timesleader.com
Law & Order Reporter
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The owner of an embroidery factory is facing a federal charge after officials learned he had outsourced an order to produce flag emblems for military uniforms to Thailand in violation of the Buy American Act.

Brian Moritz of Moritz Embroidery Works Inc., Mount Pocono, was charged Wednesday with one count of conspiracy to defraud the United States.

According to court papers filed by the U.S. Attorney’s office, Moritz won a contract in April 2004 to produce 3 million to 7.2 million flag patches at a cost of 22 cents each for use on U.S. military uniforms. As part of the contract, Moritz agreed to comply with the Buy American Act, which prohibits the U.S. Department of Defense from purchasing clothing items that have not been produced in the United States.

Moritz was physically unable to produce the number of flags at his Mount Pocono facility, so he outsourced the manufacturing to Sheen Ray Embroidery Co., in Chaing Mai, Thailand. That resulted in the patches being produced with foreign materials in violation of the Buy American Act.

The court documents do not say how officials discovered the flags were not locally produced. Christian A. Fisanick, the assistant U.S. attorney prosecuting the case, declined to comment.

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