Prosecutors have charged Capt. Eric Schmidt, 35, of Murietta, Calif., and his wife, Janet Schmidt, 39, with conspiring to commit wire fraud and filing a false tax return to hide their profits.
Capt. Schmidt allegedly abused his position to steer military contracts under the Iraqi First Program to his preferred Iraqi contractor, the Al-Methwad Company.
Once the U.S. government awarded a contract to Al-Methwad, Schmidt's wife, Janet, would use the contractor's money to buy fewer products than the contract specified and have them shipped to Marines in Iraq, prosecutors say. Capt. Schmidt then falsely certified that the goods had arrived in the quantity stated in the contract, the government claims.
The Schmidts allegedly skimmed a total of $1.75 million from government contracts and failed to report the income on their 2008 tax return. Government agents seized two California properties, two vehicles and $400,000 in cash during their investigation of the couple, prosecutors say.