DAEGU, Republic of Korea –
The Republic of Korea, Daegu District Court sentenced three South Korean nationals on March 20, 2026, for their roles in a sophisticated conspiracy to defraud the Republic of Korea and compromise the safety of U.S. Forces Korea.
The convictions follow a joint investigation into a multi-year scheme to substitute mission-critical defense materials with cheap imitations.
The scheme was made possible by a former senior local national employee at the U.S. Army's Material Support Command-Korea, who acted as an insider threat. According to court documents, the fraud targeted a five-year, 1.6 billion Korean Won ($1.2 million USD) contract for Chemical Agent Resistant Coating (CARC) that explicitly mandated production by an approved U.S. manufacturer and be assigned a specific DoW National Stock Number.
Instead, the operator and CEO of Hankuk Vehicle Industry Co., Ltd. orchestrated a sophisticated scheme to bypass military standards by illegally obtaining authentic CARC paint samples for reverse engineering and utilizing forged documentation to pass counterfeit products as mission certified.
"This was far more than a simple case of financial fraud," said Special Agent in Charge Michael DeFamio, Department of the Army Criminal Investigation Division Far East Field Office. "By exploiting an insider threat to substitute mission-critical Chemical Agent Resistant Coating with unverified counterfeits, these individuals jeopardized the safety of our personnel and directly undermined the readiness of U.S. Forces Korea."
The fraudulent operation allowed the defendants to illicitly obtain approximately KW₩622.6 million over five payments.
During the sentencing, the Daegu District Court emphasized that the crime extended beyond financial theft. The defendants directly undermined the defense readiness of U.S. Forces Korea and posed a potential threat to the safety of service members in chemically contaminated environments.
The case was investigated by the Department of the Army Criminal Investigation Division’s Far East Field Office, the Defense Criminal Investigative Service – Korea Post of Duty and prosecuted by Republic of Korea Prosecutors in the Daegu District Court.