KC Dealer Paid $1m in Bribes to Two GLOCK Execs for LEO Guns

GLOCK 30SF (courtesy The Truth About Guns)

Anyone who’s read Glock, The Rise of America’s Gun knows that the Austrian firearms company has been swirling in scandal since the plastic pistol first hit our shores. We’re talking cocaine, hookers, an assassination attempt, payments to journalists to quell concerns about the “light trigger,” international money laundering and more. [Click here for my review.] So it’s no surprise that the Justice Department has indicted a GLOCK distributor for paying $1m in bribes to two GLOCK sales execs to get ahold of 14K discounted law enforcement pistols to sell at full retail to non-LEO consumers. Amongst other things. Make the jump for the DOJ press release detailing the charges. Fans of the brand should remain reassured that GLOCK won’t be phased by the criminal case. They’ve faced worse before and they have very deep pockets . . .

Kansas Firearm Distributor Charged with Paying Bribes and Kickbacks to Glock Executives
U.S. Attorney’s Office
June 04, 2014

District of Kansas
(316) 269-6481

TOPEKA, KS—A Kansas firearms distributor was indicted today on federal charges of paying more than $1 million in bribes and kickbacks to executives of the company that manufactures Glock pistols, U.S. Attorney Barry Grissom said.

John Sullivan Ralph, III, 40, Olathe, Kansas, who was owner of Global Guns & Hunting Inc. of Olathe, Kansas, doing business as OMB Guns, is charged with one count of conspiracy, 11 counts of wire fraud, and 10 counts of money laundering.

The indictment alleges Ralph secretly paid executives of Glock to receive preferential treatment over other distributors of firearms, including directing potential customers to his company, giving his company priority access to limited products, steering government contracts and sales to government agencies of firearms and accessories to his company, and providing confidential Glock information to him.

The following co-defendants are charged with the same counts as Ralph:

James “Craig” Dutton, 42, Acworth, Georgia, who was the assistant national sales manager for Glock. The American headquarters of Glock Inc. is in Smyrna, Georgia.

Lisa Delaine Dutton, 42, Acworth, Georgia, who was Craig Dutton’s wife, and who formed a company called Supreme Solutions LLC. She is alleged to have concealed payments of bribes and kickbacks.

Welcome D. “Bo” Wood, Jr., 65, Oviedo, Florida, who was the Eastern Regional Manager for Glock.

Paula Ann Wood, 63, Oviedo, Florida, who was Bo Wood’s wife, and who formed a company called Tropical Marketing & Consulting LLC. She is alleged to have concealed payments of bribes and kickbacks.

According to the indictment, most of Glock’s pistols are sold to independent firearm distributors who have contracts with Glock to resell its pistols. The allocation of Glock pistols was important because the demand frequently exceeded the supply.

Glock created two different sales channels for purposes of licensing its distributors. One channel was for sales to law enforcement agencies. Independent distributors were authorized to resell Glock pistols to law enforcement agencies within a specific geographic territory. The other channel was for the commercial market. Distributors of commercial market products were not restricted to a particular geographic area.

Glock used a Universal Product Code to differentiate pistols that were sold for resale to law enforcement agencies (blue label products) from pistols sold for resale to the commercial market (red label products). The price list for pistols intended for resale to law enforcement agencies is lower due to the fact law enforcement agencies routinely buy in bulk and are often subject to bidding processes.

The indictment alleges Wood and Dutton provided Ralph with equipment and software to allow him to convert firearms sold with the law enforcement discount (blue label) to firearms sold at the premium price to the commercial market (red label). Ralph is alleged to have sold at least 14,000 pistols to commercial buyers—including Cabela’s—which Glock sold to Ralph for resale to law enforcement agencies.

The indictment alleges that from 2003 to 2009, Ralph used the U.S. Postal Service to send and receive approximately 140 bribes and kickbacks that were delivered to defendants Lisa Dutton and Paula Wood. Between 2009 and 2011, the indictment alleges, Ralph used wire transfers to send approximately 80 bribes and kickbacks.

Upon conviction, the crimes carry the following penalties:

Conspiracy: A maximum penalty of 30 years in federal prison and a fine up to $1 million.

Wire fraud: A maximum penalty of 30 years in federal prison and a fine up to $1 million on each count.

Money laundering: A maximum penalty of 20 years and a fine up to $50,000 on each count.

The FBI investigated. Assistant U.S. Attorney Richard Hathaway is prosecuting.

 

comments

  1. This does not surprise me, at all. This gun shop was one of the sleaziest on the Internet, taking orders and charging your credit card for items they did not have in stock and would never have in stock, for months and months.

    1. avatar J.C. says:

      It’s scary how easy the internet makes such practices too.

  2. avatar bontai Joe says:

    I have never heard any of this stuff pertaining to Glock before. Makes me totally reconsider doing any business with them in the future.

    1. avatar ChRiSiS says:

      Note that GLOCK is not being charged, just two Glock executives – who will no doubt be fired for (a) violating company “policy” and (b) being charged with a criminal offense

    2. avatar larry says:

      Why? How does this impact Glock the company? Did they sanction this in any way? Does it impact the track record of their products?

      What you have here is 5 greedy Americans, two of which are US Glock employees, breaking some laws (I guess?).

      The Glocks would have sold either way as the article states because they are in high demand. Glock the company did not make any more or less money on the actions taken by these greedy individuals. They gamed the system, to make higher profits for them selves.

      I would say the Glock employees in question are the biggest offenders. All they had to do was say “no” to the bribes end of story. The gun dealer was taking advantage of his customers by reaping higher profits, by selling those LE priced guns at Civi prices.

      Honestly should we really care about this? If these people get off they can just run for office or become lawyers as they are highly skilled already at this kind of stuff.

      The Federal government is spending how much on the F-35??? A deeply flawed aircraft that is massively over budget, super late on delivery, and basically broken. It is a perfect example of how flawed our government is. How politicians backed by enough “incentive” will vote for anything.

      This snarky blog piece leaves no doubt in my mind about how Robert feels about Glock.

  3. avatar RandallOfLegend says:

    So what exactly is illegal here? Breaking Glock’s company policy in selling blue label items?

    1. avatar CarlosT says:

      The bribe is illegal, and the diversion from one channel to the other might be a breach of contract.

      1. avatar RandallOfLegend says:

        I thought it was bribery when dealing with public servants. They would have to arrest everyone for tipping for better service. Are they going to charge candy bar selling clubs for getting their chocolate cheaply in bulk, then re-selling for twice the price? I think bribery is a gray area.

        Regardless, I bet the government got their sales tax.

      2. avatar borg says:

        By arranging to get preferential treatment it causes other dealers to be disenfranchised by cheating them out of deals they would have otherwise have gotten. The dealer effectively had a monopoly on all the deals available from Glock

        1. avatar RandallOfLegend says:

          But should that be a legal issue? Glock could fire the people he bribed and cut him off as a distributor.

        2. avatar Hal says:

          I’m with you Randall. All I see are business arrangements here. Not quite sure how the word “bribery” is being used here.

          If I pay a company to receive preferential treatment, it sounds like a business arrangement. I.e., paying for services. Like how gun the magazines work. Are we going to start rounding up the “Guns and Ammo” writers and throwing them in the slammer for being paid to write good reviews?

        3. avatar CarlosT says:

          Commercial bribery, when it’s not called out specifically as a separate crime, is mostly treated as a type of fraud.

    2. avatar Ralph says:

      Operation Choke Point, prosecution of Glock, huge ammo buy-ups — “under the radar” gun control anyone?

    3. avatar Layne says:

      Same here, I’m failing to see how any of this should be illegal in the US. Worst case they ripped off an Austrian company, best case they took advantage of a company policy that’s dumb anyway.

      1. avatar Chicago Steve says:

        Glock Inc. is a US company, held by Glock GMBH, an Austrain company. Might seem minor but it’s not.

        More to the point, neither glock nor the execs are being charged with a crime

    4. avatar Casey says:

      Is it even a bribe if it’s not paid to a public official? Like what happened other than a distributor getting bumped up the line and getting some stuff with different upc codes sold to consumers? Who cares if the gun was “labelled” for law enforcement? If you have an overstock of LEO guns that are identical to civilian guns what is wrong with converting the UPC and selling it? Am I missing something? I don’t see anything worth caring about…

      1. avatar Doug says:

        Yes it is a bribe. That it happens does not make it OK. Illegal kickback. Grounds for termination at an honorable business. Husband and wife stinkeroos, it looks like.

        1. avatar Stuki says:

          It might be a bribe, but it’s still an internal policy violation, hence something Glock itself ought to investigate and punish, rather than dragging taxpayers into it.

      2. avatar Roger says:

        It sounds like they were defrauding Glock. The Glock execs were letting/assisting this distributor buy low-priced LEO guns and sell them for more money on the commercial market for a cut while all the other distributors had to abide by their contract vis-a-vis the regions & customers they were allowed to sell to.

    5. avatar DJ9 says:

      There could also be problems related to the Firearm Excise Tax (FET). Firearms for commercial sales have an excise tax added to the price; firearms slated for Law Enforcement sales (including individual officer sales) are exempt from the FET, I believe.

      1. avatar borg says:

        In that case the charge should be tax evasion against all parties.

      2. avatar Roger says:

        But they were converting LEO sales into commercial sales thereby creating more FET for the government not less.

  4. avatar Mike Crognale says:

    I remember that guy. I ordered some AR15 parts for a build and never got them. When I asked about the shipping date he responded with curses and insults. Fortunately my credit card company reversed the charges so I didn’t lose anything but time.

  5. avatar Woody says:

    I’ve never been able to sort out the distribution model of the gun industry. In my industry (outdoor) it’s a direct supply chain from manufacturer to retailer. Why does the gun industry typically have multiple distributors sandwiched in between them and retailer? Seems really strange. Could somebody explain why this is?

    1. avatar Dyspeptic Gunsmith says:

      It seems that all of the ATF-regulated business segments have wholesalers/distributors imposed between the manufacture/grower/distiller and the retailer(s).

    2. avatar WRH says:

      Because they can. Everyone wants to wet their beak, and it seems like this is one of those industries that draw plenty of middle men.

    3. avatar Al says:

      In the days before computers, it made a lot of sense.

      If you did national or international sales, you didn’t want to have to manage accounts and paperwork and a sales force for every single retailer who might carry a small fraction of your product line. The overhead would be huge.

      Instead, you sell to a few hundred local distributors who will carry most/all of your line and handle local sales and advertising for you.

      Now, with computers and telecommuting, it makes less sense, but that’s a very recent thing.

  6. avatar Jordan Knoll says:

    I was a member there for over 2 years. Their customer service could be hit and miss. Luckily never bought a gun from them. I think they knew it was coming because that’s why they shut down OMB police supply because once they opened OMB guns further south in Olathe they could no longer sell new Glocks.

    I cancelled my membership months ago and transfered over to Centerfire, much better buisness and customer service.

    1. avatar Mike says:

      Centerfire is a much nicer place, with much better customer service. I can’t understand for the life of me how any brick & mortar could get away with having poor customer service in the Internet Age. Bullet Hole is about as bad.

  7. avatar Ralph says:

    The indictment alleges Ralph secretly paid executives of Glock

    I will aggressively defend myself against these baseless charges! I never bribed anyone and don’t even like Glocks all that much. I did have a Glock hat once, but I stole it got it for free.

    1. avatar CarlosT says:

      And if someone forgot money in the hat, how is that your problem?

  8. avatar John in AK says:

    I’m having a hard time being shocked, SHOCKED to find that there is bribery going on in the gun business. . . Such things have been an honoured (well, maybe not ‘honoured’) tradition in American and international business since the beginnings of commerce, and probably existed when the first cave dwellers swapped pointy rocks.

    I am DEFINITELY in favour of Glock trying to sell me a pistol through the use of bribery and hookers; They can keep the cocaine, though.

    If every business got prosecuted for all of the bribery and ‘entertaining’ that they do to get contracts and make sales, Civilization as we know it would probably cease to exist. For example, we’d probably close up GM, and Boeing, and Ford, and Dell, and Remington, and Colt, and FN, andandand.

    For our government to get all sweaty and excited over something like this begs the question: When do they start prosecuting government officials for the same thing on a regular basis, and actually PUNISHING them when they are convicted?

    Cal me when Charlie Rangel goes to prison, along with everyone in the current administration and the House and Senate.

    1. avatar Don says:

      Politicians and government officials just retire early with a pension in the unlikely event they are caught doing the same things.

  9. avatar borg says:

    I am surprised that they did not charge Ralph with mail fraud as well since he used the mail to commit fraud.

  10. avatar Dingy Harry says:

    Isnt this how our government operates? You have to Bribe/Contribute to Campaigns to get the ear of a politician or government official and or get a favorable result. Why is it OK for them but not private businesses who want to transact business between themselves?

    1. avatar Kent says:

      Quite simple really. It’s not ok because the government didn’t get it’s cut!

  11. avatar Alan Longnecker says:

    How much did Yee get?

  12. avatar Don says:

    Works out to adding $71.42 each to the price they paid for those 14,000 guns. They must have had quite a markup.

    1. avatar Larry says:

      Don says:
      June 10, 2014 at 13:08
      Works out to adding $71.42 each to the price they paid for those 14,000 guns. They must have had quite a markup.

      When I buy through Blue Label program,it’s $100 off and comes with 3 mags. So 30 x 14,000 is $ 420,000 plus selling off 14 ,000 mags.

  13. avatar Renegade Dave says:

    I could see hitting them for tax evasion and stuff, but the fact that two private businesses want to bribe, I don’t necessarily take issue with. I could see GLOCK going after it’s employees civilly, but short of tax evasion I’m not sure I see where the government needs to get on.

  14. avatar dan543 says:

    Your headline is wrong. “Glock” was not paid bribes. Individuals at Glock were bribed. This action has nothing to do with “guns” and everything to do with corrupt individuals whoring out their company for personal gains.

    ” Fans of the brand should remain reassured that GLOCK won’t be phased by the criminal case. They’ve faced worse before and they have very deep pockets . ”

    Um… the Glock company isn’t the target of this action. Indeed, it is the victim of these crimes, if true. The individuals, on the other hand, have some life-changing events coming….

  15. avatar S.CROCK says:

    Im glad I don’t own perfection. There are many other reputable polymer pistols that imho are better than GLOCK.

    1. avatar mike says:

      If you say so. As long as you’re happy with your imperfections 😉

  16. avatar spartan88 says:

    just adds more credence to my view that Glock is a marketing machine, their guns are cheap plastic and totally overrated, poorly balanced (compared to a perfectly balanced Hi Power), a decent percentage of their aficionados and fan boys are first time gun owners that don’t know shit, their trigger mechanism is suspect at best, and their corporate culture is completely polluted. Cannot imagine anything like this taking place at Sig Sauer (yes I owns Sigs and am biased of course). Just my opinion, however calling it like I see it.

    1. avatar Roger says:

      Your comment doesn’t seem to be apropos of anything in this story. This involved a couple corrupt Glock employees. What what does this have to do with Glock, their products, the polymer construction, trigger etc., etc.?

      Seems like you just wanted to bash Glock.

  17. avatar Retired LEO says:

    Why doesn’t Glock do something about the dealers that pull out a mag or 2 & sell them as a separate item. Took a few years but they did dump a few.

  18. avatar jimmyjames says:

    Numbers dont add up…no surprise in a gubment prosecuted case. Looks like Ralph lost half a mil on the transaction. Since when is losing money against the law? The gun sales and distribution model stinks for the consumer. Great for the mfr and jobber/middleman. Lots of industries do business this way. Minimum risk for the mfr, selling to a wholesaler/jobber who discounts his monthly invoice and pays on time or loses the line. Jobber takes all the risk trying to get paid by mom and pop gun stores. Consumer pays 3 prices to buy a gun.

  19. avatar roogie says:

    Bummer. OMB used to do business as OMB Police Supply before moving from Lenexa to Olathe, Kansas. They have a great range but I’ve never purchased anything from them. Amazing that went on for so long unnoticed. Used to work with Mr. Ralph’s brother before he passed away, he was not in the family gun biz.

  20. avatar Stephanie long says:

    Glock is only telling half the story….you would be surprised on what they are leaving out!!!

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