Baltimore, Maryland – Kenneth Coffland, age 67, of Riva, Maryland, has pleaded guilty to Hobbs Act extortion committed in connection with the operation of a state government contract for information technology (IT) services.
The guilty plea was entered on late on June 7, 2022, and announced by United States Attorney for the District of Maryland Erek L. Barron and Special Agent in Charge Thomas J. Sobocinski of the Federal Bureau of Investigation, Baltimore Field Office.
According to his guilty plea, Coffland used his relationship with co-defendant Isabel FitzGerald to compel Company # 1 to re-hire Coffland for a position on a state contract that he had resigned from 18 months earlier, at a substantially increased salary and with a bonus agreement that was far more lucrative than that what Coffland had previously enjoyed.
From 2009 to September 2011, Coffland was an employee of Company # 1, an IT company that held a large contract with the Maryland State Department of Human Resources (DHR) to operate a data center that was used to host various applications that provided social welfare benefits under various federal and state programs (“the Hosting Contract”). In 2010, Company # 1 promoted Coffland to the position of Hosting Director on this contract, with overall responsibility for ensuring that Company # 1’s operation of the data center met its contractual obligations to DHR. Coffland’s annual salary as Hosting Director in 2010-11 was approximately $171,000, plus a potential bonus of up to 20% of his salary.
While working first as an employee of Company # 1 on the Hosting Contract and later as the Hosting Director, Coffland developed a close working relationship with Isabel FitzGerald, who was then DHR’s Chief Information Officer (“CIO”) and was directly responsible for overseeing the performance of the Hosting Contract. By the spring of 2010, Coffland’s and FitzGerald’s relationship had evolved into a close personal one.
Although FitzGerald resigned from DHR effective October 2011, starting at least in December 2011 and continuing through early December 2012, FitzGerald served as a consultant to the Secretary of DHR and to her successor as CIO. She dealt directly with Company # 1 and its officials who had responsibility for the Hosting Contract and advised the Secretary of DHR on matters relating to the Hosting Contract.
On Friday, September 23, 2011, after FitzGerald had given notice that she was resigning her position as CIO, Coffland resigned his position as Hosting Director with Company # 1. The following Monday, September 26, 2011, Coffland started work for Company # 2, which was responsible for reviewing and reporting to the State concerning Company # 1’s performance on the Hosting Contract. In his new position, Coffland’s sole job was to monitor and report to DHR on his previous employer’s performance on the Hosting Contract, which continued to involve working closely with FitzGerald in her new role as an DHR consultant.
In December 2012, FitzGerald was appointed Deputy Secretary for Operations of DHR, a position that reported directly to the DHR Secretary and that oversaw the Hosting Contract and numerous additional offices within DHR. As detailed in Coffman’s plea agreement, after FitzGerald was appointed as DHR’s Deputy Secretary, in early 2013 she caused her successor as CIO to instruct Company # 1 to remove the person who then held the position of Hosting Director. FitzGerald then met with Company # 1’s program manager concerning its “problematic performance” on the Hosting Contract. During this conversation, FitzGerald told Company # 1’s program manager that if it rehired Coffland as Hosting Director, she believed he would be able to fix the performance issues she discerned and that the State would then be willing to award Company # 1 a five-year contract renewal, after the original five-year term of the Hosting Contract expired in 2014. FitzGerald subsequently communicated the substance of her discussion with Company # 1’s program manager to Coffland.
According to the plea agreement, although it was reluctant to do so, largely because of its discomfort with what it perceived to be the relationship between FitzGerald and Coffland, Company # 1 offered the Hosting Director position to Coffland in February 2013, with a salary and bonus arrangement that were an improvement over what which he had received during his previous tenure in the position. However, Coffland rejected Company # 1’s initial offer, and countered with a demand for a salary and bonus structure that far exceeded what he had previously received. Coffland also demanded that he be hired as an independent contractor rather than an employee.
Given FitzGerald’s position, Company # 1 felt that it had no choice but to agree to Coffland’s demands, and it offered him the Hosting Director’s position as an independent contractor in April 2013. Company # 1 also agreed to pay Coffland at a rate of $125 per hour, up to a maximum of 2,400 annual hours – a potential annual salary of $300,000. In addition, Company # 1 agreed to Coffland’s demand for a quarterly bonus of up to $50,000.00, resulting in a potential annual bonus of $200,000. Coffland forwarded Company # 1’s emailed offer to his personal email address and from there to FitzGerald’s personal email address, and he discussed Company # 1’s offer with FitzGerald before he accepted it.
On July 2, 2013, Coffland returned to the Hosting Director position as an independent contractor.
Isabel Fitzgerald, age 52, of Annapolis, Maryland, previously pleaded guilty to bribery in connection with a scheme to receive financial benefits from two senior members of an information technology company in exchange for influence in connection with the performance of favorable official acts. She is scheduled to be sentenced on October 13, 2020.
Coffland faces a maximum sentence of 20 years in federal prison followed by up to 3 years of supervised release for extortion. U.S. District Judge Paul W. Grimm has scheduled sentencing for October 13, 2022 at 2:00 p.m.
United States Attorney Erek L. Barron commended the FBI for their work in the investigation. Mr. Barron thanked Assistant U.S. Attorneys Sean R. Delaney and Jefferson M. Gray, who are prosecuting the case.
For more information on the Maryland U.S. Attorney’s Office, its priorities, and resources available to help the community, please visit www.justice.gov/usao-md and https://www.justice.gov/usao-md/community-outreach.
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