Financial Fraud

A settlement has been reached in a whistleblower class action lawsuit brought against North Florida Shipyards Inc who is accused of creating a front company, Ind-Mar Services Inc., in order to be awarded Coast Guard contracts that were designated for Service Disabled Veteran Owned Small Businesses (SDVOSBs).

The whislteblowers in this action will receive $180,000.

To qualify as a SDVOSB on Coast Guard ship repair contracts, a company must be operated and managed by service disabled veterans and must perform at least 51 percent of the labor.  The whistleblower case was started in May of 2011.  The government's complaint alleged that North Florida created Ind-Mar merely as a contracting vehicle and that North Florida performed all the work and received all the profits.  The government further alleged that if the Coast Guard and the Small Business Administration (SBA) had known that Ind-Mar was nothing but a front company, the Coast Guard would not have awarded it contracts to repair five ships.

In December 2013, the SBA suspended North Florida, Matt Self, Ind-Mar and three others from all government contracting.  In April 2014, North Florida and Matt Self entered into an administrative agreement with the SBA in which they admitted to having created and operated Ind-Mar in violation of its Coast Guard contracts and SBA statutes and regulations.

A settlement has been reached to resolve False Claims Act Allegations by Sevenson Environmental Services Inc who is accused of accepting kickbacks, rigging bids and passing inflated charges to the U.S. Environmental Protection Agency (EPA) in connection with work performed at the Federal Creosote Superfund Site in Manville, New Jersey. 

The settlement resolves allegations that Sevenson solicited and accepted more than $1.6 million in kickbacks from six companies in exchange for the award of subcontracts for work at the Federal Creosote Site.  It also resolves allegations that Sevenson conspired with the subcontractors to pass the majority of those kickbacks to the EPA and that it conspired with one subcontractor to pass to the EPA additional inflated charges for soil disposal.

A settlement has been reached in a whistleblower class action lawsuit brought against Maricopa County Community College District (MCCCD) who is accused of submitting false claims to the Corporation for National and Community Service (CNCS) concerning AmeriCorps state and national grants.

The whistleblower's share of the settlement is $775,827.

MCCCD obtained AmeriCorps funding for Project Ayuda, a program that proposed to engage students in national service.  In order to receive an AmeriCorps education award, a student had to meet certain service-hour requirements.  

Filed in 2011, the complaint alleges MCCCD allegedly improperly certified that students had completed the required number of service hours so that they would earn an education award.  This resulted in CNCS providing education awards to these students.  MCCCD also allegedly improperly received grant funds from CNCS to administer the project.

A settlement has been reached to resolve False Claims Act Allegations by Eyak Technology LLC (EyakTek) and Eyak Services LLC (ESL) who are accused of submitting false claims to the U.S. Army Corps of Engineers.

From 2005 to 2011, EyakTek held a $1 billion prime contract with the U.S. Army Corps of Engineers known as the Technology for Infrastructure, Geospatial, and Environmental Requirements contract. 

The government alleged that, between Sept. 12, 2007, and Oct. 4, 2011, EyakTek’s then-director of contracts, Harold Babb, accepted kickbacks from several subcontractors of EyakTek and ESL in return for using his position to direct subcontracts to them.  EyakTek and ESL allegedly submitted invoices to the Army Corps that included charges for work that was never performed by the subcontractors and lacked internal controls to detect the improper charges. 

In March 2012, Babb pleaded guilty to bribery and kickback charges.  The U.S. District Court for the District of Columbia sentenced him to serve 87 months in prison, to be followed by 36 months of supervised release and more than $9 million in restitution for his role in the kickback scheme.

A settlement has been reached in a whistleblower class action lawsuit brought against Iron Mountain Incorporated and Iron Mountain Information Management LLC (Iron Mountain) who are accused of overcharging federal agencies for record storage services under General Services Administration (GSA) contracts.

The whistleblowers in this action will receive $8,010,000 collectively.

Originally filed in 2011, the government's complaint alleged that Iron Mountain failed to meet its contractual obligations to provide GSA with accurate information about its commercial sales practices during contract negotiations, and failed to comply with the price reduction clause of the GSA contracts by not extending lower prices to government customers during its performance of the contracts.  It also resolves an allegation that Iron Mountain charged the United States for storage meeting National Archives and Records Administration requirements when the storage provided did not meet such requirements.

A settlement has been reached in a whistleblower class action lawsuit brought against three importers, California-based C.R. Laurence Co. Inc., Florida-based Southeastern Aluminum Products Inc. and Texas-based Waterfall Group LLC.  They are accused of engaging in schemes to evade customs duties on imports of aluminum extrusions from the People’s Republic of China.

According to the settlement, C.R. Laurence Co. Inc., Southeastern Aluminum Products Inc., and Texas-based Waterfall Group LLC have agreed to pay $2,300,000, $650,000 and $100,000, respectively. The whistleblower will receive $555,100 as his share of these settlements.

The government’s complaint alleged that C.R. Laurence, Southeastern and Waterfall made false declarations to the U.S. Department of Homeland Security’s Customs and Border Protection (CBP) to avoid paying antidumping and countervailing duties on aluminum extrusions imported from manufacturer Tai Shan Golden Gain Aluminum Products Ltd. in the PRC.  The Department of Commerce assesses, and CBP collects, antidumping and countervailing duties to protect U.S. businesses and level the playing field for domestic products.  Antidumping duties protect against foreign companies “dumping” products on U.S. markets at prices below cost, while countervailing duties offset foreign government subsidies.  C.R. Laurence, Southeastern, and Waterfall allegedly misrepresented that the “country of origin” of the aluminum extrusions was Malaysia, when the goods were manufactured in the PRC and merely shipped through Malaysia – a practice called “transshipping.”  Imports of PRC-manufactured aluminum extrusions have been subject to antidumping and countervailing duties since 2010.  No such duties are due on imports of such items from Malaysia.

The government’s complaint, filed in 2013, stemmed from a whistleblower lawsuit originally filed in 2011.  The government alleges that C.R. Laurence, Southeastern and Waterfall purchased PRC-made aluminum extrusions imported by other domestic companies and caused or conspired with those importers to make false declarations to CBP to evade duties.

A settlement has been reached in a whistleblower class action lawsuit brought against Gilbane Building Company.  W.G. Mills Incorporated ,a company with which Gilbane merged in November 2010, is accused of creating a front company, Veterans Constructors Incorporated (VCI), in order to be awarded a Coast Guard contract that was designated for Service Disabled Veteran Owned Small Businesses (SDVOSBs). To qualify as a SDVOSB, a company must be operated and managed by service-disabled veterans and must not be affiliated with a large company.  

The whistleblowers' settlement share has not been determined.

Originally filed by  two whistleblowers in May 2011, the government's lawsuit alleged that W.G. Mills created VCI merely as a contracting vehicle and that VCI’s affiliation with W.G. Mills rendered it ineligible to be awarded set-aside contracts for SDVOSBs.  The government further alleged that W.G. Mills performed the work that VCI was required to perform under the Coast Guard contract, and alleged that if the Coast Guard and the Small Business Administration (SBA) had known that VCI was nothing but a front company, the Coast Guard would not have awarded it the contract.

A settlement has been reached in a whistleblower class action lawsuit brought against United Parcel Service Inc., who is accused of submitting false claims to the federal government in connection with its delivery of Next Day Air overnight packages.

The whistleblower will receive a $3.75 million share of the government's settlement amount.

The lawsuit, filed August 2011,  alleged that from 2004 to 2014, UPS engaged in practices that concealed its failure to comply with its delivery guarantees. This deprived federal customers of the ability to request refunds for the late delivery of packages.  In particular, the government alleged that UPS knowingly recorded inaccurate delivery times on packages to make it appear that the packages were delivered on time, applied inapplicable “exception codes” to excuse late delivery  (such as “security delay,” “customer not in,” or “business closed”), and provided inaccurate “on-time” performance data under the federal contracts. 

A settlement has been reached in a whistleblower class action lawsuit brought against Education Affiliates who is accused of submitting false claims to the Department of Education for federal student aid for students enrolled in its programs.

Five whistleblowers will receive payments totaling approximately $1.8 million.    

A series of whistleblower lawsuits was filed, the first of which was in 2010.  The government alleged on behalf of these whistleblowers, that employees at Education Affiliates’s All State Career campus in Baltimore altered admissions test results so as to admit unqualified students, created false or fraudulent high school diplomas and falsified students’ federal aid applications, and that multiple Education Affiliates schools referred prospective students to “diploma mills” to obtain invalid online high school diplomas.  These allegations also led to criminal convictions of two All State Careers admission representatives, Barry Sugarman and Jesse Moore, and a test proctor, Jacqueline Caldwell.

A settlement has been reached in a whistleblower class action lawsuit brought against The Gallup Organization who is accused of it violating the False Claims Act and the Procurement Integrity Act for conduct involving several of its federal government contracts and subcontracts.

The whistleblower will receive a $1,929,363 share of the government’s recovery.

The original whisteblower case, filed in October 2009, alleged that Gallup knowingly overstating its estimated labor hours in proposals to the U.S. Mint and State Department for contracts it was awarded without competing bids.  The government joined in the case in November 2012.  The U.S. complaint alleged that the two federal agencies awarded Gallup contracts and task orders at falsely inflated prices and that Gallup engaged in improper employment negotiations with a then Federal Emergency Management Agency (FEMA) official, Timothy Cannon, in order to obtain a FEMA subcontract at an inflated price and additional FEMA funding after the subcontract had been awarded.