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DOJ Enforcement Actions

The Department of Justice is the principal federal agency authorized to enforce the laws and defend the interests of the United States. As such, it oversees the enforcement of the False Claims Act, the foundation of the American whistleblower system, as well as numerous other laws.

The agency traces its origins to the Judiciary Act of 1789 which created the Office of the Attorney General, and the 1870 Act to Establish the Department of Justice, which established the agency as “an executive department of the government of the United States” with the Attorney General as its head.

The agency is comprised of numerous divisions with the Civil Division and in some instances, the Criminal Division, overseeing investigations and prosecutions under the False Claims Act. The U.S. Attorneys Office of the federal district where the False Claims Act case is filed also plays a key role in False Claims Act enforcement.

Below are summaries of recent DOJ settlements or successful resolutions under the False Claims Act as well as other successful prosecutions for fraud and misconduct. If you believe you have information about fraud which could give  rise to a claim for a whistleblower reward, please contact us to speak with one of our experienced whistleblower attorneys.

June 20, 2019

Two defense supply companies and their owners have agreed to a $159,390 consent judgment for improperly substituting parts intended for DOD contracts.  Liberty Air Parts, Inc., US Supply Corporation, and their operators, George and Ellen Onorato, allegedly agreed to supply brand new parts bolts, knobs, rings, and rivets, but instead substituted them with surplus parts left over from other government project.  They concealed the substitution by allegedly falsifying records and statements, in violation of the False Claims Act, and used the ability to quote prices lower than their competitors to their advantage in the contract bidding process.  As part of the consent judgment, the defendants are now prohibited from contracting with the federal government.  USAO EDPA

June 20, 2019

Pennsylvania-based Support of Microcomputers Associates (SOMA) has agreed to a $300,000 judgment for violating the False Claims Act and Trade Agreements Act.  The Trade Agreements Act prohibits the sale of computer supplies manufactured in certain countries to some federal agencies, such as the Department of Defense.  However, according to a former SOMA executive’s lawsuit, the company allegedly sold federal agencies computer supplies made in China, Vietnam, and other non-compliant countries.  USAO EDPA

June 20, 2019

Hart to Heart Ambulance Services, d/b/a Hart to Heart Transportation Services, has agreed to pay $1.25 million to settle allegations that it defrauded Medicare by submitting claims for medically unnecessary services, violating the False Claims Act.  Allegations were first brought to the government’s attention by former employee, Bryan Arvey, who alleged that from 2010 to 2017, Hart to Heart management pressured employees to falsify claims for non-emergency ambulance transports, such as hospital discharges.  For aiding in the recovery of public funds, Arvey will receive a share of $251,000.  USAO MD

June 20, 2019

To settle charges of violating the Foreign Corrupt Practices Act (FCPA), Walmart Inc. and its Brazilian subsidiary, WMT Brasilia S.a.r.l., have agreed to pay $138 million to the DOJ and $144 million to the SEC, for a combined penalty of $282 million.  According to the DOJ and SEC, Walmart’s alleged failure to implement and maintain adequate internal anti-corruption controls from 2000 to 2011 resulted in bribes to government officials in Brazil, China, India, and Mexico that allowed Walmart’s foreign subsidiaries to open more stores faster.  For cooperating with all investigations and self-disclosing some of the alleged misconduct, Walmart received a reduction of 20-25% off the amount originally owed to the DOJ.  In addition to the monetary penalty, Walmart has agreed to retain an outside compliance monitor for two years.  DOJ, SEC, USAO EDVA

June 19, 2019

The former CEO of Quintillion, a telecommunications company in Alaska, has been sentenced to 5 years in prison and ordered to forfeit $896,698 for defrauding investors of more than $270 million.  In order to secure funding to build a high-speed fiber optic cable system, Elizabeth Pierce had presented two New York investment companies with contracts that made it appear as if Quintillion was guaranteed revenue of nearly $1 billion.  Unbeknownst to investors and her own staff, however, the contracts were allegedly forged and the actual contracts she’d negotiated would generate only a fraction of that amount.  Quintillion eventually reported her to the DOJ.  USAO SDNY

June 19, 2019

Memphis Goodwill Industries has agreed to pay $150,000 for allegedly making false certifications to the federal government in order to qualify for contracts administered by the AbilityOne Commission, which helps create job opportunities for disabled individuals.  Federal regulations required AbilityOne contractors like Goodwill to employ disabled individuals for 75% of its direct labor hours and submit annual certifications attesting to that fact.  Despite submitting certifications attesting to the 75%, Goodwill was found to allegedly employ disabled individuals for far fewer hours.  USAO WDTN

June 18, 2019

A New Hampshire man named Imtiaz Shaikh has been sentenced to 1.5 years in prison and ordered to pay $2.8 million to the State of New Hampshire for evading taxes on the sale of certain tobacco products.  According to state law, wholesale distributors of other tobacco products (OTP) must be licensed, file reports on the number of OTP sold, and pay taxes at 65% of the wholesale price.  To avoid paying taxes on his products, Shaikh conducted business through a number of shell corporations, robbing the state of $2.8 million in unpaid taxes.  USAO NH

June 18, 2019

A consultant in South Dakota who allegedly caused multiple states to submit up to five years of false quality control data to the USDA’s Supplemental Nutrition Assistance Program (SNAP) has agreed to pay $751,571 to resolve her liability under the False Claims Act.  Though funded by the federal government, SNAP relies on states to ensure that food stamp benefits are awarded correctly and error rates are accurately reported.  To incentivize lower error rates, the USDA reimburses states for certain quality control expenses and pays bonuses to states with the lowest and most improved error rates.  Julie Osnes was retained by multiple states to lower error rates but gave improper advice, causing the states to report false information and receive bonuses they were not entitled to.  Through settlements with three of the states—Alaska, Virginia, and Wisconsin—the federal government has recovered $17 million.  USAO EDWA

June 18, 2019

Nevada Heart & Vascular Center has agreed to pay $2.5 million to settle allegations that it accepted kickbacks from genetic testing companies, Natural Molecular Testing Corp. and Iverson Genetic Diagnostics, Inc., in exchange for referrals of Medicare patients.  The alleged violations of the Anti-Kickback Statute and False Claims Act occurred for nearly a year in 2012.  USAO NV

June 14, 2019

IBM and its subsidiary, Cúram Software, will pay $14.8 million for allegedly making material misrepresentations to the State of Maryland during a contract award process for the state’s health insurance exchange website.  Cúram, which was acquired by IBM at the end of 2011, had applied for the award in 2012 and subsequently became a subcontractor on the project, which was partially funded by federal grants.  However, during the application process, and with IBM’s knowledge, Cúram allegedly misrepresented the development status and existing functionality of its software, as well as its software’s ability to integrate with other software.  The resulting issues caused the State of Maryland to terminate the contract and replace Cúram’s software.  DOJ; USAO MD
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