Bribery and Bid-Rigging

October 14, 2022

Illinois Bell Telephone Company, LLC, d/b/a AT&T Illinois, has agreed to pay $23 million under a deferred prosecution agreement to resolve a bribery investigation.  As part of the resolution, AT&T Illinois admitted that it paid an ally of former Illinois Speaker of the House Michael J. Madigan $22,500 through a lobbying firm to unlawfully influence legislation favorable to the company.  USAO NDIL

June 14, 2022

Defense contractor Kellogg Brown & Root Services, Inc. and related entities will pay $13.7 million to resolve allegations that the companies submitted false claims under KBR’s Logistics Civil Augmentation Program (LOGCAP) III contract for the delivery of logistics support to U.S. Army forces in Iraq.  In an action originally brought by a whistleblower, the government alleged that KBR employees rigged bids on certain subcontracts in exchange for kickbacks from the subcontractors, and unlawfully passed on the inflated cost of those subcontracts to the government. DOJ

May 18, 2022

Seven companies in South Korea have agreed to a joint settlement of $3.1 million to resolve allegations that they conspired to suppress and eliminate competition in bidding on 15 contracts for construction and engineering work on U.S. military bases in South Korea awarded by the U.S. Army Corps of Engineers between 2016 and 2019.  The government alleged that as a result of the bid-rigging by the companies, Korea Engineering Consultants Corporation, Yul Lim Construction Co. Ltd., Shin Woo Construction & Industrial Co. Ltd., Seongbo Const. Ind. Co. Ltd., Wooseok Construction Co. Ltd., Yuil Engineering and Construction Co., and Seokwang Development Co. Ltd., the government paid substantially more for services performed under the contracts than it otherwise would have.  DOJ

April 25, 2022

David H. Wright, former general manager of the LA Department of Water and Power, will spend 72 months in federal prison after pleading guilty to one count of bribery. Wright accepted bribes from a lawyer to secure a $30 million no-bid contract for the lawyer’s company, Aventador Utility Services LLC, and thereafter accepted the position of CEO after he retired from LADWP. While still in his official capacity at LADWP, he lobbied the board to vote in favor of Aventador’s contract. CDCA

March 3, 2022

Multiple chemical companies agreed to pay a collective total of $11.7 million to resolve claims by state and local entities that from 1997 through at least 2011, they participated in a nationwide conspiracy to allocate territories and customers, unlawfully rig bids, and fix prices paid by government entities for the purchase of coagulant liquid aluminum sulfate, a chemical used in water treatment and purification.  The defendants include General Chemical entities, GenTek, Inc., Chemtrade entities, GEO Specialty Chemicals, Inc., C&S Chemicals, Inc., USALCO, LLC, Delta Chemical Corporation, and American Securities, LLC.  The Commonwealth of Virginia recovered $1.1 million in a whistleblower case initiated under the Virginia Fraud Against Taxpayers Act by Lawrence McShane.  VA

January 14, 2022

A former official with the Department of Defense’s Office of Inspector General who was accused of accepting bribes on a prime contract and defrauding the government has been sentenced to 7.5 years in prison.  While overseeing a contract that allowed federal agencies in the DC area to order telecommunication services and equipment, Matthew LumHo solicited and received bribes from a co-conspirator, William S. Wilson, in exchange for steering business to Wilson’s company.  Lumho also knowingly authorized fraudulent service orders for marked up services—essentially defrauding the government into paying for the bribes themselves—and repeatedly interfered with the criminal investigation.  USAO EDVA

October 1, 2021

Pharmaceutical manufacturers Taro Pharmaceuticals USA, Inc., Sandoz Inc. and Apotex Corporation have agreed to pay a total of $447.2 million to resolve alleged violations of the False Claims Act and Anti-Kickback Statute arising from unlawful compensation received through arrangements on price, supply and allocation of customers with other pharmaceutical manufacturers of various generic drugs.  In connection with the FCA settlements, Taro will pay $213.2 million, Sandoz will pay $185 million, and Apotex will pay $49 million.  The civil settlements are in addition to previous deferred prosecution agreements resolving related criminal charges, pursuant to which Taro paid a criminal penalty of $205.6 million, Sandoz paid a criminal penalty of $195 million, and Apotex paid a criminal penalty of $24.1 million.  DOJ

June 30, 2021

Armed Forces Services Corporation (AFSC) d/b/a Magellan Federal has agreed to pay over $4.3 million to resolve its liability under the False Claims Act.  In a written disclosure to the U.S. Small Business Administration, AFSC revealed that a former executive had orchestrated kickbacks for himself and two other executives in exchange for awarding subcontractors work on federal contracts.  USAO EDVA