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Defense Contract Fraud

This archive displays posts tagged as relevant to fraud in defense and military contracts. You may also be interested in the following pages:

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April 23, 2019

Oregon-based aluminum supplier Hydro Extrusion Portland, Inc., formerly known as Sapa Profiles Inc., together with its parent company, has agreed to pay $47 million to settle criminal mail fraud charges and civil claims alleging that between 1996 and 2015, the company altered the results of tensile tests measuring the consistency and reliability of extruded aluminum, and falsified certifications about products meeting testing requirements and contract specifications. Among the customers who received products that defendants knew did not meet contract specifications were NASA and the Dept. of Defense Missile Defense Agency.  The $47 million total settlement payment consists of forfeiture of $1.8 million, $34.1 million in criminal restitution to NASA, DOD, and commercial customers – $23.6 million of which is also credited to resolve civil claims under the False Claims Act – and an additional $11 million in payments to resolve civil FCA claims.  Defendant entered into a deferred prosecution agreement and has been  suspended as a U.S. government contractor.  DOJ; USAO EDVA

Catch of the Week — DOJ Settles False Claims Act Case Against Cybersecurity Company

Posted  04/18/19
Hand Above Passcode Locked Phone
Last week, the Department of Justice announced that Fortinet, Inc., a Silicon Valley-based cybersecurity company, has agreed to pay more than half a million dollars to resolve allegations that it lied about its compliance with the federal Trade Agreements Act (TAA). The allegations were brought to the government’s attention through a False Claims Act lawsuit filed by a whistleblower who worked in Fortinet’s...

Catch of the Week — DOJ Settles with Two Additional Defendants in Ongoing Bid Rigging Investigation

Posted  03/22/19
US Soliders in Front of Oil Rig
Our Catch of the Week celebrates DOJ’s $127 million settlements with two additional South Korea-based companies entangled in a bid-rigging conspiracy to stifle competition and thus artificially inflate prices charged to the U.S. Government on contracts to supply fuel for U.S. military bases in South Korea. The two oil companies, Hyundai Oilbank Co. Ltd and S-Oil Corporation, will pay $75 million in criminal fines...

March 20, 2019

South Korean companies Hyundai Oilbank Co. Ltd. and S-Oil Corporation will plead guilty and pay $127 million in fines to resolve criminal and civil claims arising from the defendants’ alleged bid-rigging and price-fixing in contracts to supply fuel to U.S. military bases in South Korea.  The settlement, the second announced by DOJ in an ongoing investigation, resolves criminal conspiracy and antitrust claims, as well as civil antitrust and False Claims Act violations related to the bid-rigging conspiracy. DOJ

March 5, 2019

The United States reached a $25 million settlement against an Afghan delivery and transport subcontractor accused of violating the False Claims Act. From 2010 to 2012, Hikmat Shadman Logistics Services Company (HSLSC) and its owner, Hikmatullah Shadman, allegedly overcharged the United States millions of dollars by inflating their rates to well above those of competitors, falsifying thousands of documents, and charging for work that was never performed. In addition to the civil charges, HSLSC faced criminal charges for paying bribes to at least two U.S. service members to influence the awarding of contracts. As part of the criminal settlement, the company and its officers have agreed to seek no further business with the United States and to refrain from applying for travel visas to the United States. DOJ; USAO DC

February 22, 2019

Mark Cundiff of Macon, Georgia, was sentenced to three years in prison and ordered to pay restitution of $380,000 to the federal government.  Cundiff, a former DOD employee at Robins Air Force Base, was responsible for soliciting bids for new contracts at the base.  Cundiff accepted cash payments of $2,000-$8,00 monthly over the course of almost ten years from co-defendant Raymond Williams (previously sentenced to five years in prison) in exchange for drafting bid solicitation Performance Work Statements in such a way that the contracts could only be met by Williams and his companies, US Technology Corporation and US Technology Aerospace Engineering Corporation.  The UST companies and Williams received almost $14.5 million in government contracts as a result of the bribery scheme.  USAO MD GA

January 29, 2019

E.M. Photonics, Inc. (“EMP”) and its Chief Executive Officer, Eric Kelmelis, will pay $2.75 million to resolve allegations that they violated the False Claims Act by seeking disbursements from federal agencies for falsified labor costs and duplicative work in order to maximize charges to contracts awarded by federal agencies. From January 2009 to April 2014, EMP received funds under seven different contracts and grants awarded through the federal Small Business Innovation (“SBIR”) and Small Business Technology Transfer (“STTR”) programs. EMP and Kelmelis directed EMP employees, or caused others to direct EMP employees, to complete false timesheets and submit false invoices and public vouchers for direct labor that did not occur. EMP and Kelmelis also sought and received SBIR/STTR funding for work already performed and funded by another government agency and falsely certified that such work was, in fact, non-duplicative. The government alleged that both of these schemes were designed to maximize charges to each contract or grant. DOJ

December 19, 2018

Arvco Container Corporation of Kalamazoo, Michigan, will pay $400,000 to settle allegations that it violated the False Claims Act by performing 100% of the manufacturing work on a contract that had been awarded by the Defense Logistics Agency to Fibre Technologies LLC in Reading, Pennsylvania, subject to a HUBZone small business program that barred Fibre from subcontracting the entire manufacturing.  USAO MD Pa

December 17, 2018

Progressive Technology Federal Systems, Inc. and its CEO, John Yokley, have agreed to pay $110,000 to resolve allegations under the federal False Claims Act that they misrepresented a consultant's security clearance and failed to disclose a conflict of interest in bidding to perform IT work for the Army and Air Force.  PTFS bid on the contract through the cooperative purchasing program of the National Institutes of Health’s Information Technology Acquisition and Assessment Center, NITAAC, which enables federal agencies to contract for information technology services. USAO CO

Catch of the Week — DOJ Nets 3 South Korean Companies in Bid Rigging Scheme

Posted  11/16/18
Our Catch of the Week celebrates DOJ’s massive $236 million settlement with three South Korean-based companies accused of rigging bids to inflate the cost of fuel supplied to U.S. Army, Navy, Marine Corps, and Air Force bases in South Korea, the investigation of which was initiated by a whistleblower represented by Constantine Cannon. The three companies, SK Energy Co. Ltd., GS Caltex Corporation, and Hanjin...
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