California-based Tungsten Heavy Powder, Inc. (THP) has agreed to pay over $5.6 million to resolve a qui tam lawsuit by former employee Gregory Caputo and Global Tungsten & Powders Corporation. In violation of the False Claims Act, THP allegedly falsely certified that certain defense articles procured by the Israeli government and financed by U.S. grant funds were sourced from and manufactured in the United States, when instead they were sourced from China and manufactured in Mexico. For bringing the lawsuit, Caputo will receive a 17% share of the settlement proceeds. USAO SDCA
Whistleblower Champion Chuck Grassley Pushes for Further Strengthening of False Claims Act (Again)
Senator Chuck Grassley (R-Iowa) already is celebrated as the modern-day champion of the False Claims Act. This is the government's main fraud-fighting tool, which empowers whistleblowers to act as private attorneys general and sue on the government's behalf over fraud in government contracts and programs. In successful cases, it rewards these whistleblowers with between 15% and 30% of the government's...
French contractor COLAS Djibouti SARL will pay a total of $14.5 million to resolve claims that it supplied substandard concrete under a contract with the U.S. Navy for construction of Navy airfields in the Republic of Djibouti. Colas Djibouti was required to certify that concrete supplied met contractual specifications for composition and characteristics, but made fraudulent misrepresentations and created fictitious testing results regarding the concrete’s composition and characteristics. Defendant entered into a deferred prosecution agreement on criminal claims, paying $12.5 million ($10 million in forfeiture and restitution, and $2.5 million as a criminal penalty). Defendant also entered into a civil settlement for $3.9 million, receiving a credit of $1.96 million for its payment under the DPA. DOJ; USAO SD Cal
DOJ Reports Decline in Total Fraud Recoveries in 2020, but Whistleblower Efforts and Rewards Continue
In its annual report of recoveries in fraud and False Claims Act cases, the Department of Justicereported total recoveries of $2.2 billion for the fiscal year ending September 2020. These recoveries represent the lowest reported DOJ recoveries since 2008.
While it is the decline in recoveries that stands out, the 2020 DOJ fraud statistics do share some things in common with prior years. First, whistleblowers...
Boeing-owned drone maker Insitu Inc. has agreed to pay $25 million to resolve a whistleblower-brought suit alleging violations of the False Claims Act. According to D.R. O’Hara, a former executive at Insitu, the company knowingly submitted cost and pricing data for new parts, but used recycled parts to build drones being supplied to the U.S. Navy and U.S. Special Operations Command on seven contracts. The alleged misconduct ran from 2009 to 2017. For exposing the fraudulent scheme, Mr. O’Hara will receive $4.6 million of the settlement proceeds. USAO WDWA
Defense contractor Raytheon Technologies Corporation and its subsidiary, Hamilton Sundstrand Corporation, have agreed to pay over $515,000 to settle allegations of submitting false claims for payment. Between 2006 and 2015, Raytheon and Hamilton improperly certified that goods it sold either directly to the government or to suppliers selling to the government were of domestic origin, when in fact they were manufactured in Romania. The false certifications violated the contracts’ domestic-preference requirements, the Buy American Act of 1933, and the False Claims Act. USAO CT
Government contractor Schneider Electric Buildings Americas Inc. will pay a total of $11 million to resolve criminal and civil claims that it overcharged the government on eight separate energy savings performance contracts under which the company was to install energy upgrades including solar panels, LED lighting, and insulation, in federal buildings. The company admitted to wrongdoing including the disguising of unauthorized design costs by charging them to unrelated contract components and the receipt of kickbacks from subcontractors on the ESPCs. $9.3 million of the settlement resolves civil liability under the False Claims Act and Anti-Kickback Act; $1.7 million is denominated as criminal forfeiture. DOJ
With voting in the 2020 election underway and the presidential debates behind us, now is a good time to reflect on the importance of civic duties to the preservation of American democracy. Voting, paying taxes, serving on a jury, and registering with selective service are all examples of such duties—responsibilities which, if ignored or unfulfilled by enough individuals, will cause the institutional fabric holding...
This Week in Whistleblower History: The Hall Carbine Affair and Defense Procurement Fraud
This week marks the first public unveiling of a fascinating—and still disputed—event in whistleblower history called the “Hall Carbine Affair.” Arising out of the investigative activities of a U.S. House Special Committee at the start of the Civil War into rampant defense procurement fraud, the scandal involved the government sale and then repurchase of obsolete rifles for the Union Army at grossly inflated...