Government Procurement Fraud

September 5, 2023

Verizon Business Network Services LLC has agreed to pay over $4 million in connection with its Managed Trusted Internet Protocol Service (MTIPS), which provides federal agencies with secure connections to the internet.  The company self-disclosed that its MTIPS service failed to comply with General Services Administration (GSA) contracts because it didn’t satisfy required cybersecurity protocols.  DOJ

KBR – Defense Contracting Fraud ($108.75 million)

Constantine Cannon represented whistleblowers Geoffrey Howard and Zella Hemphill Anderson in a False Claims Act case against defense contractor KBR Inc. that resulted in the largest settlement to date involving Iraq War fraud.  KBR agreed to pay the government $108.75 million, with the whistleblowers sharing an award of $31.5 million, representing a whistleblower share of 29% of the total recovered.  The whistleblowers alleged that KBR overcharged the U.S. government in connection with procuring supplies and materials to support U.S. troops stationed in Iraq and Afghanistan during the Iraq War. The relevant contract, pursuant to which the government reimbursed KBR for its costs plus profit, required KBR to make efficient use of taxpayer funds by “cross-leveling” before procuring new material, including by checking to see if KBR already had excess of the needed item available in-theater before buying more.  In their complaint, the relators, both of whom worked for KBR during the Iraq War, alleged that KBR’s failures to “cross-level” resulted in hundreds of millions of dollars in excess materials and overcharges to the government.  Press Release; Whistleblower Insider

May 16, 2023

Randall Judge Phelan, a former Tribal government official, will spend 5 years in prison for soliciting bribes and kickbacks from a contractor providing construction services on the Fort Berthold Indian Reservation in North Dakota, the home of the Mandan, Hidatsa, and Arikara Nation. For approximately 8 years, from 2013 to 2020, Phelan solicited and accepted bribes and kickbacks totaling more than $645,000. In exchange, Phelan helped the contractor’s business by awarding millions of dollars in contracts, fabricating bids, advocating for the contractor with other Tribal officials, and facilitating the submission and payment of fraudulent invoices. DOJ, USAO ND

May 11, 2023

GCI Communications Corp. has agreed to pay $40 million to resolve a whistleblower case by its former Director of Business Administration, which alleged the company violated the False Claims Act by failing to comply with competitive bidding regulations for the FCC’s Rural Health Care Program.  In order to participate in the program—which awards $570 million in subsidies annually to bring critical telecommunications services to rural healthcare providers—GCI was subject to regulations governing the prices it could charge these providers.  However, GCI charged inflated rates to a provider in Alaska, thereby receiving higher subsidy payments than it was entitled to.  For launching a successful enforcement action, whistleblower Robert Taylor will receive a $6.4 million share of the settlement.  DOJ

April 21, 2023

Keith Alan Seguin, an Air Force civilian employee, will spend 188 months in prison and pay over $39 million in restitution to the Air Force, Army and General Services Administration, and the IRS, and forfeit over $2.3 million that he received in bribe money for colluding with others to evade competition and steer $100 million in government Air Force projects to them. Seguin was charged with making a false income tax return and for conspiracy to commit wire fraud. USAO WDTX

April 17, 2023

Bill R. Miller, a construction company owner, will spend 78 months in prison and will pay nearly $1 million in restitution for a bid-rigging and bribery scheme perpetrated against California Department of Transportation (Caltrans). Caltrans contract manager and Miller-co-conspirator, Choon Foo “Keith” Yong, pleaded guilty to receiving bribes that included cash, wine, furniture, and remodeling service on his home. Yong will spend 49 months in prison and will pay over nearly $1 million in restitution as well. Miller, Yong, and their co-conspirators sought to corrupt the competitive bidding process to enrich themselves, while wasting taxpayer dollars on contracts not secured through free and fair competition. DOJ, DOJ