Government Procurement Fraud

July 6, 2016

En Pointe Gov. Inc. (now known as Modern Gov IT Inc.), En Pointe Technologies Inc. (now known as Dinco Inc.), En Pointe Technologies Sales Inc. (now known as Collab9 Inc.), Dominguez East Holdings LLC and Din Global Corp. agreed to pay roughly $5.8 million to resolve allegations that they violated the False Claims Act by falsely certifying that En Pointe Gov. was a small business so it could obtain contracts set aside for small businesses and by underreporting sales under a General Services Administration (GSA) contract to avoid the payment of fees.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by Minburn Technology Group, , a Virginia company that sells information technology products and services, and Anthony Colangelo, Minburn’s managing member.  Minburn and Colangelo will receive a whistleblower award of approximately $1.4 million.  DOJ

May 31, 2016

Deloitte Consulting agreed to pay $11.38 million to resolve allegations under the False Claims Act that it submitted false claims under a General Services Administration contract.  In 2000, GSA awarded Deloitte a contract for the provision of information technology services.  According to the government, Deloitte failed to comply with price reduction clauses in the contract which required Deloitte to reduce the prices it charged the government if it offered lower prices to specific commercial customers and which resulted in the government paying more for Deloitte’s services than comparable commercial customers.  DOJ

May 5, 2016

Tennessee Valley Authority contractor Bartlett Holdings, Inc. (d.b.a. BHI Energy/Sun Technical Services) agreed to pay $2.8 million to settle charges of violating the False Claims Act by knowingly concealing or avoiding an obligation to refund overpayments received from TVA for work performed on the project to complete the construction of Watts Bar Nuclear Plant Unit 2.  According to the government, Bartlett received payments from TVA in excess of actual costs for payroll taxes and insurance and knowingly failed to timely identify, report and refund those overpayments to TVA as required under the subcontract.  DOJ (EDTN)

March 21, 2016

Maryland-based Coastal International Security, Inc. agreed to pay a total of $1.65 million to resolve criminal and civil allegations that the company defrauded the State Department during performance of a security contract and later concealed the fraud from contracting officials, and civil allegations that the company improperly obtained and used competitors’ pricing information to underbid competitors on government task orders.  Coastal International simultaneously agreed to pay $1.5 million to resolve civil claims under the False Claims Act for this conduct, as well as claims under the Procurement Integrity Act.  DOJ (EDVA)

March 16, 2016

John Bennett, the former founder and CEO of Canada-based Bennett Environmental Inc. was convicted of conspiring to pay kickbacks to guarantee the award of soil treatment contracts to his company for work at Federal Creosote, a Superfund site located in Manville, New Jersey.  Specifically, in exchange for gifts and cash payments, the project manager at Federal Creosote provided Bennett with “last looks” at confidential competitor bids, allowing Bennett to outbid its competitors without independently determining its price, thereby guaranteeing an award to the company and undermining the competitive bid process on this federally-funded project.  DOJ

March 14, 2016

Syracuse-based government contractor Hayner Hoyt Corporation agreed to pay $5 million to settle charges that its chairman and chief executive officer Gary Thurston, its president Jeremy Thurston, and its affiliate companies LeMoyne Interiors and Doyner Inc., violated the False Claims Act by exploiting contracting opportunities reserved for service-disabled veterans.  According to the government, “by diverting contracts and benefits intended for our nation’s service-disabled veterans . . . , the defendants undercut Congress’s intent of encouraging contract awards to legitimate service-disabled veteran-owned small businesses.” The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by former Hayner Hoyt subsidiary employee John Rubar.  He will receive a whistleblower award of $875,000 from the proceeds of the government’s recovery.  Whistleblower Insider

March 24, 2016

New York announced a groundbreaking $3.1 million agreement with Focused Technologies Imaging Services, LLC (“FTIS”), its sole owner Charles “Chuck” Tobin, and its former co-owner Julie Benware, for unlawfully outsourcing government-funded work to a subcontractor based in Mumbai, India in 2008 and 2009. The outsourcing was illegal because even though FTIS was required to perform the work at a warehouse in Albany, New York, FTIS unlawfully sent personal information of over 16 million people to a foreign business that was unauthorized to receive this information. The outsourcing also resulted in the failure of FTIS to adhere to a requirement that over 50% of the labor hours of the contract be performed by individuals with disabilities. NY