Government Procurement Fraud

February 2, 2016

New Jersey industrial pipe supply company American Pipe Bending and Fabrication Co. Inc. and its owner Andrew Martingano were sentenced to 32 months in prison and to pay a $150,000 criminal fine and $1.6 million in restitution for conspiring to commit fraud and pay bribes to a purchasing manager at Consolidated Edison of New York in return for the manager’s efforts to steer contracts to the company.  According to court documents, Martingano and others agreed to pay approximately $510,000 in cash bribes to James M. Woodason, a department manager of the Con Ed purchasing department.  In exchange, Woodason steered Con Ed industrial pipe supply contracts to American Pipe by secretly providing Martingano with confidential competitor bid information, thereby causing Con Ed to pay higher, non-competitive prices for materials.  DOJ

January 29, 2016

U.S. Navy Lieutenant Commander Todd Dale Malaki was sentenced to 40 months in prison and pay a $15,000 fine and $15,000 in restitution for accepting bribes from foreign defense contractor Glenn Defense Marine Asia (GDMA) in exchange for classified U.S. Navy ship and submarine schedules and other internal Navy information.  While he was working as a supply officer for the U.S. Navy’s Seventh Fleet, Malaki began a corrupt relationship with Leonard Glenn Francis, the former president and CEO of GDMA, a company that provided port services to U.S. Navy ships and submarines throughout the Pacific.  As part of the scheme, Malaki provided Francis with classified U.S. Navy ship schedules and proprietary invoicing information about GDMA’s competitors in exchange for luxury hotel stays in Singapore, Hong Kong and the island of Tonga, as well as envelopes of cash, entertainment expenses and the services of a prostitute.  To date, 10 individuals have been charged in connection with this scheme.  DOJ  Just a day earlier, U.S. Navy Commander Michael Vannak Khem Misiewicz pleaded guilty to participating in the same scheme.  DOJ

January 14, 2016

State Street Bank and Trust Company will pay $12 million to settle charges that it conducted a pay-to-play scheme to win contracts to service Ohio pension funds.  An SEC investigation found that Vincent DeBaggis, head of State Street’s public funds group, made a deal with Ohio’s then-deputy treasurer under which DeBaggis would make illicit cash payments and political campaign contributions in exchange for three lucrative contracts to safeguard certain funds’ investment assets and effect the settlement of their securities transactions.  DeBaggis will pay almost $275,000 to settle the SEC’s charges.  In related proceedings, attorney Robert Crowe, who worked as a lobbyist and fundraiser for State Street, was charged in federal court for his role in the scheme.  SEC

January 6, 2016

URS E & C Holdings Inc., a successor in interest to the global design and construction company Washington Group International Inc. (WGI), agreed to pay $9 million to settle allegations that WGI submitted false claims in connection with United States Agency for International Development (USAID) contracts.  Specifically, the settlement concerns USAID-funded contracts for the construction of water and wastewater infrastructure projects in Egypt in the 1990s.  The contracts were awarded to a joint venture partnership between WGI, Contrack International Inc. and Misr Sons Development S.A.E., an Egyptian company.  The government alleged the joint venture partners concealed from USAID that Contrack and Misr Sons were partners in the venture, thus preventing USAID from evaluating their qualifications and eligibility, which was a precondition to contract award.  The government previously settled with Contrack and is continuing to pursue its claims against Misr Sons.  DOJ

January 5, 2016

Wisconsin-based Novum Structures LLC agreed to enter a guilty plea and pay $3 million to resolve its criminal and civil liability arising from its improper use of foreign materials in federally funded construction projects which had “Buy America” requirements.  Novum specializes in the design and construction of glass space frames often used in roofs and atrium enclosures.  The allegations originated in a whistleblower lawsuit filed by Brenda King under the qui tam provisions of the False Claims Act.  She will receive a whistleblower award of approximately $400,000 from the government’s recovery.  DOJ

December 10, 2015

Tishman Construction Corporation agreed to pay more than $20 million to settle charges of overbilling customers over a ten-year period.  Starting from at least 1999, Tishman Construction allegedly billed clients for large construction projects for hours never worked or for rates not agreed upon.  Tishman Construction carried out the scheme by, among other things, padding hours of unworked or unnecessary “guaranteed” overtime; and submitting time for certain foremen who were actually absent for sick days, major holidays and vacation days.  The government claims the company also billed clients at wage rates that exceeded those specified in the governing contracts.  Whistleblower Insider

September 3, 2015

California-based Parsons Government Services Inc. agreed to pay $3.8 million to settle allegations it knowingly mischarged the Department of Energy for ineligible or inflated short-term and long-term employee relocation costs in connection with its contract on the DOE Salt Waste Processing Facility Project at the DOE Savannah River Site in Aiken, South Carolina.  DOJ

August 21, 2015

Wholly-owned Lockheed Martin Corporation subsidiary Sandia Corporation agreed to pay $4,790,042 to resolve allegations it violated the Byrd Amendment and the False Claims Act by using federal funds for activities related to lobbying Congress and federal agencies to obtain a renewal of its Management and Operating Contract with the Department of Energy’s National Nuclear Security Administration to operate the Sandia National Laboratories.  DOJ

August 19, 2015

Background check company US Investigations Services Inc. and its parent company Altegrity agreed to settle charges that USIS violated the False Claims Act by failing to provide proper background checks as required under its contract with the  Office of Personnel Management.  They agreed to forgo $30 million in payments they claim OPM owed them.  The allegations leading to the settlement were first raised in a whistleblower lawsuit filed by former USIS executive Blake Percival under the qui tam provisions of the False Claims Act.  He will receive a yet-to-be-determined whistleblower award.  Whistleblower Insider