Trade Agreements

Unitrans International Inc., Anham FZCO, et al. — Government Contract Fraud ($45 million)

Our attorneys represented Rory Maxwell, John Bush, and Supreme Foodservice GmbH in a qui tam action under the False Claims Act against Unitrans International Inc., a privately held Virginia defense contracting company, and Anham FZCO, an associated Dubai Free Zone company, for making false certifications of compliance with the U.S. sanctions regime against Iran to induce the U.S. Defense Logistics Agency and the U.S. Army to award Anham wartime contracts to provide food and transportation to U.S. troops.  Our whistleblower clients also alleged Anham knowingly and falsely represented construction progress on its Bagram warehouse in related bid proposals to the government.  In December 2019, Unitrans agreed to pay $45 million to resolve criminal and civil allegations related to this alleged misconduct, which includes $27 million to resolve our whistleblower clients’ False Claims Act allegations.  Read more about the case at the Department of Justice website here and in The Washington Post here.

December 12, 2019

For selling defective, Chinese-made products to the U.S. Department of Defense on fraudulently obtained contracts, Timothy Kelly, a California business manager for Emerson Company, has been sentenced to 2.5 years in prison.  Together with company owner Daniel Norton, who was sentenced to 8 years in prison, the two have also been ordered to pay $2.38 million in restitution, forfeit $333,000 in a bank account, and forfeit a $725,000 house in Hawaii.  USAO SDOH

November 18, 2019

Daniel Norton, the owner of former DOD contractor Emerson Company, has been sentenced to 8 years in prison following his guilty plea on charges that he fraudulently obtained government contracts and obstructed justice.  According to the evidence at trial, Emerson Company had been debarred in 2011, but Norton used front companies to fraudulently secure purchase orders for parts to be supplied to the military.  In violation of contract Buy-American requirements, Norton filled the purchase orders by supplying non-conforming products manufactured in China, even where the contract called for a specific part from an American manufacturer.  In addition to his prison sentence, Norton was ordered to pay $2.4 million in restitution, and forfeit property valued at over $1 million.  USAO SD OH

June 20, 2019

Pennsylvania-based Support of Microcomputers Associates (SOMA) has agreed to a $300,000 judgment for violating the False Claims Act and Trade Agreements Act.  The Trade Agreements Act prohibits the sale of computer supplies manufactured in certain countries to some federal agencies, such as the Department of Defense.  However, according to a former SOMA executive’s lawsuit, the company allegedly sold federal agencies computer supplies made in China, Vietnam, and other non-compliant countries.  USAO EDPA

May 13, 2019

Silicon Valley-based software company Informatica LLC will pay $21.57 million to resolve allegations that it provided false information about its commercial pricing and discounting practices that was then used in negotiations for Multiple Award Schedule contracts with the General Services Administration.  In addition, Informatica was alleged to have caused sales to the U.S. in violation of the Trade Agreements Act. The whistleblower, a former employee of Informatica, will receive $4.3 million from the settlement.  DOJ

November 13, 2018

Naum Morgovsky and Irina Morgovsky were sentenced following their guilty pleas for conspiracy to illegally export components for the production of night-vision and thermal devices to Russia in violation of the Arms Export Control Act, and for laundering the proceeds of the scheme.  The defendants purchased products using their U.S. business, Hitek International, representing that the products would not be exported.  The couple then shipped the products to Moscow-based Infratech using a variety of front companies and shipping methods.  They were sentenced to 108 months and 18 months, respectively, were assessed a $1 million fine, and forfeited $223 thousand.  DOJ

September 6, 2018

The owner of New Jersey-based defense contracting firm, Bright Machinery Manufacturing Group Inc (BMM), has been charged with defrauding the Department of Defense and violating the Arms Export Control Act. From 2010 to 2015, Ferdi Gul—currently at large in Turkey—submitted bids and was awarded 346 contracts worth $7 million to manufacture military parts within the U.S., including torpedoes, firearms, and mine clearance systems. Instead, Gul had the parts made in Turkey, submitted false quality control paperwork, and sent the parts back to the U.S. to DoD customers. In subsequent testing by the DoD, some of the parts were shown to be essentially unusable. If found and convicted, Gul could be imprisoned for a maximum of 160 years and be ordered to pay up to $3.5 million. USAO NJ

August 8, 2018

The former CEO of Wellco Enterprises, Inc., Vincent Lee Ferguson, was sentenced to 41 months in federal prison for his role in a scheme to sell boots to the Department of the Defense and others as "Made in the U.S.A.," when the boots were, in fact, made in China.  The company instructed its Chinese manufacturing facility to include tear-away "Made in China" labels on the boot uppers, and then instructed employees at Wellco's New Jersey facility to remove the labels.  The company sold over $8 million in fraudulently-marked boots.  USAO E.D.Tenn.