Catch of the Week: a Medley of Contracting Fraud in Telecom

This week’s Catch of the Week goes to Level 3 Communications, which agreed to pay $12.7M to resolve claims that the company paid kickbacks paid to former Level 3 officials in return for favorable treatment to subcontractors in connection with government contracts, improperly obtained competitive bid information of competitors, and misstated compliance with woman-owned small business subcontracting requirements to receive more favorable contracting treatment.

Specifically, Level 3, a multinational telecommunications company, entered a contract with the General Services Administration under which the DOD ordered various pieces of telecommunication equipment. Under that contract, Level 3 employees received kickbacks from a potential subcontractor, a set of companies owned by William Wilson, which, in exchange for the payment of kickbacks, received favorable treatment in subcontracting.

Level 3 also resolved allegations that one of its senior managers who took these kickbacks, Ron Capallia, obtained confidential competitor bid information in connection with the GSA contract to gain an advantage in bidding on task orders under the contract.

The third alleged fraud involved both Wilson and Capallia. Under a Department of Homeland Security contract, Level 3, through Capallia, represented Wilson’s companies (subcontractors on the project) as being-women owned, a requirement of the DHS contract. In reality, the businesses were not owned or controlled by women, a fact that Level 3 management, through their kickback-laden experience with Wilson, knew all too well.

All of these allegations were brought to light by a whistleblower under the False Claims Act, which lets private individuals sue a government contractor, alleging fraud against the government, and share in any potential recovery. The whistleblower who brought this case forward was a former employee of Level 3, Steven Bishop, who served as a senior manager on the DHS contract at issue. Mr. Bishop pursued his claims for nearly eight years before reaching this successful resolution.

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Tagged in: Catch of the Week, FCA Federal, Government Procurement Fraud, Set-Asides and Preferences, Whistleblower Case,