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Top Ten Non-Healthcare False Claims Act Recoveries of 2020

Posted  January 14, 2021

This year’s Top Ten Non-Healthcare False Claims Act Recoveries demonstrates the False Claims Act’s power to combat an array of corporate misconduct spanning diverse industries. In 2020, the United States recovered hundreds of millions in taxpayer funds obtained through claims rendered false by bribery and bid-rigging schemes, mortgage underwriting fraud, avoided import duties, fraudulent loan applications, and other garden-variety contracting fraud schemes like overbilling on government contracts or selling the government substandard products and services.

More novel fraud schemes also emerged this year as the federal government spent unprecedented sums and adjusted regulations to combat the coronavirus pandemic and its resulting economic devastation. Many brave individuals came forward in 2020 to report fraudsters seeking to exploit the pandemic, sparking government investigations that are not yet public. As those federal investigations mature into enforcement actions, we expect recoveries in the year ahead to feature pandemic-fueled frauds.

With this list, we celebrate the whistleblowers and government officials who have worked to expose the scams highlighted below and hold these companies accountable. We also salute the numerous other whistleblowers who exposed fraud in 2020, and those future whistleblowers who will reveal misconduct, whether familiar or evolving.

  1. S.K. Engineering – $68.4 Million – Bribery. This South Korean engineering company agreed to pay $68.4 million to resolve allegations that it paid a fake construction company $2.6 million to bribe an Army Corps of Engineers official, then submitted falsified documents to the U.S. Army to hide the payoff. The government says the company also hampered U.S. and Korean investigations into the scheme.
  2. Bechtel, AECOM, & Waste Treatment Completion – $57.75 Million – Department of Energy Contract Fraud. Four whistleblowers were awarded $13.75 million for initiating this investigation into several contractors for overcharging the DoE for work at the Hanford Waste Treatment Plant in Washington State. Defendants are said to have billed for unallowable and unreasonable idle time caused by management failures, including labor charges by electricians, millwrights, pipefitters, and other skilled trades workers.
  3. QuantaDyn – $51.7 Million – Bribery. This software engineering firm settled claims arising from bribes it paid to an Air Force contracting official to provide procurement-sensitive information and steer government contracts for training simulators to the company. According to the government, QuantaDyn’s corrupt partnership with the contacting official caused a prime contractor to submit false invoices to the United States.
  4. Hybrid Tech & Ace Strength International – $29 Million – Bid Rigging. Whistleblowers shared in $5.2 million of the government’s $29 million recovery for their roles in reporting this collusion scheme. Defendants settled claims they had exerted pressure on two other competing bidders to suppress their bids during a live auction to purchase a Department of Energy loan, reducing the amount ultimately recovered in the auction.
  5. Guild Mortgage – $25 Million – Mortgage Fraud. Guild’s settlement resolved claims that it knowingly approved ineligible federally insured loans that later defaulted, failing to comply with rules applicable to participants in the Federal Housing Administration’s mortgage insurance program. The company’s former head of quality control received nearly $5 million for his role in reporting the scheme.
  6. Linde Engineering – $22 Million – Customs Fraud. Thanks to a whistleblower, this multinational industrial engineering company settled claims that it avoided import duties by misrepresenting the nature, classification, and valuation of its merchandise, which is used in constructing natural gas and chemical manufacturing plants. The whistleblower was awarded $3.7 million of the settlement proceeds for exposing the six-year fraud.
  7. Cognosante – $19 Million – General Services Administration Contract Fraud. The information contractor settled allegations it overcharged the U.S. on two GSA Multiple Award Schedule contracts, including by lying about its commercial discounting practices during contract negotiations and charging the government for labor that did not meet the contractual qualifications.
  8. Lakeway Medical – $15.3 Million – Government Loan Fraud. This is one of several settlements concerning fraudulent applications for a federally insured mortgage loan to develop a hospital in Lakeway, Texas. The hospital ultimately defaulted on the Federal Housing Administration program loan, which defendants obtained by overstating physician support for the hospital and understating other credit risks.
  9. Guaranteed Rate – $15.1 Million – Mortgage Fraud. An unnamed whistleblower shared in this $15.1 million recovery as a reward for reporting that his or her former employer, Guaranteed Rate violated material program requirements in originating and underwriting mortgages insured by the Federal Housing Administration or guaranteed by the Veterans Administration. The lender approved mortgages that did not meet credit and underwriting requirements for the government-sponsored guarantees and insurance.
  10. Bradken – $10.8 Million – Navy Contract Fraud. The U.S. Navy’s leading supplier of high-yield steel for submarines settled allegations it sold the government steel that did not meet the Navy’s strength standards. The defense contractor discovered and self-disclosed that its former director of metallurgy altered thirty years’ worth of steel production test results for steel produced and sold out of the defense contractor’s Tacoma foundry. The steel was destined for use in U.S. Naval submarines.

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Annual Whistleblower Insider Top Ten Lists

Every January, Whistleblower Insider looks back at the significant government enforcement actions of the past year. Our Top Ten lists highlight the biggest recoveries and significant enforcement efforts by different government actors in cases of interest to whistleblowers.
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Tagged in: Bribery and Bid-Rigging, Customs Fraud, FCA Federal, Government Loan Programs, Government Programs Fraud, Housing and Mortgage Fraud, Top 10, Whistleblower Case,