Financial Fraud

A settlement has been reached in a whistleblower class action lawsuit brought against Chevron Corporation, Texaco, Unocal Incorporated and their affiliates (the Chevron companies). They are accused of knowingly underpaying royalties.

The whistleblower's heirs (due to the original whistleblower's death) will receive $12,303,787.88.

The original whistleblower case that this lawsuit stemmed from was filed in February 1998. The government previously settled with Burlington Resources Inc. for $105.3 million, Shell Oil Company for $56 million and Dominion Exploration and Production Company for $2 million. 

The United States alleged the Chevron companies knowingly underpayed royalties owed on natural gas produced from federal and Indian leases from March 1988 to November 2008 and, consequently, that they paid less royalties than they owed to the United States and various Indian tribes. 

Each month, companies are required to report to the MMS the value of the natural gas produced from their federal and Indian leases and to pay a percentage of the reported value as royalties. The settlement resolves claims by the United States that the Chevron, Texaco and Unocal companies improperly deducted from royalty values the cost of boosting gas up to pipeline pressures, used affiliate transactions to falsely reduce the reported value of gas taken from federal and Indian leases, and improperly reported processed gas as unprocessed gas to reduce royalty payments.

A settlement has been reached in a whistleblower class action lawsuit brought against AT&T Missouri (formerly known as Southwestern Bell Telephone L.P.), who is accused of engaging in non-competitive bidding practices for Federal Communications Commission contracts.

The whistleblower will receive a $195,000 share of the government's settlement.

Originally filed in 2006, the United States alleged that the Company violated the False Claims Act in connection with the Federal Communications Commission's E-Rate program. 

The E-Rate program, which Congress created in the Telecommunications Act of 1996, provides funding for needy schools and libraries to connect to and utilize the Internet. Under the program, which is supported by fees collected from telephone users, schools apply for funds to pay for hardware and monthly connectivity service fees.

The government's complaint asserted AT&T Missouri provided false information to the E-Rate program and otherwise violated the program’s requirements by engaging in non-competitive bidding practices for E-Rate contracts. The United States further alleged that AT&T Missouri employees colluded with officials in the Kansas City, Mo., School District to award contracts to the company, extended contracts in violation of E-Rate rules and provided meals and other inducements to school district employees.

A settlement has been reached in a whistleblower class action lawsuit brought against VMware Inc. and Carahsoft Technology Corporation.  They are accused of misrepresenting their commercial pricing practices and overcharging the government.

The whistleblower's portion of the recovery has not been determined.

Originally filed in July 2010, the United States alleged that VMware and Carahsoft made false statements to the government in connection with the sale of VMware products and services under Carahsoft’s MAS contract.  These false statements allegedly concealed the companies’ commercial pricing practices and enabled the companies to overcharge the government for VMware’s products and services from 2007 through 2013.

A settlement has been reached in a whistleblower class action lawsuit brought against LB&B Associates Inc who is accused of made false statements to obtain contracts through the Small Business Administration.

The whistleblower will recover a total of $1.5 million of the settlement.

Originally filed in 2007, the United States alleged that in seeking certification under SBA’s 8(a) Program, LB&B falsely represented that Lily Brandon – who satisfied the criteria for a socially and economically disadvantaged person under the program – controlled the operations of LB&B, when she did not.  Securing 8(a) certification allowed LB&B to obtain 8(a) set aside contracts from various government agencies.  Throughout the performance of these contracts, Lily Brandon allegedly failed to exercise actual control over LB&B’s operations, a key component to qualifying for the set aside contracts.

A settlement has been reached to resolve False Claims Act allegations against Fastenal Company who is accused of knowingly failing to meet its contractual obligations.

This settlement was reached following an investigation of alleged false claims in connection with a General Services Administration (GSA) contract. 

The GSA Office of Inspector General learned that Fastenal knowingly failed to meet its contractual obligations to provide the GSA with current, accurate and complete information about its commercial sales practices, including discounts afforded to other customers.

In addition, the United States alleged that Fastenal failed to comply with the price reduction clause of its GSA contract, overcharged government customers, and improperly assessed delivery and sales tax charges on government sales. As a result, the government paid more than it should have for Fastenal products. The settlement also resolves allegations that Fastenal violated the Trade Agreements Act when it knowingly sold products to the United States that were manufactured in countries that do not have trade agreements with the United States, e.g., China.

A settlement has been reached in a whistleblower class action lawsuit brought against Sun Microsystems Inc, who merged with Oracle in 2010.  They are accused of submitting false claims and causing others to submit false claims to the General Services Administration (GSA) and other federal agencies.

The whistleblowers' share of the government's recovery has not been disclosed.

Originally filed in September 2004 against Accenture LLP, the United States alleged that Sun knowingly paid kickbacks to systems integrator companies in return for recommendations that federal agencies purchase Sun’s products. Sun executed agreements with consulting companies that provided for the payment of fees each time the companies influenced a government agency to purchase a Sun product. These kickback allegations are part of a larger, ongoing investigation of government technology vendors that has resulted in settlements to date with six other companies.

The settlement also resolves claims under the FCA that Sun’s 1997 and 1999 GSA Schedule contracts were defectively priced because Sun provided incomplete and inaccurate information to GSA contracting officers during contract negotiations, as well as claims that the incomplete and inaccurate information resulted in defective pricing of Sun’s contract with the U.S. Postal Service and GSA Schedule contracts held by two resellers of Sun products. At the time Sun entered into its contracts with GSA to sell information technology products and services to federal agencies, applicable regulations and contract provisions required Sun to fully and accurately disclose to GSA how it conducted business in the commercial marketplace so that GSA could use that information to negotiate a fair price for government customers using the GSA contracts to purchase Sun products and services. The defective pricing information that Sun disclosed to GSA was subsequently relied on by the Postal Service in negotiating a contract with Sun, as well as by GSA in negotiating contracts with two resellers of Sun products.

A settlement has been reached in a whistleblower class action lawsuit brought against Alaska DigiTel LLC, a former Alaska limited liability company now owned by General Communication Inc. (GCI), who is accused of submitting false claims to the Federal Communications Commission’s (FCC) Low Income Support Program.

The whistleblower will receive $260,274 from the settlement.

Originally filed in 2008, the United States alleged that Alaska DigiTel violated the False Claims Act by submitting claims to the Low Income Support Program for improperly substantiated, duplicative, or otherwise ineligible subscribers for the period from Jan. 1, 2004, though Aug. 31, 2008.

The Low Income Support Program of the Universal Service Fund, which includes the Lifeline, LinkUp and Toll Limitation Services, was created by Congress in the Telecommunications Act of 1996 and is administered by the Universal Service Administrative Company for the FCC. Under the Low Income Support Program, eligible individuals may apply for free ordiscounted phone or wireless services. Reimbursement is paid directly to Eligible Telecommunications Carriers, such as Alaska DigiTel.

A settlement has been reached in a whistleblower class action lawsuit brought against Verizon Communications Inc who is accused of overcharging the General Services Administration (GSA) on invoices dealing with government-wide voice and data telecommunications services contracts.

The whistleblowers portion of the government's recovery was not disclosed.

Originally filed in January 2007,  the United States alleged that Verizon subsidiary MCI Communications Services Inc. dba Verizon Business Services invoiced GSA for a variety of federal, state and local taxes and surcharges in violation of the contracts or applicable regulations in connection with the FTS2001 and FTS2001 Bridge contracts. The department’s joint investigation with GSA’s Office of the Inspector General (OIG) found that Verizon and MCI submitted false claims under the contracts for the reimbursement of property taxes, common carrier recovery charges and unallowable surcharges, charges that are not directly reimbursable under the FTS2001 contracts.

A settlement was reached to resolve False Claims Act allegations against Ultralife Corporation, formerly known as Ultralife Batteries Inc., who is accused of failing to provide current, accurate and complete cost and pricing data related to three contracts with the U.S. Army.

In each of the three contracts at issue, Ultralife was alleged to have knowingly provided government contracting personnel with false certifications concerning the company’s cost and pricing information, which was not current, accurate and complete as required by law. As a result of the defective price disclosures, the Army paid inflated prices for the batteries it purchased.

A settlement has been reached reached to resolve False Claims Act allegations against Fluor Corporation knowingly submitting false claims and paying and receiving kickbacks.

The allegations are in relation to a contract to operate and manage mixed radioactive waste at the Department of Energy’s (DOE) Hanford Nuclear Site in Hanford, WA. 

Between 2003 and 2008, Fluor employed individuals known as material coordinators, whose job responsibilities included purchasing supplies for use by Fluor on its DOE contract. Between 2003 and 2008, three such material coordinators, Susanna Zuniga, Gregory Detloff and Paul Kempf, made hundreds of fraudulent purchases using government purchase cards, using their positions and exploiting weaknesses in Fluor’s internal control system to funnel DOE funds to themselves.

As early as 2001 and repeatedly between 2001 and 2008, internal audits conducted by Fluor alerted it to weaknesses in its purchase card controls, weaknesses exploited by the three material coordinators. Nonetheless, Fluor failed to address these weaknesses, allowing these schemes to go undetected for years.

Additionally, between 2005 and 2008, at least 14 Fluor material coordinators solicited, received and accepted kickbacks from a Hanford-area vendor known as Fast Pipe and Supply Company and its owner, Shane Fast. These kickbacks, which took the form of cash, tickets to sporting events, gift cards and other things of value, were intended to influence the material coordinators to purchase from Fast rather than competing vendors. In return for these kickbacks, the 14 Fluor material coordinators did more than $3.5 million in business with Fast.