Financial Fraud

A settlement has been reached to resolve False Claims Act allegations against The Academy for Educational Development (AED) who is accused of submitting false claims to the United States Agency for International Development (USAID) and for failure to adhere to contract specifications.

The government alleges that AED failed to ensure that its actions under two cooperative agreements with USAID complied with applicable regulations concerning competition in procurements, adherence to contract specifications, and supervision of its subcontractors. The government further alleges that AED failed to inform USAID that AED had discovered defects in AED’s systems of internal controls and that certain of AED’s subcontractors may have engaged in corruption and other wrongful activities.

The two cooperative agreements covered by the settlement are the Federally Administered Tribal Area Livelihood Development Program (FATA-LDP) in Pakistan and the Higher Education Project in Afghanistan. AED’s alleged misconduct resulted in substandard work and the government being overcharged for services and goods.

A settlement has been reached in a whistleblower class action lawsuit brought against Taleo Corp who is accused of knowingly causing false claims to be submitted to the Transportation Security Administration (TSA) of the Department of Homeland Security (DHS).

The whistleblower's recovery amount was not disclosed.

Originally filed in May 2008, the United States alleged Taleo's commercial list rates were usually based on a customer's actual number of employees, but that Taleo charged TSA a higher rate that was not based on the agency's actual number of employees.  If Taleo had followed the normal procedure, the rate TSA was charged would have been lower.

A settlement has been reached in a whistleblower class action lawsuit brought against Accenture LLP who is accused of submitting or causing to be submit false claims for payment under numerous contracts with agencies of the United States for information technology services.

According to the settlement Accenture has agreed to resolve allegations that it received kickbacks for its recommendations of hardware and software to the government, fraudulently inflated prices and rigged bids in connection with federal information technology contracts.The whistleblower's portion of the government's recovery has not been disclosed.

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A settlement has been reached to resolve False Claims Act allegations against CH2M Hill Hanford Group Inc., a wholly-owned subsidiary of Colorado-based CH2M Hill Companies Ltd., who is accused of knowingly submitting false claims and paing kickbacks relating to a contract to operate and manage mixed radioactive waste at the Department of Energy’s (DOE) Hanford Nuclear Site in the state of Washington.

Between 2003 and 2005, the engineering and construction firm employed two individuals whose responsibilities included purchasing supplies for use by CH2M on its DOE contract.  The government alleged that, during that period, these two individuals improperly made more than 200 purchases from companies owned and run by their spouses and charged the cost to DOE.   At the time, CH2M was a DOE prime contractor responsible for management, maintenance and cleanup of the Hanford “Tank Farms,” which consist of more than 170 underground tanks storing mixed radioactive and hazardous waste at DOE's Hanford Nuclear Site.            

As early as 2002, and again in 2003, 2004, and 2005, internal audits conducted by CH2M alerted it to weaknesses in its purchase card controls, weaknesses exploited by these schemes.  Nonetheless, CH2M failed to address these weaknesses, allowing these schemes to go undetected for years. 

One of the involved individuals, Gregory Detloff, allegedly accomplished his scheme by routing his purchases through a company known as Kennewick Industrial and Electric Supply (KIE), through an agreement with KIE salesman Martin Perez.  Both Detloff Industrial, the company owned by Detloff and his wife, and KIE substantially marked up the cost of these goods, leading the government to pay more than twice what the goods were worth.  The other CH2M employee used a company known as AMG Marketing and owned by the CH2M employee and his wife to charge DOE for goods.  Unlike Detloff Industrial, AMG Marketing did not provide any goods to the government for these fraudulent purchases.

A settlement has been reached in a whistleblower class action lawsuit brought against Oracle Corp and Oracle America Inc. They are accused of failing to meet their contractual obligations to the General Services Administration (GSA).

The whistleblower will receive a $40 million share of the government's recovery.

Originally filed in July 2007, the United States alleged Oracle knowingly failed to meet its contractual obligations to provide GSA with current, accurate and complete information about its commercial sales practices, including discounts offered to other customers, and that Oracle knowingly made false statements to GSA about its sales practices and discounts. The government complaint further alleged that Oracle knowingly failed to comply with the price reduction clause of its GSA contract by not disclosing to GSA discounts Oracle gave to its commercial customers when they were higher than the discounts that Oracle had disclosed to GSA, and by failing to pass those discounts on to government customers. Because of these allegedly fraudulent dealings, the United States alleged that it accepted lower discounts and ultimately paid far more than it should have for Oracle products.

A settlement has been reached in a whistleblower class action lawsuit brought against Harbert Corporation, Harbert International, Inc., Bill Harbert International Constructions Inc., Harbert Construction Services (U.K.) Ltd. and Bilhar International Establishment.  They are accused of submitting false claims, and caused others to submit false claims, to the U.S. Agency for International Development (USAID).

The whistleblower's share of the government's recovery was not disclosed.

The initial whistleblower suit that triggered the government's allegations was filed in 1995.  The United States alleged that the Harbert entities conspired to rig the bids on a USAID-funded construction contract that was bid and performed in Cairo, Egypt, in the late 1980s and early 1990s. Harbert International Inc. was part of a joint venture that bid on, and was ultimately awarded, Contract 20A to build a sewer system. The United States also alleged that various Harbert entities entered into agreements with other potential bidders on Contract 20A to ensure that the joint venture would win the bid. The United States contended that other potential bidders agreed to either not bid or bid intentionally high in return for a payoff.

A settlement has been reached to resolve False Claims Acts allegations against Louis Dreyfus Energy Services who is accused of failing to pay money owed on natural gas acquired from the Department of the Interior.

The settlement agreement resolves contentions by the United States that from December 2004 to March 2008, Louis Dreyfus Energy Services made false claims or misleading statements to the Department of the Interior involving contracts to buy natural gas produced from federal oil and gas leases in the Gulf of Mexico. Starting in 2004, Louis Dreyfus agreed to pay the Interior Department for natural gas based on a price associated with the delivery of the gas at a fixed point along a natural gas pipeline. After its contracts with the Interior Department were executed, the company requested and received a discount in the price it would pay the Interior Department for the natural gas obtained under the contracts. The United States contends that this price discount applied only when there was a complete or near-complete constraint in the natural gas pipeline such that Louis Dreyfus was unable to transport natural gas along the pipeline. However, the energy services company claimed and obtained the price discounts even on days when it was able to ship natural gas along the pipeline. Thus, the United States contends that Louis Dreyfus was not entitled to the price discounts that it sought and received from the Department of the Interior.

A settlement has been reached in a whistleblower class action lawsuit brought against ReadyOne Industries Inc, previously known as the National Center for Employment of the Disabled (NCED), who is accused of knowingly submitting false certifications regarding the annual percentages of direct labor hours performed by people with severe disabilities.

The whistleblower's share in the recovery was not determined.

The government's case stems from a whistleblower lawsuit filed in 2006. NCED was a participant in the AbilityOne® Program, which creates employment opportunities for people who are blind or have other significant disabilities in the manufacture and delivery of products and services to the federal government.  The program uses the purchasing power of the federal government to buy approved products and services from participating, community-based nonprofit agencies nationwide. These community-based nonprofit agencies, like NCED, must ensure that 75 percent of all annual direct labor hours on certain government contracts are performed by employees who are blind or severely disabled.   The program is managed by the Committee for Purchase From People Who Are Blind or Severely Disabled, which is a federal agency. The United States alleged that between 2000 and 2006, NCED employed a large number of non-disabled employees to work on contracts for the manufacture of archival boxes, apparel and other items, and did not appropriately account for their hours as part of the overall ratios it certified and submitted to the committee.

A settlement has been reached in a whistleblower class action lawsuit brought against The Technological Research and Development Authority (TRDA) who is accused of construction of an office building at the Melbourne Airport that was outside the scope of the NASA grants awarded to TRDA and contrary to the terms of the EDA grant awarded jointly to TRDA and the airport authority, which prohibited combining funds from more than one federal agency for the project.  The case was filed in March of 2012.

Relatedly, the Melbourne International Airport and its governing body, the Melbourne Airport Authority, have agreed to pay the United States $4 million to resolve alleged False Claims Act violations based on the same events described in the government’s lawsuit against TRDA.

A settlement has been reached in a whistleblower class action lawsuit brought against Toyo Ink SC Holdings Co Ltd and various affiliated entities (Toyo Ink).  They are accused of knowingly failing to pay antidumping and countervailing duties.

The whistleblower will receive a $7,875,000 share of the government’s recovery.

The initial whistleblower lawsuit was filed in October 2009.  The government's complaint alleged Toyo Ink knowingly misrepresented, or caused to be misrepresented, the country of origin on documents presented to U.S. Customs and Border Protection to avoid paying duties, particularly antidumping and countervailing duties, on imports of the colorant carbazole violet pigment number 23 (CVP-23) between April 2002 and March 2010.

Specifically, the government alleged that Toyo Ink misrepresented Japan and Mexico as the countries of origin for its CVP-23 imports, rather than the People’s Republic of China (PRC) and India which were the company’s sources for raw CVP-23.Imports of CVP-23 from the PRC and India have been subject to these duties since 2004; there are no such duties on imports from Japan or Mexico. Although Toyo Ink’s CVP-23 from the PRC and India underwent a finishing process in Japan and Mexico before it was imported into the United States, the government alleged that this process was insufficient to constitute a substantial transformation to render these countries as the countries of origin.