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Georgia defense contractor agrees to $900,000 payment to settle False Claims Act allegations

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Two Georgia companies and their owners have agreed to pay $900,000 to resolve allegations that they provided unapproved substitute parts to the U.S. Army and that they violated the Buy American Act.

The settlement, by Southeastern Equipment Co., Inc., SECO Parts and Equipment Co., and their owners, B. Roy Smith and Byron M. Morris (collectively, “SECO”), resolves allegations under the False Claims Act that SECO knowingly provided unapproved substitute parts through the U.S. Army’s Simplified Nonstandard Acquisition Program (SNAP) and violated the Buy American Act by providing parts manufactured in a non-qualifying country, said David H. Estes, Acting U.S. Attorney for the Southern District of Georgia.

“Defense contractors have an obligation to provide the government what they say they will,” said Acting U.S. Attorney David H. Estes. “We will continue to vigorously pursue contractors that do not honor their word and follow the law when doing business with our armed services.”

Continue reading at:  U.S. Department of Justice website

Increasing criminal and False Claims Act liability in small business government contracting programs

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The U.S. Small Business Administration (SBA) preference programs can be vital for small businesses trying to compete in the potentially lucrative world of U.S. government contracting, but participation in these programs is not without risk.  Indeed, the programs can be fraught with peril and contain many landmines for those who do not understand and diligently comply with applicable small business program requirements.

Small Business Government Contracting Programs

The SBA works to make sure small businesses get at least 23 percent of all federal contracting dollars each year, primarily through the SBA’s small business and contracting assistance programs.  These programs are designed to assist small businesses by limiting competition for certain government contracts or by awarding a certain percentage of contracts to small businesses that participate in the respective programs.  The SBA has a variety of such programs, such as the 8(a) Business Development (8(a)) Program), the Service-Disabled Veteran-Owned Small Business (SDVOSB) program, the Women-Owned Small Business (WOSB) Program, and the Historically-Underutilized Business Zone (HUBZone) Program, which were created for small businesses owned by socially and economically disadvantaged people or entities, service-disabled veterans, or women or small businesses operating in historically underutilized business zones, respectively.

Continue reading at: JD Supra

Federal contractor indicted for stealing over $1.2 million from the U.S. Postal Service

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A federal grand jury indicted a construction contractor for stealing over $1.2 million from the United States Postal Service through a more than three-year scheme to defraud through false invoices, Acting United States Attorney Saima S. Mohsin announced today.

Mohsin was joined in the announcement by Steven Suller, Director of the Contract Fraud Investigations Division, United States Postal Service, Office of Inspector General.

Michael Rymar, 59, of Rochester Hills, stands charged with embezzling government funds from the United States Postal Service (USPS).  From 2015 to 2018, USPS engineers awarded Rymar’s company, Horizons Materials & Management LLC, with over $5 million in contracts for repairs on USPS buildings in Michigan and New York.  But the documentation Rymar provided contained false and fraudulent statements, oftentimes dramatically and falsely overstating the amount he paid subcontractors to complete the repairs.  Rymar also falsely inflated the amount he paid his own employees and the cost of materials on USPS jobs.  Over the course of the three-plus-year fraudulent scheme, Rymar stole over $1.2 million from USPS out of the $5 million in contracts he was awarded.

Continue reading at:  U.S. Department of Justice website

Potential FCA changes and enforcement priorities on the horizon

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On February 17, 2021, Senator Chuck Grassley (R-IA) and Brian Boynton, Acting Attorney General for the Department of Justice’s Civil Division, provided opening remarks at the Federal Bar Association’s annual Qui Tam Conference.  Both emphasized the key role of the FCA in combating fraud against the Government and noted an anticipated increase in FCA enforcement actions in the coming years, particularly related to the Government’s pandemic response.  In addition, Senator Grassley offered a preview of potential legislative changes to the False Claims Act, and Boynton outlined DOJ’s enforcement priorities for the coming year.

Continue reading at:  Inside Government Contracts

South Korean national pleads guilty to a scheme to defraud U.S. Department of Defense

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A South Korean national pleaded guilty today to participating in a scheme to defraud the U.S. Department of Defense.

According to court documents filed in the U.S. District Court in Columbus, Ohio, Hyun Dong Jo of the Republic of Korea was the designated manager under a Defense Logistics Agency contract to provide hazardous waste removal, testing, disposal, and related services to U.S. military installations in South Korea.  In that position, Jo participated in a scheme to falsify laboratory reports submitted under this hazardous waste contract.

From at least as early as February 2015 until at least June 2018, Jo submitted hundreds of falsified or materially altered laboratory reports, misrepresenting to U.S. military officials that laboratory testing and analysis had been performed on samples taken from U.S. military installations located in South Korea, when, in many cases, no such testing was performed.  As part of the scheme, Jo emailed the forged laboratory reports and invoices seeking payment for those reports to the Department of Defense, causing the Defense Financial Accounting Service to wire more than $280,000 in payments.

“This charge reflects the Antitrust Division’s commitment to protecting taxpayer dollars spent overseas,” said Acting Assistant Attorney General Richard Powers of the Department of Justice Antitrust Division.  “Individuals who cheat the U.S. military in the performance of contracts will be held accountable.  We hope this guilty plea will serve as a deterrent for other contractors who contemplate obtaining illicit gains through engaging in fraud while providing services for the U.S. military domestically or abroad.”

Continue reading at:  U.S. Department of Justice

Contractor to pay $2.2 million to settle False Claims Act allegations

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Deputy United States Attorney Louis D. Lappen announced that SAP Public Services, Inc. has agreed to pay the United States more than $2.2 Million to resolve allegations that it violated the False Claims Act by failing to pay required fees on contracts it signed pursuant to agreements with the United States General Services Administration (GSA).

SAP Public Services is a subsidiary of SAP SE, a multinational software engineering and support company, and its U.S. subsidiary, SAP America, Inc., headquartered in Newtown Square, Pennsylvania.

In 1998 and 2009, GSA awarded SAP Public Services contracts under the Multiple Award Schedule (MAS) program.  The MAS program provides an efficient, streamlined process for federal, state, and local government buyers to purchase goods and services from commercial firms at discounted prices.  SAP Public Services sold software engineering and support to government customers under specified conditions.  SAP Public Services canceled these contracts in 2014.  Under the terms of their MAS contracts, SAP Public Services was required to pay an Industrial Funding Fee (IFF) to GSA.  This fee covers the cost of GSA’s administration of its contracting and purchasing programs, which save federal, state, and local government agencies the time and expense of awarding individual procurements and provide volume purchase prices, greater purchasing flexibility, and other benefits to those agencies.

Continue reading at:  U.S. Department of Justice

 

Contractor settles fraud claims related to 8(a) joint venture

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R&W Builders, Inc. (R&W) of O’Fallon, Illinois, has agreed to pay the United States $400,000 to resolve allegations that it violated the False Claims Act by fraudulently obtaining construction contracts reserved for disadvantaged small businesses, U.S. Attorney Steven D. Weinhoeft announced today.

The Small Business Administration (SBA) 8(a) Business Development Program helps provide a level playing field for small businesses owned by socially and economically disadvantaged individuals by limiting competition for certain federal contracts to Program participants.  To increase the opportunities available to these disadvantaged businesses, the SBA also permits Program participants to partner with another company on certain contracts through approved joint venture agreements.  The SBA requires the joint venture agreements to include specific terms to ensure the relationship is fair and provides a benefit to the disadvantaged business, including provisions designating the disadvantaged business as the managing partner of the joint venture and requiring the disadvantaged business to perform a specified percentage of the work.  It is important that 8(a) joint ventures comply with the SBA’s criteria because misuse of the Program deprives real disadvantaged businesses of valuable economic opportunities and undermines the Program’s integrity.

In 2014, after R&W was no longer eligible to participate in the 8(a) Program, it entered into a joint venture agreement with Global Environmental, Inc. (GEI), an 8(a) Program participant based in St. Louis, Missouri.  R&W and GEI named the joint venture Patriot Commercial Construction, LLC (Patriot) and successfully secured an award set aside solely for Program participants on the Multiple Award Construction Contract (MACC) at Scott Air Force Base, Illinois.

The United States contends that R&W falsely represented it would abide by the Program requirements and the Patriot joint venture agreement to obtain the SBA’s approval.  Immediately after Patriot received an 8(a) award on the MACC, R&W began managing the joint venture and using its own employees to complete nearly all of the work Patriot performed.  Over the next two years, R&W caused Patriot to receive numerous MACC task orders set aside for 8(a) Program participants when Patriot was under R&W’s control, in violation of SBA requirements.

Continue reading at:  U.S. Department of Justice

Senator: Pandemic makes anti-fraud law more important than ever

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A long-time Senate advocate for whistleblowers and strong oversight of agencies said on Wednesday that due to the historic spending for the coronavirus pandemic, the law that targets fraud against the federal government and in federal contracting is more important now than ever.

Sen. Chuck Grassley, R-Iowa, spoke at the Federal Bar Association’s fourth annual Qui Tam Conference.  Qui tam, a provision of the “The False Claims Act,” which was originally enacted during the Civil War, allows individuals or non-government organizations to file lawsuits on behalf of the government to disclose fraud that led to financial loss for the government.  They can be awarded between 15% and 30% of the proceeds collected.  Grassley co-authored updates to the act in 1986 and 2009.

“As the country continues to battle the global pandemic, the False Claims Act has never been more important than it is right now,” said Grassley at the virtual event.  “The massive increases in government spending to address the COVID crisis have created new opportunities for fraudsters trying to cheat the government and steal the people’s money.  As history has shown all of us, fraudsters thrive during times of crises and large-scale government spending.”

He said it’s important the Justice Department, Congress and whistleblowers “remain very vigilant” due to the trillions of dollars spent in pandemic relief.

Continue reading at:  Government Executive

 

Concrete contractor agrees to settle false claims act allegations for $3.9 million

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Colas Djibouti, a contractor for the Department of the Navy at Camp Lemonnier and Chabelley Airfield, and the U.S. Embassy in Djibouti, admitted today that it faked testing results and submitted a series of false documents and false claims to the United States as part of a scheme to defraud the United States in the sale of substandard concrete used to construct U.S. Navy airfields in Djibouti.

Colas Djibouti, a French limited liability company, is a wholly-owned subsidiary of Colas SA, a French civil engineering company.  According to documents filed in court, as part of its contracts with the Department of the Navy, Colas Djibouti was required to certify that it supplied concrete with specific composition and characteristics.  Notwithstanding these obligations, Colas Djibouti created fictitious testing results, made fraudulent representations regarding the concrete’s composition and characteristics, and knowingly provided concrete to the United States that did not comply with the specifications.

Continue reading at:  U.S. Department of Justice

False Claims Act: The risks to small business government contractors

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“False Claims Act: The Risks to Small Business Government Contractors” is the fifth episode of “Ex Rel. Radio,” a multi-part series on the False Claims Act, which includes commentary on potential pitfalls for government contractors who may face enforcement issues in light of emerging trends.

In this episode, Firm Counsel Michelle Litteken joins our host, Jon Williams, to discuss how the False Claims Act relates to small business programs, potential risks these companies face, and strategies for avoiding a potentially costly FCA claim.

Listen to the podcast at:  JD Supra

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