False Claims Allegations Settled
The United States (US) Department of Justice (DoJ) has announced the reaching of a settlement with Calnet Inc. (Calnet) to “resolve allegations that the company submitted false claims to the Department of Defense”, under which Calnet will pay the US $18.1 million. Calnet was alleged to have “overstated its provisional indirect or overhead rates” on its translation and linguist services contracts at Guantanamo Bay and other facilities, resulting in the submission of “inflated claims for payment”. The settlement resolves a lawsuit filed by former Calnet employee Kimthy Chao on behalf of the US under the False Claims Act.
DoJ’s media release (1 June 2012)
US Company Agrees to Settle Allegations of TAA Violations
The United States (US) Department of Justice (DoJ) has announced that Direct Resources Inc. (Direct Resources) “has agreed to pay the government [US]$450,000 to resolve allegations that the company falsely claimed payment in violation of the Trade Agreements Act (TAA), which prohibits the sale of products to federal agencies from countries that do not have a reciprocal trade agreement with the [US]“. Direct Resources “allegedly knowingly sold products from China”, which is not part of the designated list of countries deemed to trade fairly with the US. Therefore, Direct Resources allegedly acted in contravention of its contract with the General Services Administration (GSA). GSA inspector general Brian Miller stated that “[p]assing off unauthorized foreign products to GSA contract users cheats them out of the products they actually contracted for”.
DoJ’s media release (8 May 2012)
Construction Firm Agrees to Pay US$500,000 to Settle False Claims Act Allegations
The United States (US) Department of Justice (DoJ) has announced that Cleveland construction firm Anthony Allega Cement Contractor Inc (Allega) has agreed to pay US $500,000 to settle claims “that it knowingly submitted false claims related to a federally-funded construction project”. The company allegedly submitted false claims in order to seem that it was in compliance with the US Department of Transport’s Disadvantages Business Enterprise (DBE) program, which was necessary for it to obtain and maintain its contract with the US Government. According to the DoJ, Allega made false claims stating that another company, Chem-Ty Environmental provided materials and services in a Cleveland Hopkins International Airport project between 2001 and 2006, “when in fact Chem-Ty was merely a “pass-through” entity used to make it appear as if a DBE had performed the work”. In this way, Allega, who was the prime contractor in the project, obtained and maintained its contract with the US Government.
DoJ’s media release (23 April 2012)
Aerospace & Defence Co Arrives at US$37 Million Settlement for False Claims Product Substitution Case
The United States (US) Department of Justice (DoJ) has announced that ATK Launch Systems Inc (ATK) “has agreed to a [US]$36,967,160 settlement with the [US] to resolve allegations that ATK sold dangerous and defective illumination flares to the Army and the Air Force”, following a lawsuit initially filed by an ATK whistleblower. According to the US Government, ATK knew, at the time of submitting claims for payment, that its flares could not withstand a 10-foot drop test “without exploding or igniting, as required by specifications”. According to the DoJ, “ATK has agreed to pay the [US]$21 million in cash and provide necessary in-kind services worth [US]$15,967,160 to fix the [US]$76,000 unsafe para-flares remaining in the government’s inventory”.
DoJ’s media release (23 April 2012)
Husband and Wife Plead Guilty to FCPA Violations
Husband and wife Stuart and Hong “Rose” Carson pled guilty earlier this week to violating the Foreign Corrupt Practices Act (FCPA). The couple, the former president and the director of sales for Control Components, respectively, confessed to bribing foreign officials on behalf of their company in violation of the law. Stuart Carson faces up to 10 months in prison while his wife Rose faces up to 3 years probation. They will be sentenced this October. The charges against the couple are the latest in a long running investigation into Control Components. In 2009, the company pled guilty to violating both the FCPA and the Travel Act, which prohibits commercial bribery, when it paid bribes to officers and employees of state-owned and privately-owned customers in more than 30 countries. The company paid an $18.2 million penalty and agreed to institute strong internal controls. Three other former executives, Richard Morlok, Mario Covino and Flavio Riccotti, have also pled guilty to conspiring to violate the FCPA. Three additional former executives, Paul Cosgrove, David Edmonds and Han Yong Kim, have been indicted.
Wall Street Journal: Husband And Wife Plead Guilty To FCPA Violations (17 April 2012)
(Source: Wall Street Journal)