Tag Archives: False Claims Act

DynCorp Pays $1.5M to Resolve Kickback Allegations in Baghdad, Iraq

February 7, 2020 By in Americans Abroad, Contractors, Court Cases, Federal Agencies, Iraq, State Department, U.S. Missions Tags: , , , , , ,

 

This is a follow-up to a 2017 case about a former government contractor sentenced to four years in prison for his role in a government contract kickback scheme that caused a loss of more than $3.4 million to the U.S. Department of State.

According to court documents, Wesley Aaron Struble, 49, a U.S. citizen of Batangas, Philippines, engaged in a conspiracy to violate the Anti-Kickback Act in 2011 and 2012 while employed in Iraq as a government contractor. Initially employed by a business identified in court documents as Company B, Struble learned that another business, identified in court documents as Company A, was seeking a lease of real property for use related to a U.S. Department of State contract. Struble knew that Company B was paying approximately $124,000 per month to a third business, identified in court documents as Company C, for a lease of real property. According to court documents, Struble became a manager for Company A, and together with another manager for Company A, engaged in a conspiracy with associates of Company C to make the lease of property available to Company A at an inflated rate of $665,000 per month.

(See That time when a real property lease in Iraq jumped from $124,000/mo to $665,000/mo).
Last month, USDOJ announced that DynCorp Pays $1.5M to Resolve Kickback Allegations:

ALEXANDRIA, Va. – DynCorp International, LLC (DynCorp), located in McLean, has agreed to pay $1.5 million to settle civil fraud allegations involving two former DynCorp officials, Wesley Aaron Struble and Jose Rivera, who solicited and accepted kickbacks from an Iraqi subcontractor in connection with DynCorp’s lease of property for its operations in Baghdad, Iraq on behalf of the U.S. Department of State.

Struble and Rivera previously pleaded guilty in the Eastern District of Virginia to violating the Anti-Kickback Act for their role in soliciting and accepting at least $390,000 in cash kickbacks from the Al-Qarat Company in exchange for influencing DynCorp’s lease of property in Baghdad at a lease amount higher than the previous lease. The lease costs were included with services for international civilian policing that DynCorp billed under a U.S. Department of State contract in 2011 and 2012.

The settlement resolves the alleged liability of DynCorp for violation of civil penalties under the Anti-Kickback Act and the civil False Claims Act arising out of Struble’s and Rivera’s fraudulent conduct while employed by DynCorp.

The resolutions obtained in this matter were the result of a coordinated effort between the U.S. Attorney’s Office for the Eastern District of Virginia, the Department of State Office of Inspector General, and the Federal Bureau of Investigation.

The matter was investigated by Assistant U.S. Attorney Christine Roushdy. The civil claims settled by this False Claims Act agreement are allegations only; there has been no determination of civil liability.

The original announcement is available here.

Whistleblower in @StateDept “CIVPOL” Contract Gets $875K in False Claims Act Settlement

September 25, 2017 By in Contractors, Court Cases, Security, State Department, U.S. Missions Tags: , , , , , , , , , ,

Posted: 12:30 am ET
[twitter-follow screen_name=’Diplopundit’]

 

On September 13, USDOJ announced that Pacific Architects and Engineers, LLC has agreed to pay $5 million in False Claims Act allegations related to “PAE’s Civilian Police “CIVPOL” contract in support of State Department missions in Afghanistan, Haiti, Lebanon, Liberia, South Sudan, and elsewhere. The announcement includes a note that “The claims settled by this agreement are allegations only, and there has been no determination of liability.” It also adds that the $5 million settlement also resolves a lawsuit filed in the U.S. District Court for the District of Columbia by former PAE manager Robert J. Palombo under the qui tam, or whistleblower provisions, of the False Claims Act and that Mr. Palombo will receive $875,000 as his share of the government’s recovery.

Below is an excerpt from the announcement:

WASHINGTON – Pacific Architects and Engineers, LLC (“PAE”) has agreed to pay the United States $5 million to resolve allegations that it knowingly failed to follow vetting requirements for personnel working in Afghanistan under a State Department contract for labor services. PAE is a Virginia-based contractor that provides personnel and other support to various federal government agencies.

The settlement was announced today by U.S. Attorney Channing D. Phillips and Steve A. Linick, Inspector General for the U.S. Department of State.

The agreement resolves claims relating to PAE’s Civilian Police “CIVPOL” contract in support of State Department missions in Afghanistan, Haiti, Lebanon, Liberia, South Sudan, and elsewhere.  In 2007, the State Department awarded PAE a task order under the CIVPOL contract to provide training and mentoring personnel to counter-narcotics and drug interdiction police and investigators in Afghanistan. The task order required PAE to conduct extensive background checks on U.S. personnel that were in high risk or armed positions, including independently developed reference checks. For local, national, and third party national employees working on the task order, PAE was obligated to submit their names to the State Department’s Regional Security Office in Afghanistan for additional security clearance. According to the government’s evidence, PAE was aware of these contractual requirements but did not comply with them for extended periods. The United States asserts that invoices PAE submitted to the State Department for the labor services of improperly vetted personnel were false.

“This settlement affirms our commitment to hold government contractors accountable for properly screening employees, particularly those who work alongside our government’s personnel in fragile areas of the world,” said U.S. Attorney Phillips. “In this particular matter, it is alleged that PAE failed to conduct the appropriate vetting for personnel working in Afghanistan under a State Department contract for labor services for which invoices were later submitted. Our Office will continue to investigate and seek appropriate recoveries from contractors who do not meet their obligations.”

“The OIG special agents and staff assigned to this case should be commended for their excellent investigative work,” said Inspector General Linick. “Rooting out waste, fraud, and abuse is at the heart of any OIG mission, as is ensuring that contractors are accountable for every taxpayer dollar they receive.”

The settlement also resolves a lawsuit filed in the U.S. District Court for the District of Columbia by former PAE manager Robert J. Palombo under the qui tam, or whistleblower provisions, of the False Claims Act. Under the False Claims Act, private citizens may bring suit on behalf of the United States and share in any recovery obtained by the government. Mr. Palombo will receive $875,000 as his share of the government’s recovery. The case is captioned United States ex rel. Robert J. Palombo v. PAE, Inc., et al. 

The claims settled by this agreement are allegations only, and there has been no determination of liability.

This settlement was the result of an investigation into Mr. Palombo’s allegations by the United States Attorney’s Office for the District of Columbia and the Department of State, Office of Inspector General.

The full statement is available here.

#

Contractors Settle False Claims Allegations Related to USAID Food Aid Storage/Redelivery For $1.075M

August 16, 2016 By in Contractors, Court Cases, Federal Agencies, Foreign Assistance, USAID Tags: , , , , , , , ,

Posted: 3:55 am ET
[twitter-follow screen_name=’Diplopundit’ ]

Via USDOJ:

Jacintoport International LLC and Seaboard Marine Ltd Agree to Settle False Claims Allegations Related to Delivery of Humanitarian Food Aid

The Justice Department announced today that Jacintoport International LLC (Jacintoport) and Seaboard Marine Ltd. (Seaboard Marine) have agreed to pay $1.075 million to settle a lawsuit alleging that the companies violated the False Claims Act in connection with a warehousing and logistics contract for the storage and redelivery of humanitarian food aid. Jacintoport is a cargo handling and stevedoring firm headquartered in Houston, Texas, and Seaboard Marine, an affiliate of Jacintoport, is an ocean transportation company headquartered in Miami, Florida.

In its lawsuit, the United States alleged that Jacintoport executed in 2007 a warehousing and logistics contract with the United States Agency for International Development (USAID) for the storage and redelivery of emergency humanitarian food aid. This contract contained explicit caps on the rates Jacintoport could charge ocean carriers to load humanitarian food aid onto ships (referred to as “stevedoring” charges) bound for crisis areas around the world. The complaint alleges that beginning around January 2008 and continuing through at least October 2009, Jacintoport, under the supervision and control of Seaboard, charged ocean carriers more for stevedoring than permitted to load over 50,000 tons of humanitarian food aid. These inflated stevedoring charges were subsequently lumped into other costs for delivering humanitarian food aid and passed on to the United States.

“USAID’s humanitarian food aid program provides critical assistance to starving people all over the world,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “The Justice Department will hold accountable those who seek to abuse this important program.” ‪

“It is unacceptable for companies that do business with the federal government to inflate their costs,” said U.S. Attorney Channing D. Phillips for the District of Columbia. “This settlement demonstrates our determination to protect the taxpayers’ dollars – and humanitarian programs – from abuse.”

The allegations resolved by this settlement were initially brought in a lawsuit filed under the qui tam or whistleblower provisions of the False Claims Act by John Raggio, a shipping contractor who allegedly received an invoice from Jacintoport that contained the excessive stevedoring charge. Under the Act’s qui tam provisions, a private citizen, known as a “relator,” can sue on behalf of the United States and share in any recovery. The United States is permitted to intervene in the lawsuit, as it did here. Raggio will receive $215,000. Earlier today, the government requested that the case be dismissed.

This matter was handled by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the District of Columbia, with assistance from the USAID Office of the Inspector General. The claims resolved by this settlement are allegations only and there has been no determination of liability. The case is United States ex. rel. Raggio v. Jacintoport International, LLC, et al. Case No. 1:10-cv-01908 (D.D.C.).

 

#

USAID Reconstruction Contracts in Afghanistan and Iraq Bites Former Louis Berger Executives

August 3, 2016 By in Court Cases, Foreign Affairs, Foreign Assistance, Govt Documents, Iraq, USAID Tags: , , , , , , , , 1 Comment

Posted: 4:05 am ET
[twitter-follow screen_name=’Diplopundit’ ]

 

In May 2015,  the former president, chief executive officer, and chairman of the board of USAID contractor Louis Berger Group Inc. (LBG) was  sentenced to 12 months of home confinement and fined $4.5 million for conspiring to defraud the U.S. Agency for International Development (USAID) with respect to billions of dollars in contracts over a nearly 20-year period.  See Conspired to Defraud Uncle Sam? Be Very Afraid. We’re Gonna Put You in Home Confinement! Last week, USDOJ announced that it has filed a lawsuit under the False Claims Act against the former LBG CEO Derish M. Wolff  and former CFO Salvatore J. Pepe “for conspiring to overbill the U.S. Agency for International Development (USAID) and other government agencies for costs incurred performing reconstruction contracts in Afghanistan, Iraq, and other countries.”

Via USDOJ: United States Sues Former Executives of Government Contractor for Making False Claims in Connection with Reconstruction Contracts in Afghanistan and Iraq

The Justice Department announced today that the government has filed suit under the False Claims Act against Derish M. Wolff and Salvatore J. Pepe, respectively the former CEO and CFO of Louis Berger Group Inc. (LBG), for conspiring to overbill the U.S. Agency for International Development (USAID) and other government agencies for costs incurred performing reconstruction contracts in Afghanistan, Iraq, and other countries, the Justice Department announced today.  LBG is based in East Orange, New Jersey.

“Those who do business with the U.S. government should expect appropriate consequences if they do not deal fairly,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “As this case demonstrates, the government will hold both corporate entities and individuals accountable if they misuse taxpayer funds.”

The government’s complaint alleges that Wolff and Pepe designed and directed various accounting schemes that resulted in LBG billing the government for indirect overhead costs at inflated rates.  According to the complaint, for example, Wolff and Pepe shifted portions of salaries of LBG executives and accounting personnel from contracts paid for by foreign and state governments and private entities to contracts paid for by the United States.  Wolff and Pepe allegedly certified the false rates and submitted them to the government in annual financial reports.

The United States resolved criminal and civil claims against LBG arising from this conduct on Nov. 5, 2010.  At that time, LBG entered into a Deferred Prosecution Agreement and paid $50.6 million to resolve False Claims Act allegations.  Pepe pleaded guilty on that date to a charge of conspiracy to defraud the government and was later sentenced to one year probation.  Wolff pleaded guilty to the same charge on Dec. 12, 2014, and was later sentencedto 12 months of home confinement and required to pay a $4.5 million fine for his role in the scheme.  The complaint filed today asserts civil claims against Wolff and Pepe.

The United States filed its complaint in a lawsuit originally brought under the qui tam, or whistleblower, provisions of the False Claims Act, by Harold Salomon, an LBG accountant from March 2002 to October 2005.  Under the Act, a private citizen can sue on behalf of the United States and share in any recovery.  The United States is also entitled to intervene in the lawsuit, as it has done in this case.

This matter is being handled by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the District of Maryland, with investigative support from the FBI, USAID’s Office of Inspector General, the Defense Criminal Investigative Service and the Defense Contract Audit Agency.

“I applaud the dedication of USAID-OIG special agents, along with special agents of the FBI and the Defense Criminal Investigative Service,” said USAID Inspector General Ann Calvaresi Barr.  “Their joint investigative work has helped the Justice Department take action against those responsible and signals our continuing commitment to protecting public funds from fraud, waste, and abuse.”

The case is United States ex rel. Harold Salomon v. Derish M. Wolff & Salvatore J. Pepe, Civ. No. RWT-06-1970 (D. Md.).  The claims asserted against Wolff and Pepe are allegations only to the extent not admitted in their criminal pleas, and there has been no determination of civil liability.

#