Articles Posted in Military contract fraud

Defense contractor Vista Machining Co. has been charged with making false claims about the aluminum he provided for U.S. military aircraft landing gears. Ross Hyde,  owner of the company faces up to five years in prison, if convicted. But inspectors said many of his products were cheap replacements, some illegally obtained from China, which he tried to hide from the government. Substituting such knockoffs can cause serious safety problems for members of the military if the parts are used in critical systems.

But Vista has earned more than $20 million from government contracts, according to a government database. The case highlights the government’s questionable oversight of its defense contractors, who are able to keep selling Uncle Sam goods despite being repeat offenders.

A company, run by one of Britain’s best-know military commanders is now under investigation by the United States Government relating to his firm New Century Consulting for $130 million of unsupported costs paid to the company by the U.S. to train Afghan security forces. Colonel Tim Collins founded New Century.

New Century is the subcontractor in a Pentagon contract held by a U.S. company Imperatis. A recent financial audit of that company conducted by the US Special Inspector General for Afghanistan Reconstruction, identified $130 million in “questioned” costs paid to New Century. Continue reading

Supreme Foodservice GmBH will pay over $389 million to resolve criminal and civil charges relating to allegations in part that it used a shell corporation to inflate the cost to Uncle Sam of produce served to our troops in Afghanistan. The Complaint, filed by a former company employee, whistleblower Michael Epp,  a German citizen, also alleged illegally increasing the cost of bottled water by misrepresenting acquisition discounts.

The result is considered the largest fraud recovery against any contractor relating to the Afghanistan and Iraq wars, and against any defense contractor. He is represented by Mogan Vercamp of Cincinnati.

Mr. Epp worked for Supreme in Dubai where its Prime Vendor operation was based.  He managed supply chain under the contract until early 2007. Mr. Epp is to receive $16,160,000 pursuant to the False Claims Act relator share provision. The False Claims Act returns billions of dollars to American taxpayers and allows a private citizen to file a case on behalf of the Government.

The Boeing Company has paid the United States $23 million to settle whistleblower allegations of fraudulent billing under maintenance contracts for the C-17 “Globemaster” aircraft at Boeing Aerospace Support Center (BASC), in San Antonio, during the period 2003-2007.

The whistleblower lawsuit was filed under the federal False Claims Act on October 29, 2007 by then current and former Boeing employees:  Clinton Craddock, Fred Van Shoubrouek, Anthony Rico and Fernando de la Garza.  All are San Antonio residents except Craddock, a former San Antonian who now resides in Oklahoma. The United States exercised its right to intervene in the case concurrent with the settlement.  The whistleblowers alleged that Boeing knowingly billed the government for labor hours charged simultaneously to more than one job, for hours charged to jobs after they were completed, for hours charged to the wrong jobs, and for hours charged to aircraft maintenance jobs when the time actually was spent on other, non-chargeable activities.

The whistleblowers will receive $3.91 million as their reward for bringing the False Claims Act case and assisting the government in the investigation and resolution of the case. They are represented by attorneys Glenn Grossenbacher, Rand Riklin and John Clark, and Rosemarie Alvarado, of San Antonio, and Gary Grossenbacher, of Austin.

A former financial analyst and assistant controller for Derco Aerospace has filed a whistleblower suit under The False Claima Act alleging that Derco and others used special software to overbill the U.S. Department of Defense by nearly $50 million for aicraft parts. Derco is a subsidiary of Sikorsky Aircraft Corp., based in Stratford, Conn.

The complaint alleges that Derco and its parent and sister companies, Sikorsky Aircraft and Sikorsky Support Services Inc., respectively, submitted false bills to the Department of Defense with an impermissible 20% markup on parts the companies had purchased from other vendors. According to the complaint, special software hid the markup to make it difficult to detect, as the price billed to the government appeared to be the actual purchase price of the spare parts, but was instead the price plus the markup.

The attorney, Nola Hitchcock Cross, said the government is entitled to triple damages plus penalties of $5,500 to $11,000 for each request for payment. Altogether, it could add up to $150 million.”This is potentially the largest whistle-blower suit ever filed in Wisconsin under the False Claims Act,” Hitchcock Cross said.

Military contractor Applied Research Associates (ARA) with offices in Vermont, has agreed to pay $1.1 million to settle a whistleblower case alleging the company fraudulently billed Uncle Sam on a multi-year contract with the Army. The whistleblower, former ARA engineer Brent Boerger of Vt. was represented by Jeffrey A. Newman of Boston and Marblehead. Mr. Boerger will share in the settlement pursuant to the federal False Claims Act. Applied Research Associates is a defense contracting firm headquartered in New Mexico with two Division offices in Randolph Vermont-the New England Division (NED) and Vertek Division.The False Claims Act case, filed in federal court in Burlington Vermont, by Attorney Jeffrey A. Newman, alleged fraudulent billing for work performed by ARA’s employees that was unrelated to a government contract for a project known as “Nemesis.” The Nemesis project was a multi-year, successive contract project spanning about ten years. ARA billed under the contract for work performed on a number of other projects. Mr. Boerger alleged that the work on other projects was not pertinent to research or development of the humanitarian de-mining system identified in the contract.

The federal qui tam statute 31 U.S.C. Section 3730 allows a whistleblower to file a civil complaint on behalf of theUnited States. The filing of the complaint allows the government to decide whether to intervene in the action. The government intervenes in only 23% of all False Claims Actions filed each year. The Government intervened in this case in September 2012. Tristam J. Coffin United States Attorney forVermontcommended Mr. Boerger for coming forward and reporting the ARA billing practice on the Nemesis contract. “His efforts led to a federal investigation that we believe furthered the integrity and accountability in federal contract programs, and his cooperation and assistance was tremendously helpful to our work.” He said.  The United Stateswas represented during the investigation by Civil Chief Carol L. Shea of Burlington Vt.

Jeffrey Newman represents whistleblowers in cases involving military contracts, foreign bribes, Medicare and Medicaid Fraud, Tax Evasion Cases and Corporate Financial Fraud.

KBR Inc. was selected for a no-bid contract worth as much as $568 million through 2011 for military support services in Iraq, despite the fact that The Dept. of Justice is pursuing a lawsuit against the company for fraud. The Army also awarded the work to KBR over objections from members of Congress, who have pushed the Pentagon to seek bids for further logistics contracts. The  False Claims Act lawsuit, filed by whistleblowers alleging that two freight-forwarding firms gave KBR transportation department employees kickbacks in the form of meals, drinks, sports tickets and golf outings. KBR will continue to provide services in Iraq such as housing, meals, laundry, showers, water purification and bathroom cleaning under the new order, which was placed under a military contract KBR won in late 2001, shortly after the U.S. invaded Afghanistan. The no-bid work order is unusual because the Army, at the insistence of Congress, has since April 2008 put all logistics orders to bid, pitting KBR against Falls Church, Virginia-based DynCorp International Inc. and Irving, Texas-based Fluor Corp.
The Army didn’t put this work out for bids because U.S. commanders in Iraq advised against it, saying that enlisting a new company would be too disruptive as the U.S withdraws.