KLN Steel Products LLC, a furniture maker that sells to the United States Government has been hit with a whistleblower suit for defrauding Uncle Sam out of millions including producing furniture in Columbia and stating it was made in the U.S. In addition the suit says the company falsely certified that KLN and related companies are women owned small businesses so they could gain preferential treatment in winning government contracts.
KLN makes furniture for military barracks and universities.
According the the complaint, the whistleblower is a company called University Loft. It alleges that the defendants KLN Steel Products and sister companies engaged in illegal acts including; 1) Bid rigging; 2) falsely stating the products were made in the U.S. when they were actually made in a factory in Medellin Columbia; 3) knowingly substituting nonconforming products on government contracts and 4) artificially inflating costs on freight through the use of a sham company.
The case has various unusual aspects. First, the whistleblower in this case is a company and not an individual. This is a growing trend in highly competitive businesses but still rare. The information in the complaint is quite detailed and specific, for example on the issue of the padded freight charges, the whistleblower was aware and asserted the creation of fake invoices. This seems to suggest that someone involved with the whistleblower may be a former employee or insider of the defendant furniture company.
Kathy O’Donnell, KLN’s president has disputed the charges in the civil action and says she looks forward to proving them untrue.
Jeffrey Newman represents whistleblowers but is not involved in this case.