Articles Posted in Government Contracts Fraud

Why is government fraud such an important practice area to our team? The cases aren’t simple, they can be time consuming (especially since we try to relieve pressure from our clients), and they take longer to reach resolution that a typical accident case. Still, we do it for the same reason we represent the injured – we believe in it. We are involved as legal counsel in California fraud cases in addition to our work on cases involving Medicare and other federal programs. Fraud on the state and on state programs impacts every Californian and, by stealing from limited coffers and leaving honest people facing a haze of suspicion, hits the people who rely upon those programs the hardest, typically the groups that can least afford it.

D.A. Investigating Alleged Fraud on CalFresh Benefits Program

The San Francisco Examiner recently reported on a case that the District Attorney’s Office is pursuing against four individuals accused of defrauding the local food stamps program to the tune of over $480,000. According to the charges, the four people solicited recipients of CalFresh Benefits, the state’s food stamps program, convincing them to sell their electronic benefits cards in return for a small fraction of the card’s value. Allegedly, the defendants would then use the card to fake purchases at Ivy’s Food Co., so that the government ultimately reimbursed Ivy’s for purchases that didn’t actually happen (ring a bell? — there are some very similar schemes in the medical benefits arena).

As a leading purchaser of both goods and services, the United States government is a powerful commercial entity. The government has chosen to help minority- and women-owned businesses by giving them certain contracting preferences. Like the health care and defense contracting arenas, dishonest individuals and companies, including those in the transportation field, abuse these preference programs for their own profit. As with other forms of fraud on the government, fraud in disadvantaged business enterprise programs is often discovered by private individuals. Our whistleblowers’ law firm in Northern California is proud to partner with and protect the interests of these private individuals as they pursue those who defraud the government and, ultimately, all of its citizens.

A Quick Look at DBE Preference Programs

The government supports a number of programs designed to help what are collectively known as “disadvantaged business enterprises” (“DBE”s). By way of example, the Department of Transportation (“DOT”) Fact Sheet explains that for 20-plus years the DOT has had “a policy of helping small businesses owned and controlled by socially and economically disadvantaged individuals, including minorities and women, in participating in contracting opportunities created by DOT financial assistance programs.” All agencies that receive DOT funding, particularly state and local transportation agencies, must set goals for the percentage of DBEs that it will hire and certify that these companies comply with DBE eligibility rules. The DOT itself must, by statute, ensure a minimum of 10% of transit funds go to DBEs. Similar programs exist in other Departments.

With respect to fraudulent actions against the government, much attention has been rightly focused on the schemes that seek to fleece Medicare and other healthcare programs. But San Francisco qui tam lawsuit attorney Gregory J. Brod would point out that there are other government agencies that are targets for fraud, with one of the most lucrative to be found among contracts doled out by the Defense Department. Indeed, on Thursday, the day on which the Pentagon announced major defense contracts, there was also news of accusations that have been leveled against a major high-technology firm for alleged fraud against the Defense Department.

The Pentagon awarded $555 million in defense contracts to 17 different firms on Thursday, and the Defense Department annually spends billions on such deals, many of which are in the news for reasons other than fraudulent activity, such as the flashy, state-of-the-art hardware that is ordered – or sometimes the huge price tags and/or cost overruns that are associated with such procurements.

According to Bloomberg News, on Thursday the feds charged CA Technologies Inc., which is a maker of software for managing information technology, with overcharging the U.S. government on contracts. The alleged hit to the U.S. Treasury amounted to $100 million. The lawsuit that was unsealed in federal court in Washington accused CA Technologies of not accurately disclosing its pricing for private sector customers, which is required under the law. As a result of the inaccurate pricing, the government’s complaint stated that the General Services Administration did not obtain the price it should have for government customers, including the Defense Department. The lawsuit specifically said that while CA Technologies routinely gave discounts of 90 percent or more to commercial buyers, the firm extended much smaller reductions to the GSA.
The law states that the government is entitled to negotiate for the best price that a contractor makes available to other large private sector clients, and if there is a difference in price the contractor must tender the government an explanation.

“CA (Technologies) repeatedly certified to GSA that it discounting policies and practices had not changed, when in fact it discounts to commercial customers had increased,” the Justice Department said in a statement accounting the lawsuit.

Interestingly enough, some of the charges leveled against the Islandia, N.Y.-based company were filed under seal in 2009 by a former employee of the firm’s Israeli unit. The former employee, Dani Shemesh, alleged violations of the False Claims Act, which is the law that permits private, whistleblowing individuals to sue on behalf of the government and receive a share of any recovery. The Justice Department joined Shemesh’s complaint in 2012.
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Health care fraud is one of our firm’s specialties, however, our firm also works with whistleblowers to fight other types of fraud on our federal and state governments. These cases involve theft from government coffers, thefts that ultimately steal from the American taxpayers generally and from the intended program beneficiaries. Often, they also involve whistleblowers with special knowledge of the fraud who bravely come forward to report and fight it, a bravery and dedication that can lead to a financial reward in addition to the knowledge that they, regardless of how clichéd it sounds, helped in the pursuit of justice. One issue for which we are proud to serve as a California whistleblowers’ law firm is the continuing threat of government contracting fraud.

Owner Pleads Guilty to Contract Fraud Allegations

Earlier this month, The Sacramento Bee carried an AP report addressing an alleged military contracting kickback scheme. According to federal prosecutors, William Boozer, a California businessman and owner of Globe Dynamics, conspired with a procurement officer for Boeing to receive confidential financial information that helped his company win more than $1.5 million in government purchasing contracts from Boeing. Boozer pleaded guilty to felony wire fraud relating to 16 bids submitted from November 2009 and February 2013, 7 of which his company received. Three other individuals await trial.

In this blog, we have often discussed the use of the False Claims Act (the “Act” or the “FCA”) as a weapon against those who commit health care fraud. While health care fraud is an important target of FCA suits, the Act’s reach goes beyond the health care arena. Generally, the Act can be used to fight back against those who knowingly submit false/fraudulent claims seeking payment from the federal government. Private whistleblowers are key to this fight, bringing attention to fraud and filing claims known as qui tam lawsuits. In addition to fraud involving the Medicare and Medicaid programs, the FCA is often used to stop companies and individuals who submit fraudulent claims pursuant to military contracts. Our California defense contractor fraud attorney is prepared to help these whistleblowers bring an end to schemes involving defense contractor fraud, using the Act to recover money for the government and helping the whistleblower recover a substantial whistleblower reward for their efforts.

Bankruptcy Judge Okays Whistleblower Claims to Proceed Against Defense Contractor

In late March, as reported by the Wall Street Journal, a New York judge paved the way for a $2.3 billion whistleblower lawsuit to move forward despite the company involved in the alleged wrongdoings being in the process of Chapter 11 bankruptcy. Donald Minge and David Kiehl are former employees of TECT Aerospace Inc., a subcontractor for Hawker Beechcraft Corporation, a manufacturer of military aircraft. Together, the pair filed a whistleblower claim pursuant to the FCA alleging that the company provided flawed aircraft parts to the U.S. military. Their complaint includes allegations that workers would use hammers and pry bars to alter defective parts so that they would pass inspection. Not surprisingly, that behavior is not permitted by government contracting specifications.