Defense Contractor Fraud - Whistleblower Law Blog

AKAL Security pays $18 million to settle suit with Military

LaBovick Law — Tue, 17 Jul 2007 09:09:29 -0500

Akal Security Inc., one of the largest contract security providers in the country, will pay the United States $18 million to resolve allegations that it violated the terms of its contract to provide trained civilian guards at eight U.S. Army bases.

The brave whistleblowers that filed a civil False Claims Act qui tam suit were: Tony Barnes, Raymond Borggreen and Roger Riche. They had firsthand knowledge of the fraud, since they worked as security gaurds for AKAL at Ft. Riley. After investigations by the Department of Defense into AKAL making false claims for payment regarding work contracts with the government, the following allegations were made about Akal: some of the supplied security guards allegedly failed to satisfy weapons qualification requirements and receive other training, and the contractor allegedly failed to satisfy contractual man-hour requirements.

Of course Akal denied all allegations, however, they have agreed to cooperate in the investigation, and has agreed to pay the United States $18 million, to settle the lawsuit.

A warm round of applause for the brave and diligent following key individuals and organizations: the Department of Defense, the Defense Criminal Investigation Service (DCIS), Assistant U.S. Attorney Richard Schodorf, Assistant U.S. Attorney Emily Metzger, auditor Debra Heston, the U.S. Attorney offices in the Western District of Texas, the Southern District of Georgia, the Eastern District of North Carolina, the Eastern District of Kentucky, the Western District of Kentucky, the Northern District of Alabama, and the Western District of Washington.

As former Federal Prosecutors, we know the importance of teamwork when prosecuting complex cases for the government. When prosecuting civil False Claims Act qui tam cases, it is important to have whistleblowers (relators) with first hand knowledge and proof that is not in the public domain. Brian F. LaBovick mentioned in an earlier post on the Whistleblower Law Blog, there are several things that a whistleblower needs when bringing a successful qui tam suit. Although it is not always easy for a whistleblower, the whistleblower rewards can be great. The relator can receive a reward of 15 percent to 25 percent of what the government recovers, if the government joins the qui tam case and if the government declines to join the qui tam lawsuit, the relator can receive a reward of 25 percent to 30 percent of what the government recovers.

Click Here to read more on the Akal Security story from the US Department of Justice.

The Whistleblower Law Blog is presented as a service of the Private Law Firm, LaBovick & LaBovick, P.A., Civil Justice Prosecutors. LaBovick & LaBovick is a Plaintiff's firm that represents whistleblowers in Florida and throughout the nation in qui tam (False Claims Act) litigation.

U.S. Attorney appeals to Congress to move faster on qui tam violations occurring in Iraq War

Brian F. LaBovick, Esq. — Tue, 26 Jun 2007 22:00:13 -0500

Alan Grayson is one of my heroes. He is a United States Qui Tam Attorney trying to get Congress to move faster on qui tam violations that are occurring in the Iraq War. Currently, the government has 60 days to review the disclosure statement as submitted by the Realtor. The courts can give the government more time, if the government asks for more time. However, with the Iraq War, there are a huge number of claims remaining under seal because the Bush Justice Department does not want to investigate them. Therefore, 60 days becomes 60 months.

The Bush administration talks tough about the war on terrorism, but it stalls when it comes to the war on fraud. In fact, it seems as though the current administration is trying to push the investigation of qui tam fraud so far back in the future, where no one will be paying attention.

Brian

Click Here to read more on this issue from the Crime Reporter.

The Whistleblower Law Blog is presented as a service of the Law Firm, LaBovick & LaBovick, P.A., Civil Justice Prosecutors. LaBovick & LaBovick, P.A. is a Plaintiff's firm that represents whistleblowers in Florida and throughout the nation in qui tam (False Claims Act) litigation.

Houston Firm Pays $300,000 to Resolve Qui Tam suit for military containers in Iraq

LaBovick Law — Sun, 24 Jun 2007 23:51:47 -0500

Eagle Global Logistics, paid the United States $300,000 to settle a qui tam suit. The company’s local agent in Kuwait allegedly overcharged the military for rental charges on shipping containers to Iraq for the period from January through June of 2006, according to the Justice Department. The Houston-based company’s containers were for shipments of military cargo to Iraq under an EGL subcontract with KBR, the prime contractor for the U.S. Army’s LOGCAP III contract for logistical support of military operations overseas.

This matter stems from allegations in a suit filed against EGL under the qui tam or whistleblower provisions of the False Claims Act. Under the False Claims Act, private persons may bring a suit on behalf of the United States alleging the submission of false claims to the government and may receive a portion of the proceeds of the suit. The whistleblowers, David Vavra and Jerry Hyatt, will receive $36,000 as their part of the settlement. Congratulations to these brave whistleblowers for speaking up.

Click Here to read more on this case from the Department of Justice.

Defense Contracting Fraud - ITT

Brian F. LaBovick, Esq. — Sun, 18 Feb 2007 10:38:17 -0500

My favorite fraud is defense contractor fraud. This is the original fraud that old Abe Lincoln wanted to sniff out when he signed into law the first incarnation of our present law in 1863. Think about it, at that time the country was engaged in a great civil war. On both sides the governments were promising huge benefits to anyone who could supply the armies with guns, mortar, bullets and food. It only made sense that the wonderful patriotic citizens of the northeast would screw the government to make outrageous profits whenever possible.

Well not much has changed. On January 18, 2007 we found out that ITT Corp. the largest manufacturer of night-vision goggles, failed to supply the U.S Army in Bosnia with up to $200 million of security guards. (See: Blanc v. ITT, 07-cv-401, So. Dist of New York). In 2002 ITT was given the contract to supply the Bosnia multinational security forces with 245 security guards. Instead of actually giving the guards ITT decided to supply ghosts or rather imaginary people as guards at the station. This type of deception has been coined ``ghost-posting.'' ITT failed to post guards at the armory, the base defense operations center, and at least three of the five guard towers according to the whistleblower.

]]>ITT wanted to create the ghosts instead of supplying actual guards for the obvious reason. Ghosts are cheaper. They don’t ask for a paycheck and they don’t need health insurance benefits. By posting ghosts ITT was able to raise the profit margin for supplying guards significantly.

ITT’s defense to this allegation is that the government’s prior reviews of their performance on the contract were favorable. That says to this writer that our government felt the ghosts were doing a good job. ITT says they intend to “defend this lawsuit vigorously.”

The whistle blower says he and other ITT employees actually reported what ITT was doing to the Army. The Army, with their superior military intelligence, confronted ITT with the complaints and so ITT took the natural course of action to correct this situation. ITT told the actual live guards that if they complained or talked to the army they would be fired.

ITT has reported that they are raising profit projections and will also raise dividends.

Iraq Contracting Fraud tackled by Kerry and Dorgan

LaBovick Law — Fri, 16 Feb 2007 07:08:00 -0500

Senator John F. Kerry and Sen. Byron Dorgan sponsored legislation that punishes war profiteers and protects whistleblowers. According to Senator Kerry, in a Boston Herald article " Millions have been wasted in the Iraq reconstruction effort. It’s a disgrace that we have to answer to parents who ask how we can allow corporate cheaters to reap massive profits on the battlefield of Iraq when their sons and daughters are serving without proper equipment." The legislation seeks to prevent Defense Contractor fraud, waste and abuse.

Pamela Leavy, Editor of the Democratic Daily Blog, wrote an excellent Section- by- Section Analysis of the Honest Leadership and Accountability in Contracting Act Legislation. Key Highlights:

1. Punishes War Profiteers – Sec. 101 -Max. 20 years in prison and minimum $1 million in fines
2. Cracks Down on Big Corporate Cheaters – Sec. 102 - suspension and debarment
3. Requires Full Disclosure of Contract Abuses – Sec. 103 - greater transparency in contracting
4. Forces Real Contract Competition – Secs. 201 and 202 no umbrella contracts over $100 million
5. Bans Corporate Cronyism in Contracting – Sec. 211 - requires conduct contract oversight
6. Eliminates Conflicts of Interest for Federal Contracting Employees – Sec. 212 -
7. Ends Cronyism in Key Government Positions – Sec. 301 end unqualified political appointees from holding key jobs relating to (1) federal contracting or (2) public safety.
8. Strengthens Whistleblower Protections – end retaliation against whistleblowers

Read Pamela's Section Analysis of the Honest Leadership and Accountability in Contracting Act

Defense Contractor Fraud - False Claims Act

LaBovick Law — Sun, 11 Feb 2007 19:22:09 -0500

“In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex.” - President Dwight D. Eisenhower, 1960

Having served as army general and President, Eisenhower saw potential for the military-industrial complex to perpetrate massive fraud on the American people. But he was not the first President to issue such caveats. Abraham “Honest Abe” Lincoln urged lawmakers to reform military-industrial oversight upon discovering massive fraud in government military contracts as far back as 1863. Today, thanks to concerns voiced by great men like Eisenhower and Lincoln, our government has agencies devoted to controlling waste and fraud. But these agencies can only do so much, and like much of what makes America great, the bulk of the responsibility is placed upon the American people themselves.

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One proud American exposed his military aircraft company's peacetime overstatement of progress payments to the Department of Defense. Thanks to him, the military recovered $150 million to better spend on troop safety and equipment. The finance VP who blew the whistle was awarded $22.5 million for exposing the fraud. But fraud occurs in wartime as well. As recently as August of 2006, during the heart of the Iraq conflict, a Houston based shipping and logistics contractor attempted to defraud the military of millions in bogus shipping fees. Thanks to two employees utilizing The False Claims Act, the scheme was foiled and the whistle blowers received $800,000. Another case settled for $1.2 million when it was discovered that a defense contractor responsible for testing fire alarms on military bases was falsifying inspection reports for phantom tests. The whistle blower not only saved the government money, but directly ensured the safety of military personnel.

If you have reason to believe your employer is defrauding the military, however large or small, becoming a whistle-blower is easy. Your first step is to speak with a lawyer, assured that any information you give will be held in the strictest confidence. After reviewing your case, your lawyer will help you decide if becoming a whistle blower under The False Claims Act (a qui tam relator in legalese) is right for you. Your lawyer will prepare your case, and submit it to the proper authorities for review. During every step of the process, your lawyer will make sure that your interests as well as your job are protected. Most lawyers skilled with False Claims Act cases like yours will accept your case at no charge to you, asking only for a share of the eventual settlement.

Stop losing sleep over doubts about your company's defense contracts. Talk to a lawyer experienced in military False Claims Act cases who can investigate and evaluate your case, giving you an opinion as to where your employer really stands. Doing so is a patriotic duty owed to men and women in uniform, as well as a potential windfall for the whistle blower.