Consumer Fraud

Army contractor to pay $10 million to settle False Claims Act fraud allegations

whistleblower Army contractor to pay $10 million to settle False Claims Act fraud allegationsFirst RF Corporation (First RF), an antenna and radio technology company, has agreed to pay the U.S. $10 million to settle allegations that it violated the False Claims Act by lying to the U.S. Army about the manufacturing costs of antennas it had been contracted to provide.

According to the U.S. Justice Department, the Army contracted Boulder, Colo.-based First RF in 2005 to manufacture electronic warfare antenna systems.  The Army used the antennas to detect Improvised Explosive Devices (IEDs) in combat.

An investigation conducted by the Defense Criminal Investigative Service with the Commercial Litigation Branch of the Justice Department’s Civil Division and the U.S. Attorney’s Office for the District of Colorado determined that First RF “knowingly submitted false data to the Army” misrepresenting the company’s costs to make the antennas.

According to the Justice Department, First RF inflated the price of the antennas in its government contract so that it would receive more money from the federal government. Statements made by U.S. Attorney John Walsh for the District of Colorado indicated that First RF took advantage of the Army because it had an urgent need for the antennas.

“When defense contractors supply our armed forces with equipment, those contractors must be absolutely truthful in their price negotiations,” Mr. Walsh said in a statement. “It is no excuse for dishonesty that the military equipment was urgently needed. Defense contractors that fail to act with integrity in such negotiations should know that they will face consequences.”

“Our men and women in uniform are putting their lives on the line daily around the world, and the U.S. Army relies heavily on the contracting process to bring the very best to our service men and women,” said Frank Robey, director of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit.

“Shortchanging our troops or the American taxpayers in any way, shape or form will not be tolerated and we are committed to investigating all allegations of possible fraud or misrepresentation of costs with great interest.”

The False Claims Act is the federal government’s greatest weapon against fraud, waste, abuse, mismanagement, and other wrongdoing that costs U.S. taxpayers billions of dollars annually. The government may initiate a fraud investigation on its own, as it did in this case, or it can intervene in any number of lawsuits filed on its behalf by whistleblowers who are authorized by the qui tam provisions of the False Claims Act to sue on behalf of the U.S.

Last year, False Claims Act actions recovered $3.8 billion plus $443 million in recoveries for state Medicaid programs.

Most of fiscal year 2013’s False Claims recoveries ($2.9 billion) were the result of whistleblower lawsuits, with $345 million being paid to whistleblowers as a reward for helping the government recover funds.

Source: Department of Justice