Consumer Fraud

Government Contractor Pays $9.8 Million To Settle False Claims Act Allegations

whistleblower 2 370x210 Government Contractor Pays $9.8 Million To Settle False Claims Act AllegationsA Department of Defense contractor that provides GPS tracking systems to shipping containers in the Middle East has agreed to pay the U.S. $9.8 million to resolve False Claims Act allegations that it billed the government for faulty services and services that were never performed.

The Defense Department contracted Scottsdale, Arizona-based APL Limited, an American subsidiary of Neptune Orient Lines Limited of Singapore, to affix a satellite tracking device to each shipping container transported from Karachi, Pakistan, to U.S. military bases in Afghanistan – a vital precaution taken to prevent military equipment from falling into the wrong hands.

The U.S. Department of Justice (DOJ) alleges that APL submitted false claims to the government when it billed the Defense Department for GPS tracking services despite knowing that the tracking devices completely or partially failed to transmit data, or had not been affixed to shipping containers at all.

The government also claims that APL attached a single satellite tracking device to two shipping containers despite being contractually required to affix one device to every container.

“Today’s settlement demonstrates our commitment to ensure that contractors doing business with the military perform their contracts honestly,” said Principal Assistant Attorney General Benjamin Mizer, head of the Justice Department’s Civil Division. “We will continue to ensure that there are appropriate consequences for those who knowingly fail to live up to their bargain and misuse taxpayer funds.”

The case marks the second time APL has agreed to settle False Claims Act allegations that it violated its contractual responsibilities with the federal government. In 2009, the company paid more than $26 million to settle claims that it overcharged and double-billed the Defense Department for shipping services it provided for containers going from sea ports to inland destinations in Afghanistan and Iraq.

The U.S government and its agencies and staff can sue military contractors for fraud and other wrongdoing under the False Claims Act, one of the best fraud-busting weapons in its anti-corruption arsenal. Most False Claims lawsuits, however, are filed by private individuals under the Act’s “whistleblower” provisions, which authorize them to sue on behalf of the government and share a percentage of any recovery in excess of $1 million.

In fiscal year 2014, the number of False Claims Act complaints filed by whistleblowers exceeded 700 for the second year in a row. Recoveries in FCA whistleblower cases during the same time totaled nearly $3 billion, with whistleblowers sharing awards of more than $435 million.

Source: U.S. Department of Justice