Recently, the Justice Department joined a False Claims Act (FCA) case against software vendor CA, Inc. (CA), filing a complaint in intervention on March 24, but the case remained under seal until May 27. CA manufactures and sells information technology products. The FCA suit alleged that the vendor is overcharging the government for software licenses and maintenance. The allegations are that CA provided the General Services Administration (GSA) with incomplete and inaccurate pricing information during contract negotiations. The allegations in the lawsuit stem from a qui tam case brought by whistleblower Dani Shemesh, a former CA employee, in 2009.
CA entered into a contract in 2002 with GSA to provide software licenses, maintenance, training, and services to government agencies. The contract is a Multiple Award Schedule (MSA) contract. This means that GSA pre-negotiates prices and contract terms for subsequent orders by some government agencies. CA breached its agreement that it would give the government the same prices that it was giving its commercial customers. GSA Acting Inspector General Robert C. Erickson said:
Companies doing business with the federal government on a GSA schedule must disclose current, accurate, and complete commercial discounts, so that GSA can get the best prices on behalf of American taxpayers. We will continue to investigate all allegations indicating that the federal government may have been overcharged by a contractor.
The suit claims that the licensing and maintenance portions of the contract were defectively priced because they did not give the current and most accurate pricing information. Additionally, the suit claims that CA provided false statements regarding the pricing and discounting policies. The company was required to monitor and compare discounts for commercial companies; however, the suit alleges that CA failed to disclose higher discounts being offered to commercial customers.
The Department of Justice explained in a recent press release their commitment to prosecuting fraudsters under the False Claims Act. GSA Acting Inspector General Robert C. Erikson reinforced his commitment to investigate reports from whistleblowers regarding fraud committed by government contractors. Ronald C. Machen, Jr., the U.S. Attorney for the District of Columbia, stated that “too many federal contractors think they can get away with overcharging the government.” He resolved to vigorously prosecute and recover taxpayers’ dollars because of the FCA suit initiated by whistleblower Dani Shemesh.
As we have written previously, and it bears repeating, the False Claims Act was created to allow private citizens the opportunity to sue those who commit fraud against the government. The Taxpayers Against Fraud Education Fund’s website is an excellent source of information for whistleblowers contemplating blowing the whistle. The FCA is the most important tool that U.S. taxpayers have to recover the billions of dollars stolen by defrauding the federal government.
The FCA contains whistleblower provisions that allow citizens with evidence of fraud to sue on behalf of the government and seek recovery of the monies defrauded. To compensate the whistleblowers for recovering the government’s money, a portion of the amount recovered is awarded to the whistleblower. This amount varies from case to case between 15 and 30 percent. When the case is filed, it is kept under seal so that the U.S. Justice Department has the opportunity to investigate and decide whether it wants to join the action. The case will remain sealed for at least 60 days, but most seals are extended and can remain sealed for a few years.
Lawyers in the Consumer Fraud Section at Beasley Allen continue to vigorously investigate fraud against both the federal and state governments and encourage anyone who knows of fraudulent activities to step forward. Potential whistleblowers have the right to not be retaliated against for doing the right thing and reporting the fraud they have witnessed. Any person considering doing the right thing and blowing the whistle is urged to seek legal advice before doing so. Our lawyers in the Consumer Fraud Section are very familiar with the federal False Claims Act and its state counterparts and can guide whistleblowers through the process. If you have any information that should be reported and would like to speak with a lawyer, contact Andrew Brashier, a lawyer in our firm’s Consumer Fraud Section, at Andrew.Brashier@beasleyallen.com, or at 800-898-2034 or 334-269-2343
Sources: www.taf.org; www.justice.gov; and
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