On Sept. 28, the U.S. Justice Department (DOJ) filed suit against Odyssey Marketing Group Inc., a Georgia based company, for allegedly producing marketing materials under an invalid contract. The company was hired in 2007 to produce materials, such as commemorative coins and flags, for the Army Reserve Family Program (ARFP). This agreement was expanded and the government created a website that allowed the company’s owners, Roderick and Terri MacKenzie, to sell ARFP merchandise online.
The company has prior contracting experience with the federal government, including more than 50 contracts worth $13 million since 2009. The complaint alleges that Mr. and Mrs. MacKenzie entered into agreements with ARFP through employees who did not have the authority to issue contracts. Then, despite these allegedly invalid contracts, they invoiced the government for services from 2009 until 2014. The federal government alleges, among other violations, that Odyssey committed three counts of violating the Federal False Claims Act, and that they “had actual knowledge, deliberately ignored, or recklessly disregarded the fact that the claims submitted were false or fraudulent . . . .”
A 2011 Department of Defense (DOD) report revealed that there is active fraud within the U.S. defense contracting community. In fact, from 2001 to 2011, 54 contractor companies were criminally charged and more than 300 entered into “settlement agreements or had civil judgments rendered against them.” For example, in 2014, First RF Corporation (First RF) settled with the Justice Department for $10 million after the government alleged that it submitted false data on the cost of electronic warfare antennas sold to the U.S. Army, and then used that data to inflate the price its product. Frank Robey, Director of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit stated:
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.
As we have mentioned previously, the Federal False Claims Act is often referred to as the “Informer’s Act” or “Lincoln’s Law” because it was created during the Civil War to combat fraud by Union suppliers. The purpose of the Act is to stop fraud and deter others from committing violations in the future. Since 1986, more than $40 billion has been recovered by the federal government in this sort of case. The success of this Act revolves around whistleblowers who report fraud, which the government incentivizes by awarding them 15 percent to 30 percent of the funds recovered. In fact, nearly $2 billion has been awarded to whistleblowers for helping the federal government fight fraud.
Any person who is aware of fraud within U.S. defense contracting system can be rewarded for stepping forward and reporting the fraudulent conduct. Lawyers at Beasley Allen continue to vigorously investigate fraud committed by defense contractors and they 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. Anyone considering blowing the whistle is strongly urged to seek legal advice before doing so.
Lawyers in our firm’s Consumer Fraud Section are very familiar with the federal False Claims Act and its state counterparts. They have experience shepherding whistleblowers through the process. If you have any information and would like to speak with a lawyer about a potential case, contact Andrew Brashier at Andrew.Brashier@beasleyallen.com; Archie Grubb at Archie.Grubb@beasleyallen.com; Lance Gould at Lance.Gould@beasleyallen.com; or Larry Golston at Larry.Golston@beasleyallen.com or at 800-898-2034 or 334-269-2343. If you simply want more information about the Federal False Claims Act, contact one of these lawyers, each of whom handles whistleblower litigation. All consultations are free and confidential.
Sources: Justice Department; Department of Defense; and bizjournals.com
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