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December 29, 2014 Contractor Fraud

Alaska-Based Eyak Corporation Agrees to Settle False Claims Act Allegations for $2.5 Million

In an interesting case at the intersection of healthcare and contractor fraud, Anchorage, Alaska-based Eyak Corporation has agreed to settle claims of false charges and illegal kickbacks occurring under a lucrative government contract with the U.S. Army Corps of Engineers. Accordingly, Eyak Technology and its affiliate Eyak Services LLC have agreed to relinquish any rights to future payments from the United States government for its services rendered under the agreement, known as the “Technology for Infrastructure, Geospatial, and Environmental Requirements Contract.” The agreement was for the provision of “healthcare, information technology, communications, and infrastructure services to the U.S. government.”

Details of the allegations against Eyak

For a period ranging from 2005 through 2011, Eyak is alleged to have engaged in an unlawful kickback scheme wherein the company accepted kickbacks or bribes from interested subcontractors in exchange for the company’s promise to direct sub-contract work to those businesses. Moreover, the company charged the U.S. Army Corps of Engineers for services never rendered and labor that was never performed. In addition, Eyak failed to maintain proper internal control procedures — as required by most government contracts — for purposes of identifying and correcting errant claims for reimbursement.

The director of contracts in charge at the time of the fraud has since pled guilty to several counts of bribery and kickback charges, resulting in a sentence of 87 months in federal prison. He was also ordered to serve nine additional months of supervised probation, as well as pay $9 million in restitution.

The whistleblower’s details have not been revealed. However, it is not uncommon for whistleblowers to receive up to 30 percent of the overall recovery obtained under a False Claims Act lawsuit.

Government’s comments

Government officials made several remarks following the settlement with the Eyak Corporation. Acting Assistant Attorney General Joyce R. Branda said in a statement, “Federal government contractors and their employees must adhere to high standards in their dealings with the government….We will vigorously pursue those who pay kickbacks or otherwise engage in conduct that undermines the integrity of the contracting process.”

Likewise, the U.S. Attorney’s Office commented, “This settlement demonstrates our willingness to use every tool of civil and criminal law in our arsenal to defend the American taxpayer from corruption in contracting….The criminal investigation into this wide-ranging bribery and kickback scheme has now resulted in the convictions of 20 individuals, including EyakTek’s former contracts director.  We have aggressively pursued asset forfeitures in the criminal proceedings to make the taxpayer whole and to deprive wrongdoers of their ill-gotten gains. This civil settlement sends a message to contractors who try to cheat in the competition for government funds.”

Several Department of Defense officials also commented on the settlement, stating, “This is yet another prime example of our commitment, along with other fellow law enforcement agencies, to hold people and companies accountable for each and every detail of their contracts with the U.S. government and the U.S. Army….Our agents will continue to aggressively investigate and identify any potential abuses that arise in regard to the contracting process.”

Contact Berger Montague today

If you are aware of fraud under a defense contract or general services contract with the United States or state government, please contact our team of dedicated whistleblower attorneys today!