According to an official statement from the Justice Department, American Systems Corporation, Anixter International Inc. and Corning Cable Systems LLC have each agreed to pay the United States government $3 million in order to settle allegations of violating the False Claims Act and the Anti-Kickback Statute while bidding on a contract with the Central Intelligence Agency (CIA).
This settlement was reached to resolve claims against all three contractors in relation to a CIA contract awarded to American Systems in early 2009. According to the contract, American Systems was to provide goods and services to the United States government. American Systems partnered with Anixter International to submit the contract bid, while also including Corning Cable Systems as their supplier.
Charges Against the CIA Contractors
According the charges, the United States alleges that American Systems, Anixter and Corning each provided kickbacks to CIA employees and outside consultants in order to influence contract specifications that would favor the three companies in the award of the contract. These kickbacks included meals, entertainment, elaborate gifts and expensive tickets to sporting and other events. The settlement also addresses charges that each company illegally received source selection information from a CIA employee, who also received kickbacks, and that they concealed the gratuities prior to award. These kickbacks were not disclosed to the government before the CIA contract was awarded, making all claims for payment a violation of the False Claims Act. The quid pro quo remuneration also violates the Anti-Kickback Act, a statute that all federal contractors must comply with in order to be awarded government securities contracts.
“This settlement shows that the United States will protect the integrity of the federal procurement process from the wrongful activities of unscrupulous contractors,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Department of Justice, Civil Division. “Plying government officials with meals and entertainment to gain favorable treatment in the award of federal contracts corrupts the procurement process and will not be allowed.”
“Improper gifts and gratuities paid to government officials are a corrupting influence on government contracts. Combating this type of conduct is a high priority in the Eastern District of Virginia,” said U.S. Attorney for the Eastern District of Virginia Neil MacBride.
“This case clearly reflects that the CIA will respond effectively to allegations of fraud affecting agency programs,” said CIA Inspector General David B. Buckley. “My office treats contract fraud and related employee misconduct as one of our top investigative priorities, and we work closely with agency employees and the Department of Justice to ensure that illegal acts are addressed in an effective manner.”
Qui Tam Provisions
The allegations were first brought to light by a suit filed by a False Claims Act attorney in the Eastern District of Virginia under the whistleblower, or qui tam, provisions of the False Claims Act. The whistleblower in this case is former Anixter sales representative, William Jones.
Under the False Claims Act, private citizens or whistleblowers may file suit on behalf of the United States alleging a defendant submitted false claims to the government for payment or approval. Whistleblowers share part of any monetary recovery obtained by the government. Out of the money recovered, whistleblowers receive a mandatory minimum of 10 percent, up to a maximum of 30 percent of the recovery; whistleblower or False Claims Act lawyers are allowed to petition the court for payment of their fees and expenses. For example, in a case where the government recovers $1 million, depending on the circumstances, a whistleblower may be awarded a minimum of $100,000 to $300,000. In this False Claims Act lawsuit, whistleblower William Jones will receive $585,000 as a share of the recovery for filing an action under the False Claims Act and providing information to the government.
The recent settlement in this case was reached due to the coordinated efforts of the United States Attorney’s Office for the Eastern District of Virginia, the Department of Justice Civil Division and Commercial Litigation Branch and the CIA, Office of Inspector General.