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August 7, 2015 Military Contractor Fraud

False Claims Act Lawsuit Settled Against South Carolina’s Covan World Wide Movers, Inc.

False claims occur in virtually every aspect of federal contract work. In today’s case, we look at a recent multi-faceted settlement, the details of which have been ongoing for most of 2015, involving relocation services for U.S. military members. The case was brought to light by several employees of the moving companies after noticing suspicious billing practices with regard to the weight of the freight hauled under the government contract. The overall settlement topped $1.2 billion, and the most recent component of the agreement was reached between the defendant – Covan World Wide Movers, Inc. – and the District of South Carolina, where the company maintains several offices and hubs.

The relators in the case are expected to receive up to 25 percent of the overall recovery, but their exact reward amount has not been disclosed at this time.

Details of the defendant’s violations

According to the details of the lawsuit against Covan World Wide Movers,[1.] it entered into a contract with the United States government for purposes of helping U.S. servicemembers and their families relocate, and predominantly focused on international relocation services. Allegedly, the company intentionally and falsely inflated the weight of the freight it hauled on behalf of its customers, and thereafter billed the government for the incorrect amount.

When transporting freight internationally, shippers must pay certain fees and taxes based on the total weight of the goods. Allegedly, Covan paid the correct amounts at each port, but then destroyed the correct weight certificates and replaced them with falsified records.[2.] More specifically, the company is alleged to have committed the following acts of misconduct:

  • One service member’s relocation to Germany was measured at 12,260 pounds, but Covan falsified the data to reflect tonnage of 13,205 pounds.
  • A customer’s shipment to South Korea was altered from 9,380 pounds to 10,480.
  • Another military member’s shipment was changed from 10,350 pounds to 11,210 pounds.

Overall, data records revealed that the company increased the reported shipping weights approximately 9-10 percent on each shipment, resulting in an overcharge to the U.S. government of nearly $723 million. In the government’s Complaint in Intervention, it revealed, “Out of approximately 650 re-weighs of defendants’ shipments reviewed….nearly 80 (percent) had a billed weight in excess of the actual shipment weight….” Further, the government claims to have located a “corporate manager” during the investigative process that was responsible for training staff on how to properly falsify records.[3.

Government comments on settlement

The U.S. Army’s Criminal Investigation Command said in a statement, “We are very pleased with today’s announcement and the result of all the hard investigative work and agency cooperation regarding this investigation. We would also like to thank the honest citizens who came forward and did the right thing which allowed us to fully investigate these allegations and reach today’s settlement.”

The Defense Criminal Investigative Command further commented, stating, “The transportation of household goods is essential to the military’s logistics program, enabling our warfighters and their families to get to station and ready to assume their duties, wherever on the globe they may be assigned. The Defense Criminal Investigative Service (DCIS) remains vigilant to ensure DOD programs are free from fraud and those who wish to take advantage of the U.S. Military.”

Contact Berger Montague today

If you are aware of possible falsification of data or records under a government contract, please do not hesitate to contact Berger Montague right away.