The False Claims Act is designed to protect American taxpayers from fraud, waste and abuse by those holding contracts with the United States government. Known as whistleblowers, these individuals stand to gain a sizable portion of any recovery obtained by the government – usually between 15 and 25 percent of the settlement or verdict. In fact, in response to the overwhelming amount of money recovered due to the patriotic acts of whistleblowers, the Senate announced late last month that July 30th will hereafter be known as “Whistleblower’s Appreciation Day,” a day dedicated to “acknowledging the contributions of whistleblowers to combating waste, fraud, abuse, and violations of laws and regulations in the United States.” This is something we applaud, as it will encourage more people to step up and help us fight illegal and unethical practices nationwide.
In a recently-decided case, an Ohio man is set to recover 17.9 percent of a $61 million verdict entered against a fraudulent roofing company accused of bilking money from the U.S. government from 2002 through 2011. As is typically the case in lawsuits involving the False Claims Act, defendants RPM International Inc., and its subsidiary Tremco, Inc., were found to have submitted hundreds of inflated invoices for roofing work and products. Federal entities, including the Army, Air Force and Veterans Affairs hospitals were targeted by defendants seeking to deceive and overcharge for roofing installations and repair.
Greg Rudolph, the whistleblower in this case, began to notice the fraudulent misconduct during his tenure as Tremco, Inc.’s vice president. He quickly resigned so as to fairly and properly pursue his qui tam cause of action. Under the False Claims Act, private citizens acting in an individual capacity may commence a qui tam lawsuitwhich is exactly what Rudolph did; he stepped down as company leader and revealed the rampant and perpetual abuse of taxpayer funds.
State and Federal Whistleblower Charges
Whistleblower lawsuits are designed to expose and punish private companies found to be taking advantage of large contracts with the federal government. Many whistleblower cases involve complaints raised under state qui tam laws as well. To date, the states of California, Delaware, Florida, Illinois, Indiana, Massachusetts, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Tennessee, Virginia and the City of Chicago have all participated in the lawsuit against RPM International and Tremco. However, the $61 million settlement only resolves defendants’ misconduct against the federal government. Therefore, it is likely the defendants could face subsequent liability in a forthcoming state action.
The Specifics of the Misconduct Perpetrated by RPM and Tremco
Assistant Attorney General for the Department of Justice Stuart F. Delery said it best: “Companies that knowingly skirt the rules for securing government business undermine the integrity of the procurement process and create an unfair advantage against companies that are playing by the rules.” And this case is certainly no exception. Specifically, RPM and Tremco have admitted to the following fraudulent acts against American taxpayers:
- Failure to provide the U.S. government with price discounts otherwise provided to non-government customers;
Marketing marked-up roofing materials to U.S. government purchasers while failing to disclose the availability of identical materials at a much lower cost;
Failure to provide “current, accurate and complete information” about commercial sales methods;
Refusing to report available discounts offered by sub-contractors thereby failing to afford the U.S. government of the opportunity to save money on roofing services;
Marketing generic building materials as high-end or superior;
- Using defective adhesive formula to complete roofing jobs.
There are examples of fraud all around. It isn’t always easy to speak out, but having a qualified and dedicated team around you can make things easier. If you are aware of potential fraud on the part of a business or entity that is party to a government contract and believe the fraud may be costing taxpayer dollars, contact the experienced and aggressive qui tam attorneys of Berger Montague today at 1-800-424-6690.