Defense Contractor Pays $95 Million to Resolve Allegations of Criminal, Civil Activities Related to Food Service Contracts
Foreign companies that do business with the United Sates are not
beyond the reach of its laws when it comes to waste and fraud. The Department
of Justice proved this to be the case when last month they announced that Agility
Public Warehousing Co. KSC (Agility) – a Kuwaiti company – had agreed to
resolve criminal, civil and administrative cases against it regarding their
food contracts with the Department of Defense. The company’s contract covered
food service for U.S. Troops from 2003 through 2010. As a part of a global
resolution, Agility has agreed to pay $95 million to resolve civil fraud
claims, to forgo $249 million in claims to DOD and to plead guilty to theft of
government funds. For its part, the DOD’s Defense Logistics Agency (DLA) will
release a claim of $27.9 million against Agility and lift its suspension of the
company. (Agility had been suspended from entering into federal contracts for a
period of seven years.)
“This settlement marks the
conclusion of a lengthy investigation that demonstrates the Defense Criminal
Investigative Service’s (DCIS) commitment to ensuring that tax dollars spent to
support Department of Defense programs and missions are protected from fraud
and abuse throughout the procurement process, but especially during overseas
combat operations which are the most vulnerable,” said
Special Agent in Charge John F. Khin of, DCIS-Southeast Field Office. “This
extremely complex investigation required DCIS agents and our partners to
tenaciously sort through and piece together an unprecedented volume of
information and documents, and persevere through many years of exhaustive work,
to bring this case to a resolution.”
The
civil complaint alleges that Agility and TSC knowingly overcharged the DOD for
locally available fruits and vegetables despite agreeing that they would pay 10
percent less than the amount billed. The United States also alleged that
Agility failed to disclose rebate and discounts it obtained from US suppliers
as it was contractually obligated to do so. The criminal charges against
Agility alleged that it concealed consolidation fees that it should have paid
and that this caused an inflated price to be paid by the United States.
Starting in 2006, Agility filed a number of claims seeking additional payments
in the amount of $249 million alleging that DLA owed this money for its
performance under a series of military contracts. The agreement reached last
month requires Agility to release all claims to this $249 million.
another
Kuwaiti The allegations that are the basis of this agreement arose from a civil
lawsuit that was filed against Agility and company – The Sultan Center Food
Products Company, K.S.C. (TS) – by Kamal Mustafa Al-Sultan, a former vendor of
Agility. Al-Sultan filed his suit under the whistleblower provisions of the
False Claims Act. These provisions permit individuals to sue on behalf of the
government and to share in any recovery. Mr. Al-Sultan is scheduled to receive
$38.85 million as a result of the civil action he filed. If you have chosen to
report a False Claims Act violation we advise you to contact a qui tam law firm. Qui tam law firms will be able to put you into contact
with an attorney who will be able to advise you on such matters. Tips and
complaints from all sources about potential fraud, waste, abuse, and
mismanagement, can be reported to the Department of Health and Human Services,
at 800-HHS-TIPS (800-447-8477).
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