When President Lincoln and Congress first passed the False Claims Act, they had a very specific target in mind: dishonest contractors selling shoddy goods to the Army (moldy food, gunpowder cut with sawdust, etc.). In recent years, fraud against Medicare and Medicaid has become a larger priority for the government. But that shift in focus does not mean that fraud against the military has gone away or become less of a problem.
In fact, just this past month, the Justice Department announced one its largest ever fraud settlements with a military contractor—one that had both civil and criminal components. As alleged by the whistleblower and the Justice Department, a Kuwaiti company called Agility deliberately overbilled the U.S. military by millions of dollars under its contract to provide fresh fruit and vegetables to armed forces personnel stationed in the area.
The case took years to litigate and took some high profiled twists and turns, including the Kuwaiti Foreign Minister reaching out directly to the U.S. State Department in 2009 to try to make the criminal investigation go away.
Ultimately, under the global settlement reached by Agility and the Justice Department last month, the company will pay the United States $95 million, forego an additional $249 in administrative claims for payment, plead guilty to a criminal misdemeanor charge, and submit to review by an independent monitor.
As the Agility case makes clear, old Honest Abe’s instincts about military contractor fraud were right in the 1860s, and are still right today.
For more on the United States’ settlement with Agility, see the following press release from the Department of Justice’s website:
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