Justice joins fraud lawsuit

Whistle-blower suit alleges that IT vendors submitted false invoices to the government

The Justice Department has joined three whistle-blower suits that claim Hewlett-Packard, Accenture and Sun Microsystems bilked the government for years with a scheme of improper payments and kickbacks through federal resellers.

The suits, originally filed by Neal Roberts and Norman Rille, a former Accenture employee, in the U.S.  District Court in Little Rock, Ark., allege that the three companies and their resellers submitted false invoices for information technology hardware and services on numerous government contracts beginning in the late 1990s. Peter Keisler, assistant attorney general of Justice’s civil division, said in a brief statement April 19 that the department “is acting in this case to protect the integrity of the [federal] procurement process.”

According to the Justice announcement, the suits state that “the defendants have systematically solicited and/or made payments of money and other things of value, known as ‘alliance benefits,’ to a number of companies with whom they had global ‘alliance relationships’ or an agreement to work together.” Justice said those alliance relationships and the resulting alliance benefits amounted to kickbacks and undisclosed conflicts of interest. 

The suit was originally filed under the whistle-blower provisions of the 1985 False Claims Act. Under that statute, a private party can file an action if the fraud has not previously been publicly disclosed, whether or not the plaintiff has direct knowledge of it.

“Whenever Justice intervenes, it takes over the case,” said Charles Miller, spokesman at Justice’s civil division. “Whistle-blowers file a suit on behalf of the United States, and it comes before us and we make a determination as to whether there are merits to the suit for the government to pursue it.”

Miller said plaintiffs are free to pursue their cases on their own if the government chooses not to join in. “But in this case,” he said, “what they have acquired is the full force of the United States Department of Justice civil division to actually litigate this, which is a much bigger animal than your local attorney.”

Whistle-blowers are entitled under the False Claims Act to 15 percent to 25 percent if there is a successful monetary recovery and the whistle-blowers are not part of the alleged fraud. In some cases, theirshare can amount to millions of dollars, and the government can recover three times its losses and civil penalties.

Justice filed its complaints April 12, but they were not unsealed until April 19.

The three companies denied the allegations.

“HP is proud to partner with the government and is confident its business practices are appropriate,” said Emma Wischhusen, public relations manager at HP. “We plan to vigorously defend this action and look forward to demonstrating that HP has done nothing wrong.”

Sun said it has fully cooperated with the audit process and welcomes the opportunity to address the claims in a fair and impartial forum.

Sun “continues to take pride in its relationship with GSA and the many government agencies that rely on Sun products and services,” the company said in a statement. “In accordance with Sun policy, the company cannot provide further comment on pending litigation.”

Accenture has “acted appropriately and in compliance with the law,” said Roxanne Taylor, a company spokeswoman. “We intend to defend our position and expect to prevail.”

Hubler writes for Washington Technology, a publication of the 1105 Government Information Group. For more business news, visit WashingtonTechnology.com.
By the numbersThe Justice Department has sided with two whistle-blowers in lawsuits against three well-known companies that allegedly submitted false invoices to bilk millions of dollars from government. The lawsuits name:

Location: Hamilton, Bermuda.
Employees: 140,000.
Reported revenue: $18.2
billion in fiscal 2006.

Location: Palo Alto, Calif.
Employees: 150,000.
Reported revenue: $91.6
billion in fiscal 2006.

Sun Microsystems
Location: Santa Clara, Calif.
Employees: 38,000.
Reported revenue: $13 billion in fiscal 2006.

About the Author

David Hubler is the former print managing editor for GCN and senior editor for Washington Technology. He is freelance writer living in Annandale, Va.


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