Alabama Construction Contractor Resolves Fraud Violations for $2 Million

Caddell Construction Company Inc., based in Montgomery, Alabama, is a major industrial construction contractor that frequently is awarded construction contracts by the federal government. Caddell has agreed to pay a $2 million penalty as part of an agreement with the Department of Justice in connection with three Department of Defense (DoD) construction contracts, two in Fort Bragg, North Carolina worth about $65 million each and one in Fort Campbell, Kentucky, valued at around $34 million.

Mentor-Protégé and Indian Incentive Programs Used to Violate the FCA

The DoD funds a Mentor-Protégé Program, in which Caddell and other large DoD contractors (called “mentor” firms) hire disadvantaged small businesses (called “protégé” firms) and give the small businesses developmental assistance. The DoD reimburses the mentor firms for their costs related to the program. In addition, the DoD sponsors another program, the Indian Incentive Program, in which the DoD pays five percent rebates to large contractors that subcontract work out to Native American contractors. Caddell submitted false claims for reimbursement to the DoD in connection with both of these programs.

Allegations of Non-Prosecution Agreement Between DOJ and Caddell Construction

In February 2003, Caddell contracted with Mountain Chief – a small subcontractor that is certified as Native American, owned by a woman and economically-disadvantaged. Together, Caddell and Mountain Chief participated in both the DoD programs at the Fort Bragg and Fort Campbell jobs. Between February 2004 and March 2005, Caddell asked the DoD more than twenty times for payment in connection with the Mentor-Protégé Program. These bills overstated the amount of assistance that Caddell had given to Mountain Chief by a substantial amount. Between April 2003 and October 2004, Caddell asked for eight rebates under the DoD Indian Incentive Program for services that Mountain Chief allegedly provided, when in fact, Mountain Chief had not done the work. The invoices from Mountain Chief had been fabricated for the sole purpose of backing up Caddell’s applications to the DoD for payment.

Phony Applications Related to Minority Subcontractors Constitute False Claims

Government contractors that file false claims with the U.S. government cost taxpayers millions of dollars. When federal construction contractors file false claims seeking rebates for subcontract work purportedly done by small, minority-owned businesses, contractors cheat the government. They also thwart the government’s efforts to open up government contract work to all sorts of companies, not just corporate giants that can afford to underbid everyone else. When construction contractors are engaged in schemes of this type, employees are in the best position to find out about it and notify the government. Company insiders willing to come forward help keep government construction contractors honest.

Employee Insiders Use False Claims Act to Fight Construction Contractor Misconduct

Government construction contractors who file false claims frequently do what they can to cover their tracks. Contractor employees may receive financial incentives to keep quiet about the fraud. Accounting and billing personnel may be ordered to engage in billing practices that don’t seem right.

To reward whistleblowers who are brave enough to collaborate with the government, the qui tam provisions of the federal False Claims Act permit an insider to bring a lawsuit on the government’s behalf and share in any money recovered.

Before reporting what they know, tipsters should learn their rights. The lawyers at Waters & Kraus are here to offer government collaborators the skilled legal representation they deserve. Contact us or call our whistleblower attorneys at 800.226.9880 to find out more about our construction contractor fraud practice and how we can help employee insiders.

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