December 20, 2013 — It is well known that the U.S. military is no stranger to false claims from government contractors. Is there anything that inside employees can do to stop contractors that are ripping off the government? When fraud occurs, the qui tam provisions of the False Claims Act give conscientious informants the means to tackle the problem directly by filing suit in federal court on the government’s behalf. To compensate whistleblowers with the courage to do the right thing, the Act gives tipsters a portion of any recovery the government receives as a result of the suit.
Sysco Subsidiary Resolves Allegations of False Claims Act Violations for Overbilling the Department of Defense
FreshPoint Inc., a Texas food distribution company, will pay $4.2 million to settle a False Claims Act lawsuit alleging that the company overbilled the Department of Defense (DoD) for fresh produce purchased in 15 separate contracts. The DoD contracted with East Coast Fruit Company and FreshPoint took over the contracts when it acquired East Coast Fruit in 2007. Located in Houston, FreshPoint is a wholly owned subsidiary of Sysco Corp.
According to the U.S. Department of Justice, between 2007 and 2009, FreshPoint overbilled DoD in hundreds of fresh fruit and vegetable sales by inflating the prices to reflect FreshPoint’s outlook on the prevailing market price of the produce when it was sold. FreshPoint’s contracts with the government, however, required the company to sell the produce at cost, with a pre-set mark-up for profit. The government alleged that FreshPoint violated its contracts by making additional unauthorized price adjustments calculated on perceived changes in market prices.
The False Claims Act allegations against the Sysco subsidiary first came to light in a qui tam lawsuit filed by a former inside employee with FreshPoint. The whistleblower, Charles Hall, will receive $798,000 for his share of the settlement.
Blowing the Whistle on Government Contractors Engaged in Fraud
Insiders are usually the first to discover False Claims Act violations because they are expected to take part. But many tipsters would rather collaborate with the United States government instead. The whistleblower lawyers at Waters & Kraus have listened many times as clients describe the intimidation they’ve felt to keep quiet about schemes to bilk the government. We’ve helped many others in your situation. Contact us by email or phone our False Claims Act attorneys at 855.784.0268. With qui tam lawyers in Texas — where the business involved in this case was located — and in Maryland and California, we’re here to make the process easier on you.