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Military Contract Recruiters Conspire With Soldiers in Fraudulent Bonus Scam

February 20, 2013 — Military contractor fraud results in millions of dollars’ worth of false claims filed with the federal government every year. The fraud can involve defective military equipment, overbilling for military supplies, improprieties in construction contracts, and a host of other fraudulent schemes. The fraud is usually discovered first by an employee working for the military contractor. To put an end to the illegal conduct, brave informants often use the federal False Claims Act to file a whistleblower claim on the government’s behalf. Under the qui tam provisions of the Act, collaborators are entitled to receive a portion of the government’s recovery.

Employees of Civilian Military Contractor Bilk U.S. Government and Taxpayers

One of the most recent military contractor fraud schemes to come to light involved a conspiracy to defraud the U.S. government by submitting false claims for recruiting referral bonuses. One participant, U.S. Army Specialist Richard Garcia, 29, of Kirby, Texas, has pleaded guilty to one count of conspiracy to commit wire fraud and has been sentenced to 18 months in prison. Garcia and his conspirators were ordered to pay $244,000 in restitution, the Department of Justice reports.

The U.S. Army maintains recruiting bonus programs, which pay bonuses to soldiers who register with the Army as sponsors or recruiting assistants (RAs) and then persuade others to join either the Army or the Army Reserves. In addition, from 2005 to 2008, the Army, along with the U.S. Army Reserves and the National Guard Bureau, contracted with an outside military contractor, Document and Packaging Broker Inc. (Docupak), to administer recruiting bonus programs. Participating soldiers are eligible to make as much as $2,000 for every recruit they bring in to the U.S. military.

Garcia participated in a recruiting scam in which recruiters — both civilian contract and active duty — gave sponsors and RAs, including Garcia, the names and Social Security numbers of military recruits who had not in fact been referred by anyone. The sponsors and RAs then claimed credit for referring the recruits. The sponsors and RAs split their $2,000 bonus payments with the civilian military contractors and the active duty recruiters who passed along the names and Social Security numbers. The scheme generated at least $244,000 in fraudulent bonuses for the co-conspirators.

Insiders Use False Claims Act to Combat Military Contractor Fraud

Military contractors who file false claims with the government frequently try to cover their tracks. Contractor employees may even be paid to keep quiet about the fraud. Accounting personnel may be instructed to engage in billing procedures they know aren’t right. They may be threatened with the loss of their jobs.

Before notifying the government, insiders should learn their legal rights. The lawyers at Waters & Kraus provide whistleblowers with the skilled legal representation they need. Contact us or call our whistleblower attorneys at 800.226.9880 to learn more about our military contractor fraud practice and how we can assist employee insiders.

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