September 3, 2013 — Both state and federal governments work closely with private contractors on a regular basis, but the threat of overbilling, or some other form of fraud, is always present. The risk is amplified, of course, when unethical government employees participate in kickback schemes with the contractors. Insider employees working for the government agencies and contractors involved are in the best position to learn of the fraud and do something about it. The federal False Claims Act allows tipsters to collaborate with the government by filing a lawsuit on the government’s behalf. Under the Act’s qui tam language, whistleblowers are entitled to keep a portion of any recovery.
Whistleblower Suit Targets Fraud in Award of E-rate Contracts
A Texas businessman has consented to a $400,000 settlement to resolve a whistleblower lawsuit alleging False Claims Act violations. Larry Lehman, who lives near Austin, Texas, was accused by the DOJ of defrauding the Federal Communications Commission (FCC) concerning his company’s receipt of E-rate contracts from two large Texas school districts.
The Telecommunications Act of 1996 provides subsidies to schools and libraries through the E-rate program administered by the FCC. Institutions working to provide Internet access for students and patrons may be eligible for E-rate subsidies to pay for networking equipment and professional services needed to install and maintain that equipment.
Interested in expanding its classroom and computer lab Internet services, Houston Independent School District (HISD) applied for, and received, E-rate financial assistance between 2004 and 2006. Lehmann’s company, Acclaim Professional Services (Acclaim), specialized in helping local school districts, like HISD, purchase and install E-rate subsidized networking equipment.
The DOJ alleged that Lehmann paid kickbacks to HISD employees involved in E-rate contract vendor selection. HISD employees allegedly received gifts and $66,750 in loans along with tickets to sporting events. In addition, Lehman purportedly concocted a scam to hire HISD employees to perform services under the E-rate contracts, even though they were already employed by HISD. According to the DOJ, Lehmann then hid the cost of the HISD employees’ “work” in invoices to the E-rate program for other products and services.
The DOJ investigation of E-rate violations included HISD and the Dallas Independent School District (DISD). The original whistleblowers, Dave Richardson and Dave Gillis, filed a qui tam lawsuit concerning the E-rate scam based on Richardson’s experiences in bidding on DISD and HISD projects. As a result of the whistleblowers’ action, the DOJ recovered $750,000 from DISD, $850,000 from HISD and $16.25 million from Hewlett-Packard, in addition to the $400,000 that Lehmann has consented to pay.
Qui Tam Lawsuits Help Stop Government Contractor Fraud
Many instances of government contractor fraud are brought to light in a whistleblower lawsuit similar to the one filed in this case. Tipsters deserve to understand their rights under the statute and to know the protections available for government collaborators. Waters & Kraus, respected nationally for its qui tam practice, has offices in Texas, California, and Maryland. Contact us by email or phone our whistleblower lawyers at 855.784.0268 to discuss how we can ensure that your interests are maximized throughout the process.