Three Arrested in California for Submitting False Claims to State for Office Supplies

August 26, 2013 — The federal and state governments work hand in hand with private contractors, but a risk of fraud and overbilling is always present. The threat is made worse, of course, when unethical government employees engage in kickback schemes with unscrupulous contractors.  Through the state and federal False Claims Acts, the government works with tipsters who share unique information concerning government contractor fraud. Under the qui tam language found in many statutes, whistleblowers are empowered to file a lawsuit for the benefit of the government and retain a portion of any recovery.

California State Contractor Charged With Paying Kickbacks to State Employees

Three Californians have been charged by the California Attorney General (AG) with conspiracy, misappropriation of state funds and bribery in connection with office supplies sold to California agencies. Mike Mathison, Stephanie Clark and Danny Gray Compson were arrested and charged with participating in a scheme involving kickbacks and the sale of products at inflated prices to the California Department of Fish and Wildlife (F&W) and Department of Transportation (CalTrans).

Veteran Toner Services was an office supply company owned and operated by Mathison. The AG and the California Department of Justice have alleged that Mathison created fake competitor quotes for office supplies and then submitted his own inflated quote along with the phony quotes bearing even higher prices to two individuals with whom he was working on the scam — Clark at F&W and Compson at CalTrans. Clark allegedly received more than 50 kickbacks from Mathison in return for Clark’s award of F&W contracts to Mathison’s company.  Compson, who worked for CalTrans, allegedly submitted invoices for payment by the state of up to $5,000 per week for products that Mathison never provided. According to the California Justice Department, Mathison paid kickbacks to Clark and Compson in the form of vacations, money orders, and gift cards over many years.

The Corporate Fraud Unit of the California AG’s office investigates and prosecutes violations of California’s False Claims Act. A person with information about schemes involving overcharging or defrauding the government may be entitled to compensation under the qui tam provisions of the California statute. A whistleblower may receive up to 25 percent of the amount the government collects for providing unique information about fraudulent schemes against the government.

Informants Can Help Stop Government Contractor Fraud

Many cases like the one described here come to light when an insider employee, either with the government or the contractor, files a whistleblower lawsuit under the qui tam provisions of the False Claims Act.  Tipsters should take care to learn their rights under the statute and to understand the safeguards available for insiders who collaborate with the government. Waters & Kraus has a nationally respected qui tam practice with offices in California, Texas, and Maryland. Contact us by email or call our whistleblower lawyers at 855.784.0268 to learn how we can guide you through the process and ensure that your interests are safeguarded.

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