U.S. Files False Claims Act Lawsuit Against KBR, Alleging False Claims and Kickbacks

February 19, 2014 — Every day, government contractors, large and small, defraud the U.S. government in myriad ways. It’s actually astounding to think that the courage of just one whistleblower would be enough to stop intentional fraudulent practices at one of the nation’s largest and most powerful government contractors. But it’s true. The qui tam provisions of the False Claims Act give conscientious insiders an effective tool for defeating even gigantic government contractors looking to bilk the system. Whistleblowers have the power to file a False Claims Act lawsuit for the government in federal court. To reward informants who are bold enough to step forward, the Act makes provision for substantial financial rewards.

KBR Accepted Kickbacks from Kuwaiti Subcontractors as Part of Scheme to Defraud the U.S. Government

The United States government has filed a False Claims Act lawsuit against government contractor Kellogg, Brown & Root Services Inc. (KBR) and two Kuwaiti companies — First Kuwaiti Trading Co. (First Kuwaiti) and La Nouvelle General Trading & Contracting Co. (La Nouvelle), alleging that all three companies submitted false claims to the government concerning KBR’s contract for logistical support services to the U.S. Army. Based in Houston, Texas, KBR is a construction, engineering and services firm. First Kuwaiti and La Nouvelle are Kuwaiti companies that subcontracted with KBR to furnish services specified under KBR’s Army contract.
The alleged False Claims Act violations occurred in connection with KBR’s contract with the Army for wartime support, referred to as the Logistics Civil Augmentation Program (LOGCAP) III. According to the U.S. Justice Department, KBR employees took kickbacks in 2003 and 2004 from First Kuwaiti and La Nouvelle, which were paid to get KBR’s business. In turn, KBR allegedly filed false claims for reimbursement with the U.S. government for costs that were excessively high or fabricated entirely. KBR, for instance, allegedly contracted with La Nouvelle to supply fuel tankers at a price that was triple the tankers’ value. La Nouvelle then allegedly paid a $1 million kickback to the KBR employee who entered into the subcontract. Regarding First Kuwaiti, KBR allegedly paid the subcontractor monthly lease payments for trucks that First Kuwaiti supplied, but that KBR had already sent back. Meanwhile, KBR allegedly submitted false claims asking the government to pay for the returned trucks.
Many of the government’s allegations first came to light in a whistleblower lawsuit filed by Bud Conyers in Texas and later transferred to Rock Island, Illinois. The government intervened in Conyer’s False Claims Act lawsuit in January 2014 and notified the court of its intention to file additional allegations. When the government makes a recovery, the tipster, Mr. Conyer, will receive a share of the proceeds.

Blowing the Whistle on Powerful Government Contractors

Many whistleblowers who may have been dimly aware of an employer’s False Claims Act violations decide to take action when they are expected to become an active player in the fraudulent scheme. The qui tam lawyers with Waters & Kraus have worked with employee insiders in all manner of complicated situations. Contact us or phone our False Claims Act lawyers at 855.784.0268. With offices in Los Angeles, Dallas and Maryland, we’re devoted to protecting your interests, no matter the size and strength of your employer.

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