VSG’s Navy Bribery Whistleblower Case Settles
WASHINGTON, D.C. (August 4, 2015) Pursuant to settlement agreements between the parties, the United States District Court for the District of Rhode Island dismissed a False Claims Act lawsuit brought by two clients of the whistleblower law firm Vogel, Slade and Goldstein to redress a Navy bribery scheme that dissipated an estimated $18 million in taxpayer funds.
The lawsuit, filed under the qui tam provisions of the False Claims Act, alleged that Advanced Solutions for Tomorrow (ASFT), a now-defunct information technology services company in Atlanta, Georgia, the founders of ASFT, an affiliated entity, Paramount Solutions, two owners of Paramount and several individuals working for ASFT and its founders, engaged in a scheme to bribe a Navy official to obtain contracts with the Navy’s Undersea Warfare Center (NUWC) located in Middleton, Rhode Island, and, as a result, defrauded the United States of millions of dollars. Read the False Claims Act complaint here.
Three of the individual defendants in the case –the founder of ASFT, an ASFT employee and an ASFT subcontractor who funneled funds to the Navy official – each settled the claims in the case for $17,957,000, agreeing that funds they paid in related criminal proceedings as restitution would be applied towards the satisfaction of this civil liability. As a reward for their role in bringing forward information about the case, the United States has agreed to pay the relators $90,000 upon forfeiting funds from the bank account of the defendant who served as a middleman in the scheme.
The whistleblower lawsuit led to the 2013 prosecution and guilty pleas for bribery-related offenses of three of the individual defendants and the prosecution and guilty plea of the Navy official for theft of government funds. These defendants have each been ordered to pay $17,957,000 in restitution. Three of them have been sentenced to prison terms, the Navy official for ten years.
The fraud uncovered by the two whistleblowers is estimated to have led to a loss of nearly $18 million for the Navy. According to William Hilarides, Commander of U.S. Naval Sea Systems Command, this loss is equivalent to outfitting eighty-two submarines with spare parts. The discovery of this fraud also disrupted the Navy’s operations at NAVSEA and NUWC and led to a six-month suspension of NUWC Newport’s contracting authority. In response, U.S. Navy Secretary Ray Mabus convened a special investigatory team to review the case and make recommendations for improvement to the Navy’s contracting processes.
Today’s dismissal of the False Claims Act case was based on the civil settlement agreements between various of the parties and the whistleblower award agreement entered into between the United States and the two qui tam plaintiffs.
Vogel, Slade & Goldstein principal Shelley R. Slade, who represented the qui tam plaintiffs, stated: “I was honored to represent these clients who showed exemplary bravery, integrity, and perseverance, not only in bringing this scheme to light, but in uncovering and compiling the evidence in a manner that allowed the Government to unravel the complicated scheme and prosecute the wrongdoers. Our clients performed a very significant public service. It is this sort of a case that makes me proud to do the work that I do representing whistleblowers reporting information about fraud on government programs.”