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Whistleblower Receives $1.4 Million for Information on Fraudulent Construction Billing at Military Bases

Camp-Lejeune-jpgRicky Howard, a former employee of a California construction company that did work on domestic military bases, will receive $1.48 million dollars for his information regarding fraudulent billing practices. Howard has worked in the masonry trade his entire career, and was employed by Harper Construction Company (“Harper”) when he discovered the company’s frauds on the government.

Earlier this month, the U.S. Attorney for the District of Southern California announced that Harper has paid $5.4 million dollars to resolve allegations that it “up-charged” the U.S. government for its work on Camp Pendleton and Camp Lejeune and fraudulently created “sham” companies to fulfill government contracting requirements.

Harper Construction is ranked among the Top 400 construction companies, the Top 100 Design Build Firms, and the Top 100 Green contractors in the United States. It is the second largest privately-held company in San Diego, California. It reported revenues in 2010 of approximately $360 million.

The company earns a substantial portion of its revenues in government contracting. The company has performed government contracting work for the U.S. military around the world and throughout the United States, as well as extensive construction work for various state and local governments.

The government and Howard’s settlement with Harper pertains to four government contracts to construct facilities at Camp Pendleton and Camp Lejeune, North Carolina. The contracts required Harper to subcontract a certain percentage of work to “small disadvantaged businesses”, “service-disabled veteran-owned small businesses,” “women-owned businesses,” or “minority-owned businesses.” This is where the company ran afoul of government contracting regulations.

A “service-disabled veteran-owned small business” is a small business where not less than 51% of the company is owned by one or more service-disabled veterans. The management of the business must be primarily controlled by one or more service-disabled veterans. This framework applies to other aforementioned subcontracting requirements for “small disadvantaged businesses,” “women-owned businesses,” and “minority-owned businesses.”

Howard’s complaint details less than “above board” contracting practices. Howard’s first assignment for Harper was as a Project Manager for the Marine Corps Station at Cherry Point. Howard alleges that this project was completed “above board.”

Howard first became concerned about potential fraud when he started a project to construct an elementary school on the U.S. Marine’s Camp Lejune base. For this project, he worked under Harper’s direction in coordination with Kisaq, LLC (An Alaskan partnership owned by Alaska-native Americans, the Inuqiat Eskimo people.) During the construction of a military courthouse, Howard was asked to classify products manufactured by large companies as products that were manufactured by “small-disadvantaged companies.”

Howard’s complaint claims that Harper misclassified elevators sold by ThyssenKrupp, a large multi-national corporation, as manufactured by a company that “fit” the government contracting procurement requirements.

Howard also uncovered an allegedly long-running scheme where Harper Construction created “sham companies” to fulfill requirements under government contracts. Howard alleges that this practice occurred throughout Harper Construction’s vast west-coast building empire, and when the company attempted to apply the same techniques to its new east-coast building ventures, eye-brows began to raise amongst contractors.

This pattern and practice of creating and utilizing “sham” companies to fulfill subcontracting requirements allegedly occurred throughout   the course of Harper’s projects at Camp Pendleton, where the government paid Harper some $21.7 million in revenues for their work.

Howard alleges that from at least 2007 forward, Harper Construction represented, warranted, and certified, expressly and/or impliedly, to the U.S. military and government that it was fully compliant with the promulgated subcontracting requirements contained with the Federal Acquisition Regulations and with all federal laws.

The False Claims Act was passed by Congress during the midst of the Civil War, where frauds on the government ran rampant. Bootmakers sold boots to the Union army that only withstood weeks of use, and merchants sold the military rotten food provisions. The same logic applies to False Claims in the modern-landscape. Though fraud on the government may not be as easily identifiable as rotten food or ill-made boots, consulting an experienced False Claims Act attorney can help whistleblowers root-out violations of the Act by sifting through their employer’s questionable activities.