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San Diego Construction Firm Pays $5.4M to Settle Fraud Claim

Former employee awarded  $1,485,000

June 03, 2016

Harper Construction Company, Inc. has paid $5.4 million to the United States to resolve allegations that it fraudulently billed the government for work on multiple projects on military bases.  It was alleged that Harper knowingly used sham small disadvantaged businesses and then falsely certified to the government that it used legitimate small disadvantaged businesses.

Harper is a large, privately-held general contractor headquartered in San Diego.  Harper earns a substantial portion of its revenue through government contracting on construction projects across the country.

The settlement involves four government contracts to construct facilities at Camp Pendleton and Camp Lejeune.  The contracts required Harper to subcontract a certain percentage of work to small disadvantaged businesses.  Such requirements arise from measures intended to ensure that a fair proportion of federal contract and subcontract dollars are awarded to small businesses.  It was alleged that Harper claimed it met this requirement when, in fact, it subcontracted with sham small disadvantaged businesses.  Also, Harper allegedly required the sham small businesses to pass through all of their work to an affiliated large business, Frazier Masonry Corporation.

This settlement resolves a False Claims Act lawsuit filed by Rickey Howard, a former employee of Harper subcontractor Frazier Masonry Corporation.  The whistleblower, or qui tam, provisions of the False Claims Act permit the whistleblower (or relator) to recover a portion of the proceeds obtained by the government.  As part of today’s resolution, Mr. Howard will receive $1,485,000. 

“This type of fraud siphons taxpayer dollars and takes away opportunities for legitimate small businesses for which this money was set aside,” said U.S. Attorney Duffy.  “Whistleblowers are essential in our efforts to recover taxpayer dollars and combat fraud.  We commend the whistleblower for coming forward and making the United States aware of this alleged fraud, and we welcome others who are aware of fraudulent conduct to also blow the whistle on fraudsters.”

“DCIS and its investigative partners work diligently to expose corrupt contractors that manipulate or circumvent Federal contracting requirements,” stated Special Agent in Charge John F. Khin, Defense Criminal Investigative Service (DCIS), Southeast Field Office.  “DCIS’ earlier investigation of the subcontractors involved in this matter resulted in both criminal and civil actions.  We applaud efforts by concerned citizens and relators to assist our investigative efforts, and help the Government hold companies accountable for undermining the integrity of our contracting system.”

Source: Justice.gov

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