|[April 18, 2014]
Government Partially Settles False Claims Act Cases Arising From Construction Fraud at US Marine Corp Bases Camp Lejeune and Camp Pendleton
CHARLOTTE, N.C. --(Business Wire)--
The Rabon Law Firm of Charlotte, NC, Berg & Androphy of Houston, TX, and
the Abbott Law Firm of Birmingham, AL, announced today that the U.S.
Department of Justice (DOJ) has intervened in two cases filed by the
firms on behalf of the United States and a Relator, and reached
settlements with several California-based construction businesses and
two individuals to partially resolve allegations under the False Claims
Act that the defendants conspired to defraud the United States in
connection with military construction projects at Camp Lejeune in North
Carolina and Camp Pendleton in California.
The False Claims Act lawsuits were filed in the U.S. District Court for
the Eastern District of North Carolina, in 2012 and 2013, against
Frazier Masonry Corporation of Camarillo, California, several small
business entities and individuals affiliated with that company, and
other corporate entities that are not part of the current partial
The lawsuits charge that the Frazier defendants conspired with prime
contractors that had been awarded large construction contracts for
projects at Marine Corp Bases Camp Lejeune and Camp Pendleton to violate
the False Claims Act by falsely certifying that qualified disadvantaged
small businesses had performed the subcontracted masonry work. In each
of the prime contracts, which together totaled in excess of $225
million, the successful general contractors had promised the government
that they would comply with a "Subcontracting Plan," which earmarked
certain of the subcontracts to go to legitimate disadvantaged small
businesses. Throughout the course of the projects, the prime contractors
continued to certify that they were complying in good faith with the
Subcontracting Plans, which were expressly made a material part of the
contracts. The fraud occurred when the defendants contracted with
businesses that were owned, controlled, or were affiliated with Frazier
Masonry - a large business entity - to act as the masonry subcontractor.
The subcontracts were then performed by Frazier Masonry instead.
The Small Business Act and Federal Acquisition Regulations disqualify
small businesses that are owned, controlled, or are affiliated with
large businesses, such as Frazier Masonry, from performing subcontracts
targeted for small, disadvantaged business enterprises. As a result of
this scheme, legitimate small businesses were denied the opportunity to
win these subcontracts, and the Government's SBA program intended to
increase the utilization of small business concerns by providing them
the "maximum practicable opportunity" to participate in performing
contracts issued by any Federal agency was altogether thwarted. The
damages to the United States are reasonably calculated to be at least
the amount by which the Subcontracting Plan targets were missed due to
In resolving their liability under the False Claims Act, the Frazier
defendants agreed to pay nearly $1.9 million to the federal government.
The amount paid by the Frazier defendants was based on their ability to
pay and is not reflective of the true amount of damages to the
Government. Other entities remain as defendants in the cases. In
addition, in parallel criminal proceedings, two individuals affiliated
with the Frazier defendants pleaded guilty to felony charges, and are
The Relator, Rickey Howard, was represented by Chet Rabon and Marshall
Walker, of the Rabon Law Firm in Charlotte, North Carolina, together
with Joel Androphy, Sarah Frazier, and Rachel Grier of Berg & Androphy
in Houston, Texas, and Matt Abbott of the Abbott Law Firm in Birmingham,
Alabama. Howard came forward with crucial evidence and assisted the
government in exposing the fraud at a tremendous personal and
professional cost. However, without the Relator's information, these
frauds would not have been exposed. "Rickey Howard is a man with high
integrity. He took brave steps to call out these frauds when others
would have stood by silently and done nothing," said his attorney, Chet
Rabon. "America should be proud of citizens like Rickey and others who
are willing to do the right thing in difficult circumstances."
These cases represent a major civil and criminal inroad into combating
Small Business Administration fraud through the use of "sham" small
businesses - an area the government has targeted for fraud enforcement
for many years but with little success. The amount of such "sham" small
business fraud that exists in federal government construction contracts
is believed to be in the hundreds of millions of dollars.
"The United States Government is the single largest purchaser of goods
and services in the world, and because of this, the amount of fraud that
is perpetrated against all of us - the taxpayers - is staggering," added
Joel Androphy. "Cases like this prove that the False Claims Act is a
success. The message is being sent to general contractors - 'Don't do
this. It is fraud, it is wrong, you will get caught, and you will pay.'"
Case No.:7:12-cv-215-D (E.D.N.C.)
Case No.:7:13-cv-48-D (E.D.N.C.)
About the Rabon Law Firm, PLLC
The Rabon Law Firm is headed by attorney Chet Rabon, who has practiced
law in Charlotte, NC, for more than 24 years. The Rabon Law Firm
concentrates in whistleblower representation under the Federal False
Claims Act and companion state acts, as well as IRS and SEC (News - Alert)
Whistleblower fraud cases, and has numerous such cases currently under
investigation and in litigation throughout the United States.
About Berg & Androphy
Berg & Androphy, based in Houston, Texas, with offices in Washington,
D.C., New York, and Denver, has a nationwide qui
tam practice representing whistleblowers in many large fraud
cases, including health care, real estate, and defense contractor fraud
cases. The lawyers at Berg & Androphy are trial lawyers who are
currently litigating numerous qui tam
lawsuits without government intervention. Joel Androphy and partner
Sarah Frazier supervise a team of trial lawyers in this practice area.
About the Abbott Law Firm
The Abbott Law Firm, L.L.C., represents the legal needs of Alabama,
Georgia and Mississippi residents in personal injury and wrongful death
cases. From his law practice in Birmingham, Matt Abbott focuses on the
litigation areas of tractor-trailer accidents, automobile accidents,
defective product liability, and medical and pharmaceutical negligence.
Abbott also serves clients who need representation for workers'
compensation as well as those who have been victims of consumer fraud
and insurance bad faith.
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