Construction Kickbacks at Ft. Bliss Lead to False Claims Act Settlement

Money Kickback

In May, the United States Department of Justice (DOJ) announced a settlement agreement with Kikiktagruk Inupiat Corporation (“KIC”), an Alaska Native Corporation, and KIC Development LLC, which is a subsidiary of KIC, to resolve allegations that KIC Development had paid kickbacks to officials to win contracts for construction work at the Fort Bliss military installation located in El Paso.

Whistleblower Filed Suit in 2010

The entire matter started on January 14, 2010, when Susann Campbell filed a lawsuit in the U.S. District Court for the Western District of Texas. In that lawsuit, Campbell alleged that KICD, through several of its employees, including Anthony Acri, Christine Hayes and Earl Hall, paid illegal kickbacks and bribes to James G. Tuskan, a contract employee with both the U.S. Army Corp of Engineers and KIC Development. The complaint alleged that Tuskan used his position with the U.S. Army Corp of Engineers to steer a number of no-bid government contracts issued out of Ft. Bliss to KIC Development.

According to the initial filing, Tuskan also allegedly provided KIC Development with confidential government information, as a way to ensure that KIC Development would win the contracts. The four KIC employees,  Tuskan, Acri, Hayes, and Hall, who were involved in the scheme individually pleaded guilty to criminal charges in 2016. Since the lawsuit was filed and the investigation conducted, KIC Development has filed articles of dissolution in Alaska.

Investigation Finds Kickbacks and Diversions

However, the US Attorney’s Office then resumed its civil investigation. The matter was investigated by the Federal Bureau of Investigations, the Defense Criminal Investigative Service and the Army Criminal Investigation Command, Major Procurement Fraud Unit, and Small Business Administration Office of Inspector General. It was that investigation that led to the May 1, 2019 settlement announcement of $2.025 million. The civil settlement was reached by Assistant United States Attorney Eduardo R. Castillo.

Because KIC and its subsidiaries have been designated small business concerns, they qualify for Small Business Administration sole-source, no-bid government contracts. The settlement agreement reached with the Justice Department resolves allegations that the company obtained diverted no-bid government contracts for construction work at the Ft. Bliss military installation in El Paso, Texas.

As part of the settlement announcement, DOJ noted that fraud in government contracting takes many forms. Officials noted that kickbacks manage to erode trust in the government contracting system. It is always necessary that the federal government do its best to ensure that the awarding of a government contract is independently made, with no influence resulting from illegal kickbacks or special arrangements. The False Claims Act is easily one of the most important tools in law enforcement’s arsenal. While federal investigations are ongoing and often lead to successful indictments, the fact of the matter is, the entire system depends on the work of vigilant citizens who know about the fraud and are willing to tell their story by filing a lawsuit, with the help of a knowledgeable and experienced False Claims Act attorney.

Why It’s Often Good to Be a Whistleblower

Filing suit under the False Claims Act can be very lucrative for the filer, as they are entitled to a reward based on the amount of taxpayer money recovered by the government. While her exact share of the settlement has not yet been determined, as a whistleblower for the federal government, Susann Campbell, who was an employee of KIC Development, will be entitled to between 15 and 30 percent of the $2.025 million the government recovers from the lawsuit, which could come to more than a half million dollars. Even if money is not your motivation for coming forth as a whistleblower and filing suit, a reward that size could very well serve as an incentive to others in a position to see contractor fraud to come forward and report any possible fraud they see perpetrated against taxpayers at any level.

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