A DOJ Intervention, Settlement and Investigation in the Week Before Thanksgiving

There were a few interesting news items coming out of the Justice Department that we didn’t have more time to cover in more depth last week, so we thought that we would recap them briefly here as we start the short Thanksgiving week.

US Intervenes in Whistleblower Lawsuit Alleging Contractor Overbills Navy Millions

The United States has joined a whistleblower lawsuit filed in 2010 alleging that Inchcape Shipping Services, which provides ship husbanding services to Navy ships while docked in ports in certain locations around the world, inflated the quantity of goods and services provided and billed at rates in excess of what was permitted by the contract.

The United States has been in settlement talks with the company for the past two years but the discussions broke down.  The False Claims Act permits the government to investigate complaints brought by whistleblowers prior to making the decision whether to intervene and prosecute it themselves or to allow the relator and his or her attorney to proceed on behalf of the government.  In the case where the U.S. Government intervenes, the relator is entitled to between 15 and 25 percent of the recovery.

University of Florida Agrees to $20 Million Settlement over Federal Grants

The Justice Department announced a $19.875 million settlement with the U.S. concerning federal grants from the U.S. Department of Health and Human Services. The federal grant dollars were allegedly spent on administrative costs for equipment that should not have been charged to the contracts and salaries where there was insufficient documentation concerning the employee’s level of effort on the grants. The DOJ announcement did not credit a whistleblower with the lawsuit.

Justice Dept. Investigating Criminal Prosecutions Against Banks Over Mortgages

The Department of Justice is considering bringing criminal charges against employees of the Royal Bank of Scotland and JPMorgan Chase related to their sales of mortgage backed securities during and prior to the 2008 financial crisis. For years, critics have blamed the U.S. Government for failing to hold executives responsible for their wrongdoing in the mortgage meltdown.

Over the past few months, the DOJ has been reexamining the issue. In Eric Holder’s final months as Attorney General, he gave federal prosecutors a 90-day clock to consider bringing criminal prosecutions against Wall Street executives. After Loretta Lynch’s appointment, the DOJ issued a policy memorandum encouraging U.S. Attorneys to examine their cases for conduct where individuals should be held accountable. Prosecutors are expected to have another year or two to bring cases related to the financial crisis before the ten year statute of limitations runs.

Photo Credit.