Oracle Pays $200 Million in False Claims Act Settlement

When will Oracle learn? In October 2011, the software giant has agreed to pay $200 million to the U.S. government in response to allegations that the company was overcharging the federal government, specifically the General Services Administration (GSA), for products that were sold at a cheaper price to commercial organizations. Oracle was required by contract to disclose the discounts that it offered to other companies so that the government could determine whether fraud was being committed. Because they failed to do this, the government filed litigation under the False Claims Act against the company in May 2007. It has taken over four years for Oracle to finally settle over the allegations.

This is not the first time that the software company has been involved in a pricing dispute with the GSA. In 2006, Oracle paid close to $100 million to settle a case between PeopleSoft Inc. and the U.S. government. PeopleSoft was accused of not setting current, accurate, and complete prices of products for the GSA, which led government employees to make purchases at a much higher rate than was necessary. Because Oracle acquired PeopleSoft, they became liable for the company’s actions. In both cases, it had been cited that they were the largest payment ever obtained in a civil settlement under the False Claims Act. This must be a record that Oracle would like to have pushed under the rug.

What does it say about a company that continues to look for ways to defraud the government out of millions of unpaid tax dollars? To continuously commit the same illegal strategies should warrant an investigation rather than simply accepting the settlement and moving on. According to the Associated Press, the company saw an income of $1.84 billion in the quarter that ended in August. This leads me to believe that, although the company defends itself against the accusations of the government, they are more than able to settle the disputes without harming their bottom line. Perhaps an example ought to be made of the company that if they are caught continuing to defraud the United States government, then there will be serious repercussions to the company’s business standing. At a time when it is trying to recover as much tax revenue as possible, this could help show the average taxpayer that the government has the resolve to fix the financial problems of this country and to hold those perpetrators accountable for the crimes they have committed.

See also:
http://www.justice.gov/opa/pr/2006/October/06_odag_689.html
http://legaltimes.typepad.com/files/oracle-complaint.pdf
http://www.businesslawyerca.com/2011/10/oracle-pays-200-million-to-settle-contract-dispute.shtml
http://wraltechwire.com/business/tech_wire/news/blogpost/10161230/

Egan Young, Attorneys-at-Law, represents whistleblowers nationwide. For a free confidential consultation, please call Eric L. Young, Esquire at (215) 367-5151 or email to eyoung@eganyoung.com.