German citizen Michael Epp will receive a $16 million False Claims Act whistleblower award in a $146 million FCA settlement against Supreme Foodservice GmbH and Supreme Foodservice FZE announced today. The case is doubly significant in first affirming the trend of paying non-U.S. citizens cash rewards for blowing the whistle on frauds against the United States government and second as one of the largest government contract fraud cases to date.
Whistleblower Lawsuit: Overcharging and Other Government Contract Fraud
Michael Epp filed his False Claims Act case in the Eastern District of Pennsylvania under the FCA’s whistleblower provision allowing a private party to file a whistleblower lawsuit on behalf of the people of the United States and share in any monies recovered. Epp was a Supreme Commercial Division and Supply Chain director with inside knowledge of the complex set of alleged frauds.
The False Claims Act lawsuit alleged Supreme Foodservice and its subsidiaries knowingly overcharged for providing food and water to U.S. military groups and also pocketed discounts and rebates from Supreme Foodservice’s suppliers that were contractually required to be passed through. The complaint sought recovery of all monies fraudulently obtained and retained by Supreme Foodservice times three under the Act’s treble damages provision.
DOJ “Corporate Greed” - AG “War Profiteering” - Supreme Corporately Contrite
A Department of Justice statement quoted James Burch, a Deputy Inspector General for Investigations at the U.S. Department of Defense’s Office of the Inspector General as saying, “Today’s results are part of an ongoing effort by the Defense Criminal Investigative Service…to protect the integrity of the DoD’s acquisition process from personal and corporate greed.”
Expanding on James Burch’s comment, U.S. Army Criminal Investigation Command Major Procurement Fraud Unit’s director Frank Robey added, “Companies that do business with the government must comply with all of their obligations, and if they overcharge for supplying our men and women in uniform who are bravely serving this nation, they must be held accountable for their actions.”
The DOJ pointed out the civil settlements on the False Claims Act lawsuit were not an admission of liability or guilt, while the criminal cases resolved herein did include guilty pleas to criminal conduct. Acting Assistant Attorney General Joyce Banda characterized Supreme Foodservices’ conduct as “war profiteering” while Supreme issued a statement wherein its counsel delivered the expected “rigorous controls”, “compliance mechanisms”, and “re-earn trust” corporate prattle.
Supreme Foodservice Fraud Tab - $400 Million
And accountable Supreme Foodservice was indeed held as today’s settlement included not just the False Claims Act whistleblower lawsuit filed by Michael Epp, but also a criminal fraud case alleging a price inflation scheme using a straw man company as an intermediary with a resulting loss to the United States government of $48 million on an $8.8 billion dollar U.S. government contract. An additional handful of alleged tens of million in false billingscharges were included in the settlement which ultimately tallied to more than $400 million.