US GOVT PAYS WHISTLE-BLOWER $70M AFTER A QUARTER-BILLION DOLLAR FRAUD

US Whistle-blowers are entitled to 15 to 25 per cent of financial awards if federal prosecutors take the case and up to 30 per cent of, they do not.

• In July, the Justice Department, which investigated Sarah Feinberg’s complaint, announced that Booz Allen had agreed to pay $377 million — $209 million in restitution to the federal government and the rest in penalties — to settle the matter, one of the largest awards in a government procurement case in history.
• Booz Allen holds thousands of federal contracts, offering consulting and technical support in defence, cybersecurity, analytics and engineering to the Pentagon, U.S. intelligence divisions and other agencies. https://www.boozallen.com/
• Sarah Feinberg was rewarded $70 million for making the case known to authorities.

HERE ARE SOME EXTRACTS OF THE REPORTED STORY

A few months into a new finance job, Sarah Feinberg was stunned when a senior manager with a Northern Virginia-based defines contractor called federal auditors “too stupid” to notice overcharging, according to a federal complaint she filed.

Feinberg said she had warned the manager that the company, Booz Allen Hamilton, was losing tens of millions of dollars and, in her view, billing more than it should on U.S. government contracts to cover the losses.

During the ensuing nine months, she repeatedly raised concerns with senior executives, including internal compliance officials and the chief financial officer, according to the 37-page civil complaint she filed against Booz Allen in 2016 under the federal False Claims Act.

Executives have said in statements that they deny wrongdoing by the publicly traded company, which has 32,000 employees and an annual revenue this year of $9.3 billion. The Justice Department closed a criminal investigation in 2021 without charges, and the civil settlement did not require Booz Allen to admit liability.

Company officials told investors on an earnings call in late July that they settled the case to avoid protracted litigation. Horacio Rozanski, the president and chief executive, said the company “acted lawfully and responsibly.”

In a statement to The Washington Post, Booz Allen spokeswoman Jessica Klenk said that

• When Feinberg raised her concerns, the company “promptly facilitated meetings for her with third-party experts as well as its financial, compliance and accounting teams to examine her concerns.
• Over the next year, these experts repeatedly affirmed that the company’s practices were lawful and compliant.”
• The company “has always believed it acted lawfully and responsibly, guided by its strong culture of ethics and accountability, and its position has been consistently grounded in facts,”  

Feinberg said in her complaint and in an interview that she discovered within months that Booz Allen was losing millions of dollars on its commercial sector, which included international work, and, she contends, was using a deceptive tactic to keep those operations solvent.

Feinberg’s lawsuit presented a picture of a company eager to satisfy investors with a diversified growth strategy.

In 2008, Booz Allen had separated its commercial operations from its government consulting business ahead of an initial public offering two years later.

By 2011, the company moved to reestablish the commercial business. It wasn’t easy, according to Feinberg’s lawsuit, which cited losses of tens of millions of dollars annually.

To cover the deficits, she alleged, Booz Allen was lumping government and commercial work together in combined “costs centers” or “cost bands” — and then billing the Pentagon higher amounts than was permitted under federal compliance rules.

Feinberg said that in late October 2015, she emailed her boss, R. Timothy Lawrence, then a vice president for financial planning and analysis, calling attention to a “major legal … compliance issue.”

Lawrence, according to the lawsuit, replied that he believed the company was in financial compliance. He suggested she meet with two senior managers, including Warren Kohm, then the company’s director of financial analytics and strategy.

It was Kohm, Feinberg alleged in the lawsuit, who told her three days later that federal auditors were “too stupid” to figure out what Booz was doing. He called the compliance rules ambiguous and said the auditors would not be motivated to collect all of the overcharges even if some billing was not permitted, according to Feinberg’s complaint.

Kohm, who left Booz Allen in February 2016, did not respond to messages seeking comment. Lawrence, who still works at the company, was not available for comment, a company official said.

According to her lawsuit, Feinberg raised the issue for months with senior executives. Among them were Lloyd Howell Jr., who was chief financial officer from 2016 to 2022, and one of his deputies, Matthew Calderone, who succeeded Howell as finance chief.

Booz Allen executives said in the statement to The Post that they took Feinberg’s views seriously, bringing in legal and accounting experts from outside the company, who assured them that their accounting practices were within federal guidelines.

Feinberg’s complaint cast the company’s leadership as defensive. Calderone, she said, questioned why she put her concerns in writing after she briefed him in a PowerPoint presentation in June 2016, according to her lawsuit. She says he also suggested she not share the written material in an upcoming meeting with Howell.

In another instance, Feinberg said in her legal complaint, a manager asked her to alter language in a PowerPoint slide, an action she viewed as an attempt to soften her criticism.

Feinberg said in the interview.

• “The thing that frustrated me was that so much focus was on avoiding putting anything in writing, rather than on fixing the problem,”

Booz Allen officials

• Declined to discuss the specifics of Feinberg’s allegations that managers discouraged her from putting her concerns in writing.
• They pointed to the company’s values statement, which instructs employees to “do right” and “maintain conviction no matter the circumstances.”

On July 22, 2016, Feinberg and several colleagues met with Howell, who told them he would devote no more resources to the issue, according to the complaint.

Less than three weeks later, Feinberg resigned in protest. Howell, who retired from Booz last year after a 34-year career, was named executive director of the NFL Players Association in June. He declined to comment for this story, according to a representative.

Feinberg said she kept documentation, including PowerPoint presentations and email records, in case federal auditors came calling. Booz Allen lawyers sent letters asking her to return or destroy all proprietary information and threatening criminal or civil action if she failed to comply.

That’s when she hired a lawyer, and her husband encouraged her to inform federal authorities.

She said in the interview.

• “I loved Booz,”
• “The idea that all the people I respected were doing the wrong thing was devastating to me. I did not want to further dwell on that.
• But my husband said, ‘This can’t be about you. You have to do the right thing.’”

A month after resigning, she filed the legal complaint. In qui tam cases, the Justice Department can elect to intervene, as it did in Feinberg’s case, but legal complaints can move forward without federal help.

Feinberg said Justice Department prosecutors should have been seeking up to $1 billion.

Thomas M. Greene, a Boston-based attorney. He represented Michael Bawduniak, whose 2012 qui tam complaint against Biogen, a pharmaceutical company, resulted in a $900 million settlement last year, SAID:-

• “If the False Claims Act is going to deter this type of conduct … the settlement number has to be high enough,”

Denise M. Barnes, a former federal prosecutor who worked on fraud cases but was not involved in the Booz Allen case, called the $377 million settlement significant and said

• It signaled to the public that the company was implicitly conceding liability.
• “It’s almost $400 million — if that doesn’t dissuade you [from fraud], what would?”  

Feinberg recalls the Booz Allen manager who allegedly told her the government would never get all its money back. she said in the interview.

• “The thing that’s really demoralizing about it is that that’s what Booz knew would happen at the beginning,”
• “That’s kind of how it played out.”

For Feinberg, the personal award is life-changing. After paying her lawyers, she cleared a pretax amount of $42 million — up to $12 million of which she intends to put into a charitable trust.

She said some funds will go to supporting her church, and she is interested in investing in underserved communities.

Source and full article is here

https://www.washingtonpost.com/national-security/2023/08/26/defense-contractor-booz-allen-hamilton/