The United States government is not only the largest purchaser of goods in service in the country, it is also involved in regulating and facilitating international trade, collecting import duties, enforcing U.S. regulations, including trade, customs, and immigration.The federal government manages the country’s energy resources, including leasing government land in exchange for royalty payments for energy resources discovered and produced.The government also funds research to further the country’s interests in renewable energy, advancements in science, protection and development of employment, education, health and the final frontier, outer space.The government also is responsible for collecting taxes.The federal government can be defrauded in numerous ways and these frauds have been the basis for False Claim Act liability.
The following are some of the common types of government fraud other than government contractor, defense and health care that may also be the basis for FCA liability:
When companies seek to import goods into the U.S. they typically have to pay a government imposed charged called a duty. Companies that engage in conduct designed to avoid paying custom duties and charges, is coming a fraud against the federal government. The False Claims Act now presents a new approach to combating customs violations that are difficult for federal customs agents to catch. Common customs fraud cases that have been the subject of False Claims Act liability all have in common is a scheme to prevent or reduce the amount of customs duties paid to the federal government.
The federal government, and to a lesser extent state governments, spend billions of dollars each year to purchase, develop, manage and transport energy resources in the United States. With billions of dollars at stake, one can imagine the many ways that private companies defraud the state and federal governments out of money they are owed under their contracts for royalties, service and research grants.
Some companies have been accused of misrepresenting or falsifying how much they owe the government in royalties to increase their own profit margins under these already lucrative lease arrangements. When private companies who agree to pay royalties in exchange for drilling and mining rights fail to pay the government what it is due, it can be a fraud on the government because the False Claims Act specifically identifies liability for any person who “knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.” (31 USC § 3729(a)(1)(G))
The False Claims Act has proven to be a powerful tool for recovering money for the federal government lost to fraud. The success of the whistleblower law is due, in large part, to the ability of private citizens to bring qui tam actions exposing those who drain the government’s resources. Taking from the federal coffers is not the only way to defraud the government, however. Holding back, or neglecting to pay amounts due to the government, may also lead to liability. These “reverse false claims” are just another fraud on the government.
Research grant fraud is a common type of whistleblower qui tam claim. These types of fraud typically include misrepresenting facts in the application in order to secure the grant, misrepresenting research results and data; over-charging for costs and other expenses, including wages and time reported, using grant money for work outside the grant terms and misrepresenting conflicts of interest by the investigators.