On December 22, the Department of Justice announced that it had reached a global resolution with Department of Defense housing contractor Balfour Beatty Communities LLC (BBC) resolving claims that BBC had defrauded the United States armed forces.  BBC operated privatized military housing communities on dozens of bases controlled by the U.S. Navy, U.S. Air Force, and U.S. Army.  BBC was compensated for managing and maintaining the military housing on the bases – receiving compensation from both the service branches and servicemembers themselves.

BBC was also entitled to performance incentives if it submitted proof that it had satisfied certain performance objectives related to, among other things, maintenance of the housing communities and resident satisfaction.  In order to ensure that BBC obtained those incentive payments, BBC allegedly falsified information submitted to the service branches to falsely reflect that BBC had met the performance objectives. BBC employees allegedly manipulated data in property management software and destroyed resident comment cards to inflate metrics that were submitted to the service branches. In reality, BBC was not properly maintaining the housing facilities and failed to make necessary repairs to servicemembers’ units.

BBC pled guilty to criminal charges of fraud and was sentenced to pay $33.6 million in criminal fines and $31.8 million in restitution.  BBC was also sentenced to three years of probation and is required to engage a compliance manager during that probationary period.  DOJ stated that among the considerations in the criminal resolution was the pervasiveness and seriousness of the misconduct and the lack of a fully implemented and adequate compliance program.  BBC also agreed to pay $35.2 million to resolve civil False Claims Act liability.

The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with white-collar criminal investigations, False Claims Act investigations, and qui tam litigation.  If you need assistance with such a matter, please contact us today.