Over the past several years the federal government has increased efforts
to curb abuses in contracting activity. A main goal of this heightened
oversight is to identify and prevent fraud. Contracting fraud is more
than just the multi-million dollar schemes we read about in the news involving
large corporations. Small companies that perform basic functions such
as paper shredding or janitorial services can also engage in fraudulent
conduct. Even though fraud schemes range in complexity, the underlying
goal is often the same: to obtain an unfair or dishonest advantage at
the government’s expense.
Here are some common types of government contracting fraud:
Bid Rigging: Contractors misrepresent that they are competing against each other when
in fact they agree to cooperate on a winning bid to increase job profit.
Conflict of Interest: A government contracting official or someone else with oversight authority
has an undisclosed financial interest in a contractor or vendor, resulting
in an improper contract award or inflated costs.
Kickbacks: A contractor misrepresents the cost of performing work by secretly paying
a fee for being awarded the contract.
Materials & Time Overcharging: A contractor misrepresents the amount of materials or employee labor
used on a job in order to be paid for more material than was actually
used or to artificially charge for more work hours.
Bribery: A contractor compensates a government official in exchange for obtaining
contracts or permitting overcharges.
To uncover these schemes, governmental agencies frequently conduct audits
and investigations. Governmental organizations also encourage their employees
to be on the lookout for warning signs that may be indicators of fraud.
If that wasn’t enough, federal law compensates people who come forward
with information about possible fraud being perpetrated by their own employer.
However, the discovery of “red flags” does not always mean
a contractor is lying, stealing, or cheating. Sometimes there are alternative
explanations for alleged unlawful conduct. For instance, misinterpretation
of a contract or a change in a particular industry standard can cause
an unwarranted accusation. A fraud conviction can have criminal, civil,
and administrative ramifications. Criminal penalties alone can result
in up to 10 years’ imprisonment and a $1 million fine.
To avoid unnecessary exposure to criminal fraud statutes, it is important
to work with the right criminal defense attorney. Berry Law Firm has extensive
experience developing aggressive strategies to safeguard clients from
government investigations and prosecutions. Please contact us if you or
your business has been accused of contracting fraud.