Government Contracts Monitor

When Employees Are Involved, Contractor Fraud Is Harder to Hide

March 22, 2018

By: Lindsay Simmons

In Poor Richard’s Almanac, Ben Franklin famously advised, “Three may keep a secret, if two of them are dead.” As evidenced by a recently announced settlement of civil False Claims Act allegations by a whistleblower, this is particularly good counsel for government contractors. When employees and subcontractors know about questionable or fraudulent practices in connection with contract performance, they have abundant reason to speak up and destroy whatever secrecy the contractor may have been counting on—especially once their relationship with the contractor sours.

The settlement involved Beam Bros. Trucking Inc. (BBT) and its principals, Gerald Beam and Garland Beam, who agreed to pay $1,025,000 to resolve allegations under the False Claims Act that BBT overcharged the U.S. Postal Service (USPS) on contracts to transport mail. In connection with some of its contracts with trucking companies to transport mail throughout the United States, USPS provides trucking contractors with credit cards, known as Voyager Cards, to pay for fuel.  BBT had such a contract and its drivers had Voyager Cards.

According to the allegations of BBT’s former employee, Bobby Blizzard, however, BBT misused Voyager Cards to purchase fuel on contracts that did not allow for their use, resulting in inflated charges in violation of the False Claims Act. The settlement resolves those allegations. And because the whistleblower provision of the False Claims Act allows private parties like Mr. Blizzard to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery, Mr. Blizzard stands to profit handsomely from breaking his silence. His share of the recovery has yet to be determined, but the prospect of such an outcome was clearly sufficient motivation for him to expose the secret.

Of course, the claims resolved by this settlement are allegations only, and there has been no determination of liability. But there is no question that contractors need to be vigilant in their compliance efforts so they can uncover problematic practices, disclose what they find, and figure out how to keep it from happening again. If they don’t, the secret is almost certain to get out sooner or later.