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Friday, July 25, 2008
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W.W. Grainger Pays United States $6 Million to Resolve False Claims Act Allegations

WASHINGTON — W.W. Grainger Inc. has paid the United States $6 million to settle allegations that it submitted false claims to United States government agencies, the Justice Department announced today. The company, based in Lake Forest, Ill., supplies facilities maintenance and other related products in North America.

The settlement resolves allegations that the company sold government agencies special order items at a markup greater than that allowed by Grainger’s contract with the General Services Administration (GSA). The settlement also resolves allegations that Grainger sold government agencies products from countries that do not have reciprocal trade agreements with the U.S., such as China and Taiwan. Grainger was required by its contract with the GSA and by the Trade Agreements Act to prevent such items from being offered for sale to U.S. government agencies.

"Federal contractors will be held accountable for their knowing violations of procurement regulations," said Gregory G. Katsas, Assistant Attorney General of the Department of Justice's Civil Division. "This settlement is an example of the Department’s determination to ensure that federal funds are protected from fraud and abuse."

The case was filed under the qui tam provisions of the False Claims Act by Brian M. Holbrook, a former Grainger employee, in the U.S. District Court for the Eastern District of Wisconsin in January 2006. Holbrook will receive $70,400 of the total recovery as his statutory award. Under the qui tam provisions of the False Claims Act, private parties can file an action on behalf of the United States and receive a portion of the proceeds of a settlement or judgment awarded against a defendant.

"The Civil Division of the U.S. Attorney’s Office is committed to actively pursuing allegations of fraud by companies against government agencies," said Steven M. Biskupic, U.S. Attorney for the Eastern District of Wisconsin in Milwaukee. "This settlement is another example of the Civil Division’s continuing efforts to investigate and prosecute affirmative civil matters."

The settlement resulted from an investigation by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Eastern District of Wisconsin and GSA’s Office of the Inspector General.