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Tuesday, November 4, 2008
(202) 514-2007
TDD (202) 514-1888

EGL Pays U.S. to Resolve False Claims & Kickback Allegations Related to Overseas Shipments for the Military

Houston Firm Had Previously Paid $4 Million for Allegedly Inflating Invoices

WASHINGTON – EGL Inc., operating as Eagle Global Logistics, has paid the United States $750,000 to settle allegations that the company, in violation of the False Claims Act and the Anti-Kickback Act, paid gratuities to employees of KBR, the prime contractor for the U.S. Army’s LOGCAP III contract for logistical support of military operations overseas, the Justice Department announced today.

EGL, a Houston-based company, had a subcontract with KBR to facilitate shipments of military cargo to Iraq and Kuwait. From March 2003 through March 2005, EGL provided various meals, sporting event tickets and other gifts to KBR employees responsible for administering the subcontract.

Previously, EGL paid the United States $4 million to settle False Claims Act allegations that the company inflated invoices for military cargo shipments to Iraq. EGL also paid the government $300,000 to settle allegations that the company’s local agent in Kuwait overcharged the military for rental charges on shipping containers to Iraq for the period from January through June of 2006.

The suit against EGL was filed under the qui tam provisions of the False Claims Act. Under the act, private persons may bring a suit on behalf of the United States alleging the submission of false claims to the government and may receive a portion of the proceeds of any recovery. David Vavra and Jerry Hyatt will receive $157,500 as their relators’ share.

"The Department of Justice is committed to vigorously pursuing all those who knowingly submit false claims with respect to military contracts, particularly in a time of war," said Gregory G. Katsas, Assistant Attorney General for the Civil Division.

The Defense Criminal Investigative Service and FBI participated in the investigation, which is ongoing.

"Procurement fraud is a serious violation which undermines the integrity of all those sworn to adhere to the rules and regulations governing contracting activity," said Rebecca A. Gregory, the U.S. Attorney for the Eastern District of Texas. "As such, we will continue to subject violators to both civil and criminal prosecution."

This case is being prosecuted as part of a National Procurement Fraud Initiative. In October 2006, the Deputy Attorney General announced the formation of a National Procurement Fraud Task Force designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs. The Procurement Fraud Task Force is chaired by the Assistant Attorney General for the Criminal Division and includes the Civil Division, the United States Attorneys’ Offices, the FBI, the U.S. Inspectors General community and a number of other federal law enforcement agencies. This case, as well as others brought by members of the task force, demonstrate the Department of Justice’s commitment to helping ensure the integrity of the government procurement process.