Hayward Company To Pay $250,000 To Settle False Claims Act Allegations That It Provided Unapproved Network Communications Equipment For BART Rail Project

SAN FRANCISCO – HSQ Technology, A Corporation, a Hayward-based subsidiary of RailWorks Corporation, has agreed to pay $250,000 in penalties to resolve allegations that it knowingly violated the False Claims Act by submitting false claims for payment for network communications equipment it provided for the Santa Clara Valley Transportation Authority’s (VTA) Silicon Valley Berryessa Extension Project (Project) for the Bay Area Rapid Transit rail system, announced United States Attorney Ismail J. Ramsey and U.S. Department of Transportation Office of the Inspector General (DOT OIG) Western Region Special Agent in Charge Cory LeGars. The Project was partially funded by a federal grant provided by the Federal Transit Administration, an operating administration of the U.S. Department of Transportation.

As part of the settlement, HSQ acknowledged and accepted responsibility for the following facts:

• In August 2012, HSQ entered into a subcontract to deliver a communications system for the Project. In carrying out its work on the Project, HSQ purchased and installed network communications equipment.

• The subcontract required HSQ to procure network communications equipment from authorized distributors except when specifically approved by VTA to do otherwise. Yet, HSQ purchased some of the network communications equipment through internet sites from unauthorized distributors and without approval by VTA to do so.

• Between July 2015 and August 2016, HSQ submitted eight claims for payment for purchases of network communications equipment for which HSQ lacked documentation confirming that the equipment came from an authorized distributor.

• Each of these claims for payment sought the payment of money funded in part by a DOT grant.

“Contractors or subcontractors that receive federal funds must be truthful about the goods they are supplying and whether they meet contract requirements,” said U.S. Attorney Ramsey. “This Office will continue using the False Claims Act to address fraudulent conduct by government contractors, subcontractors, and suppliers.”

“Government contractors are expected to adhere to the contractual obligations to which they agreed and for which they have been paid,” said Special Agent-in-Charge LeGars. “The settlement announced today demonstrates our commitment to working with our prosecutorial colleagues to protect the integrity of Federal-aid programs.”

Assistant U.S. Attorney Emmet P. Ong handled this matter for the government, with assistance from Jacqueline Hollar and Garland He. The investigation and settlement resulted from a coordinated effort by the U.S. Attorney’s Office for the Northern District of California and DOT OIG.

The claims resolved by the settlement are allegations only, and there has been no determination of liability.

The investigation and resolution of this matter illustrate the government’s emphasis on combating fraud in federal grants. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to DOT OIG at https://www.oig.dot.gov/report-fraud-hotline.