North American Power Group Ltd. (NAPG) and its owner and president, Michael Ruffatto, have agreed to pay the United States $14.4 million to resolve allegations that they violated the False Claims Act by submitting fraudulent claims under a cooperative agreement with the Department of Energy (DOE) National Energy and Technology Laboratory (NETL), located in Pittsburgh, Pennsylvania, the Department of Justice announced today.
Based in Greenwood Village, Colorado, NAPG develops, owns, operates and manages energy-related projects. On December 8, 2009, NETL awarded a $14 million cooperative agreement to NAPG for a Carbon Site Characterization Project to collect and analyze data, as well as to design and implement carbon sequestration wells at the Two Elk Energy Park (TEEP) located in Campbell County, Wyoming. Between December 2009 and January 2012, Ruffatto served as NAPG’s representative for the cooperative agreement and was responsible for authorizing the submission of the company’s invoices to NETL for payment. During that time, NAPG was paid approximately $5.7 million by NETL for costs purportedly related to the project. In fact, however, none of the claimed costs were for work associated with the project and instead reflected expenses incurred by Ruffatto to pay legal fees, car payments, jewelry, international travel and other personal items unrelated to the scope of work under the cooperative agreement. The DOE suspended the cooperative agreement in January 2012 after discovering the fraudulent claims.
“The money allocated by Congress for the National Energy and Technology Laboratory is designed to fund the important mission carried out by the laboratory, not to be diverted for personal use,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “This investigation and its resolution demonstrate that the Justice Department will work with its agency partners to ensure that public funds are used for their intended purposes.”
“This $14.4 million False Claims Act settlement is the largest NETL settlement in the history of western Pennsylvania,” said U.S. Attorney Scott W. Brady of the Western District of Pennsylvania. “Protecting taxpayer funds is an important priority of our office and this settlement, along with yesterday’s sentence, demonstrate we will use every tool in our arsenal to prevent and deter wrongful expenditures of government monies.”
“The Office of Inspector General is committed to ensuring the integrity of Department subcontractors by detecting and holding accountable those who choose to abuse their positions of trust while attempting to hide behind sophisticated fraud schemes,” said Acting Inspector General April G. Stephenson for the Department of Energy’s Office of Inspector General. “We appreciate the efforts of the DOJ in pursuing this important matter resulting in an 18 month sentence of incarceration, a $50,000 fine and a $14.4 million civil settlement for Mr. Ruffatto and NAPG. We will continue to work with the DOJ to aggressively investigate those who seek to defraud Department programs.”
On October 21, 2016, Ruffatto entered a plea of guilty in the U.S. District Court for the Western District of Pennsylvania to a felony count of intentional submission of false claims under 18 U.S.C. § 287. He was sentenced on June 27, 2018, to 18 months in prison, three years supervised release, a $50,000 fine and $2 million dollars more in restitution.
This settlement was the result of a joint investigation conducted by the DOE Office of Inspector General, the Civil Division of the Department of Justice and the U.S. Attorney’s Office for the Western District of Pennsylvania.