Kentucky Moving Companies Enter Into Consent Judgment To Resolve False Claims Allegations - Agree To Pay $264,826.52
Overcharged shipping costs associated with moving members of the United States Armed Forces
LOUISVILLE, Ky. – United States Attorney Russell M. Coleman today announced entering into a Consent Judgment between several Kentucky moving companies and the United States over allegations that the companies defrauded the United States out of monies by systematically overbilling the United States Army for shipping costs associated with deploying and/or relocating United States Service personnel. The Consent Judgment will resolve a lawsuit filed by the United States in the Western District of Kentucky styled United States of America v. Lynn Moving and Storage, Inc. et al., Civil Action No. 3:18-cv-000190-CRS (WDKY).
Specifically, Lynn Moving and Storage, Inc., Shadowens Moving and Storage Company, Inc., both of Brooks, Kentucky, and E-Town Moving and storage, Inc., located in Elizabethtown, Kentucky, along with their individual owners, admitted to violating the False Claims Act and agreed to pay $264,826.52 in civil penalties and damages.
Having the same ownership and management, as alleged by the United States, the defendants engaged in a company-wide conspiracy between January 2009, and December 2014, to defraud the United States government by causing false, inflated weight tickets to be created in order to increase the weight of the shipments and the amount of payment to the companies by the military. The military’s Defense Personal Property Program (DP3) facilitates the shipment of service members’ household goods, unaccompanied baggage, privately owned vehicles, and other personal belongings. The program allows moving companies to bill for services that ties the freight rate of payment to the pounds moved and distance traveled.
Defendants inflated the net weight of numerous shipments by inflating the gross weights and/or deflating the tare weight (weight of the vehicle). Company employees accomplished this by adding fuel between the recording of the tare and gross weighs, adding personnel and pallets of paper when recording the gross weight and/or deliberately positioning the truck so that it was not fully on the scale, and removing equipment and packing materials when recording the tare weight.
Company owners routinely reminded crew members to engage in these practices, threatening termination should they refuse to do so.
In addition to the civil damages, owners William Kenneth Montgomery and Lonnie Curl were charged in United States District Court by Criminal Information, on November 28, 2017, with a single count of False Claims Conspiracy. If convicted at trial the defendants could be sentenced to no more than ten years in prison and fined up to $250,000. Montgomery and Curl are scheduled for a change of plea before Senior Judge Charles R. Simpson III, on January 25, 2018, in Louisville.
This case was investigated by the Department of Defense, Defense Criminal Investigative Service with assistance from the U.S. Army’s Criminal Investigation Command, Major Procurement Fraud Unit and is being prosecuted by Assistant United States Attorneys Benjamin S. Schecter and Joshua D. Judd.