Qui Tam

EMC comes under fire from DOJ in Qui tam suit

By Brian F. LaBovick

The Department of Justice has joined the qui tam lawsuit against EMC Corp for failing to disclose its commercial pricing practices during negotiation of its General Services Administration (GSA) contracts. The lawsuit also alleges that EMC provided improper payments and other things of value to Systems Integrators and other Alliance Partners on contracts with government agencies. 
 

This qui tam suit was originally filed in Arkansas by relators Norman Rille and Neal Roberts. If Mr. Rille and Mr. Roberts allegations against EMC of submitting false claims to the United States for information technology (IT) hardware and services on numerous government contracts from the late 1990's to the present are true, this could be an expensive qui tam payout. In their defense, According to an article by Jason Miller on Federal News Radio.com, EMC Corporation spokesman, Patrick Cooley states: "The matters at issue in this case are historical in nature; some of the allegations relate to events nearly 10 years old.  According to Acting Assistant Attorney General Michael F. Hertz  the government joined the suit "as a part of the Department of Justice's continuing efforts to ensure the integrity of the procurement process." Therefore, one would believe the government wants to crackdown on its procurement process.

This raises the question, Should we give a company a free pass, if it defrauds the government for several years and then discontinues the misleading practices?  Should the company not be held responsible for these corrupt practices if they knowingly and deceptively misled the government in the procurement of contracts?

Mr. Cooley goes on to say "We will vigorously defend this case and the many years EMC has spent serving the U.S. Government. And, we will continue to provide mission-critical information infrastructure solutions to numerous branches of the U.S. Government as this matter proceeds."

The EMC shares were down 36 cents yesterday in light of the DOJ lawsuit.  Since EMC has not been charged with any wrongdoings and these are only allegations,  the DOJ investigations will continue. The public will  have to wait and see if EMC overcharged the government with deceptive pricing structures, stemming back from the 1990s. Will  investors will keep the faith in EMC? Time will tell.....

Full post as published by Whistleblower Law Blog on March 03, 2009 (boomark / email).