Alabama Construction Company to Pay $1.5 Million for Government Contract Fraud

The Department of Justice announced on Monday that Alabama construction company Caddell Construction has agreed to pay $1.5 million to settle allegations that it filed false claims federal government in connection with construction contracts with the Army Corps of Engineers. Two Caddell executives—the former president and director of business development—are facing federal criminal charges related to the same false claims. The company has agreed to cooperate with the government’s criminal prosecution as part of its settlement.

According to the government, Caddell Construction entered performed work for the Army Corps of Engineers from 2003 and 2005 on contracts to build military barracks at Fort Bragg, North Carolina and Fort Campbell, Kentucky. Included in the contracts were agreements to subcontract work and provide mentoring to a Native American-owned company, Mountain Chief Management Services. The subcontracting provision was part of the Indian Incentives Program in Department of Defense. Under the program, contractors who subcontract work out to Native American-owned business would receive financial incentives. Likewise the mentoring agreement was through the DoD’s Mentor-Protégé Program, which reimburses contracting companies who provide mentoring to small disadvantaged businesses.

During the years Caddell had contracts with the Corps, Caddell submitted claims for payment to the government indicating that was providing mentoring to Mountain Chief Management Services, a small Native American-owned business. But investigation into the claims revealed that Mountain Chief was a “pass-through entity” that did not actually work on the Corps contracts and did not receive the mentoring services. Instead, the relationship between Caddell and Mountain Chief was a sham intended to take advantage of the financial incentives offered by the Corps.

False billing and government contract fraud take many forms, and as new government programs and services are created, new opportunities for fraud multiply. Defense fraud and construction fraud are two major areas of false claims in which the U.S. government has lost enormous amounts of money to unscrupulous contractors. Because of the vast scale of many defense and public works projects, the government spends vast sums on private contractors in these areas. In addition to tradition false billing schemes—for example, inflating prices of supplies and materials, billing for services not provided, or providing substandard goods or services—programs like the DoD’s Mentor–Protégé and Indian Incentives Programs provide dishonest contractors with new possibilities to illegally profit at the expense of U.S. taxpayers.

When companies do not meet their obligations under federal contracts, disguise their non-compliance, and then bill the government, those companies submit false claims and can be held responsible. The False Claims Act imposes large penalties on individuals and companies that file false claims to the federal government. The FCA also provides generous awards—up to 30% of any amount recovered—to whistleblowers who step forward with evidence of fraud and false claims.

If you have knowledge of government contract fraud or false claims, our experienced whistleblower attorneys may be able to help. We can confidentially evaluate the information you have discovered and, if there is convincing evidence that false claims have been made, design a successful strategy to bring a whistleblower lawsuit against the violators on behalf of the government.


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