November 26, 10

NEWS / Philadelphia-based CDI Corporation Settles False Claims Act Allegations

Allegedly Mischarged Labor Costs Under Military Aircraft Engine Contracts

WASHINGTON -- CDI Corporation has agreed to pay the United States $1.95 million to resolve allegations in a lawsuit brought under the False Claims Act that CDI wrongfully charged labor costs to work orders under military aircraft engine contracts for The General Electric Company (GE), the Justice Department announced today. According to the government’s allegations, the work for which the military was charged was not actually performed.

CDI is headquartered in Philadelphia. The CDI regional office, located in Sharonville, Ohio, was the subject of the False Claims Act allegations. CDI is a supplier of engineering services under time and material subcontracts with GE Transportation and Aviation divisions for engineering work on commercial and military projects.

The civil investigation examined CDI’s labor and billing records from Jan. 15, 2001, to Dec. 31, 2006. The civil investigation found that during this time period, CDI directed the mischarging of employees’ labor costs to purchase orders that would be reimbursed by the U.S. military. In fact, the employees did not perform the work billed to those military projects. CDI entered these mischarged labor costs in increments of 0.5 hours or less to evade detection.

"Those who contract with the U.S. military must do so fairly and honestly," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "Taxpayers should not foot the bill when government contractors charge for work that was not done."

The lawsuit was filed in the federal district court in Cincinnati by Vicki Lanich, a former CDI employee. Under the qui tam or whistleblower provisions of the False Claims Act, a private party can file an action on behalf of the United States and receive a portion of the recovery. Under the settlement, the whistleblower will receive $360,750.

This civil investigation was conducted by special agents of the U.S. Air Force Office of Special Investigations at Wright-Patterson Air Force Base near Dayton, Ohio. Audit support was provided by the Defense Contract Audit Agency, Mid-Atlantic Region. The settlement was negotiated by the Commercial Litigation Branch of the Justice Department’s Civil Division.

http://www.justice.gov/opa/pr/2010/November/10-civ-1348.html

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