Spokane Valley-based Monaco Enterprises settles government-overbilling lawsuit for $5 million

Spokane Valley-based Monaco Enterprises Inc. will pay $5 million to settle a lawsuit alleging the company siphoned millions of dollars from the federal government by overbilling or billing for services it never provided.

Two whistleblower lawsuits were filed against the company in 2012 and the federal government joined the lawsuits. The four whistleblowers – Jason Voss, Drake Osborn, Lisa Osborn and Maximillian Salazar III – will receive $1 million from the settlement to split, according to court documents.

Monaco had been a federal contractor since the 1970s, providing fire and security systems to U.S. military bases. Court documents in the case accuse the company of overcharging for airfare and preparing false invoices to give to auditors. The company also said it manufactured video monitors when in reality it bought video monitors off the shelf, put a Monaco sticker on them and increased the price by at least 35 percent, court documents say.

William Gilbert, who represents Salazar, said he doesn’t know why the case was settled. “The litigation would have required depositions around the world and a lot of expense,” he said. “I’m sure that came into play.”

Gilbert said the strongest accusations were leveled against Roger Barno, Monaco’s chief operating officer and the son-in-law of company president and CEO Gene Monaco.

“I think he just got sucked into a bad place by the wrong people and wasn’t even aware of it until he was in way over his head,” Gilbert said of Gene Monaco.

Mark Troy, Barno’s attorney, said his client and Monaco Enterprises deny the accusations that were made.

“They’re just allegations,” he said. “The case settled as a compromise to avoid protracted litigation.”

Troy said Barno is expected to voluntarily resign from his position of chief operating officer and take another position in the company. The resignation is not part of the settlement agreement, he said.

The company continues to perform work for the federal government, Troy said. “The customers of MEI never raised any complaints about the quality or the value of the products they got from MEI,” he said.

Gilbert said his client, who was fired from his job as Monaco’s director of applications engineering after he raised concerns about billing practices, is pleased by the outcome.

“This isn’t going to continue,” Gilbert said of the company’s overbilling. “Max took this one from the beginning to fix the problem. I think we did some good work. We accomplished what we set out to accomplish.”