Federal prosecutors accuse a Spokane Valley manufacturer of systematically overbilling the U.S. military, potentially involving hundreds of contracts spanning more than five years.
The allegations against Monaco Enterprises were first raised in two whistleblower lawsuits filed in 2012. Government investigators conducted a multiyear inquiry of their own and decided to take over the case, finding that Monaco Enterprises billed the military for “services not actually provided and … concealed deceptive charging practices from the government with regards to travel costs,” according to a news release from the U.S. attorney’s office in Spokane.
Monaco Enterprises has been a federal contractor since the early 1970s, providing fire and security systems to U.S. military bases nationwide. The company is located at 14820 E. Sprague Ave.; in 2012 it employed 120 and had sales of $32 million.
Company CEO Gene Monaco didn’t return calls seeking comment Friday, nor did a Chicago lawyer who’s representing the company against the whistleblower cases.
Those cases were filed by three former Monaco employees, Jason Voss, Drake Osborn and Maximillian Salazar III.
The total dollar amount Monaco is alleged to have overcharged is substantial, lawyers for the whistleblowers said.
Ryan Best, Voss and Osborn’s lawyer, said, “It’s not a six-figure claim, it’s maybe a seven- or eight-figure claim.” In whistleblower cases, plaintiffs are eligible for triple damages, plus lawyer’s fees.
Voss and Osborn filed the first complaint in January 2012, alleging Monaco Enterprises overcharged the government for a project to upgrade a central dispatch computer system at Fort Irwin in Barstow, California. Under the contract, a field engineer was supposed to supervise the two employees’ work, but none was present, their lawsuit claimed. They said their supervisor at Monaco told them to “go play field engineer,” the lawsuit said.
Osborn and Voss later learned Monaco charged the federal government about $12,800 for a field engineer to supervise their work at Fort Irwin, the lawsuit said. It also alleged the company told employees to help deceive the federal government, charged the government for goods and services that weren’t received, such as training sessions, and charged high rates for services provided.
Osborn was fired after he “raised issues of fraud upon the United States to Monaco,” the lawsuit said. Voss quit rather than agree to be paid $10 per hour for the time spent traveling to work sites rather than his customary hourly pay, Best said.
The second whistleblower suit was filed in July 2012 by Salazar, the company’s former director of applications engineering. Salazar claimed he witnessed Monaco representatives “grossly inflating markups on products,” promising to meet deadlines that company officials knew were impossible, and charging the government per-diem travel costs in excess of the per-diems they paid employees.
Salazar was fired in October 2011; according to a separate suit alleging wrongful termination, he was let go after speaking up about the company’s contract practices. Monaco Enterprises filed court documents in that case alleging Salazar was fired for insubordination after being told he’d no longer head a department at the company.
The federal government, after investigating, decided to join the whistleblower actions based on two of the multiple allegations levied in those complaints.
That’s a relatively rare occurrence, according to a report by multinational law firm Gibson Dunn on cases filed under the federal False Claims Act. Of every 10 whistleblower cases filed, the government joins about two, the report said.
“When the government appears, it matters,” the report said.
William Gilbert, Salazar’s Moses Lake-based lawyer, agreed, saying most whistleblower cases never make the news because they’re filed under seal to give the government leverage in resolving them.
In the case of Monaco Enterprises, “the fact that it’s unsealed and moving forward says the government feels like it’s got a pretty darn good case,” Gilbert said.
The Gibson Dunn report said the government recovered $3.8 billion in settlements and judgments in 2013 under the False Claims Act.
Whistleblowers are entitled to 15 percent to 25 percent of any award, plus lawyers’ fees, if the government joins a case.
“Allegations of fraud committed against our military are vigorously investigated in this district,” U.S. Attorney Michael Ormsby said in a prepared statement. “We now look forward to ensuring that any money wrongfully taken from the military is paid back and all appropriate civil penalties are imposed.”
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