The Justice Department announced that defense contractors Supreme Foodservice GmbH, Supreme Foodservice FZE, and their subsidiaries (collectively “Supreme”) have agreed to settle criminal and civil allegations by a whistleblower in a qui tam lawsuit that the Supreme entities violated the False Claims Act. According to the Department of Justice, the allegations involved contracts to provide food and water to U.S. military member serving in Afghanistan and to provide fuel and transport other cargo to troops in Afghanistan.
According to the Justice Department, the criminal claims involved a contract between Supreme and the Defense Logistics Agency – Troop Support to provide food and water for U.S. troops serving in Afghanistan. The government alleged that Supreme implemented a scheme to knowingly overcharge the U.S. for fresh fruits and vegetables and bottled water. The government alleges that Supreme used a United Arab Emirates company, Jamal Ahli Foods Co., LLC, as an intermediary to obscure the inflated prices being charged to the government. The government claims the U.S. was overcharged by approximately $48 million between July 2005 and April 2009. In settlement of the criminal allegations, Supreme pleaded guilty to fraud against the U.S., conspiracy to commit fraud, and wire fraud. Supreme agreed to pay $48 million in restitution, $10 million in criminal forfeiture, $96 million in criminal fines, and refund $38.3 million of overpayments on bottled water directly to the Defense Logistics Agency.
In addition to the criminal claims, a whistleblower, Michael Epp, filed a complaint under the qui tam provisions of the False Claims Act alleging that Supreme violated the False Claims Act. The whistleblower is Supreme CmbH’s former Director, Commercial Divisions and Supply Chain. The whistleblower alleged that Supreme knowingly inflated the charges for supplying food and water to troops in Afghanistan. In addition, the qui tam complaint alleged that Supreme failed to pass along rebates and discounts to the government as it was required to do during the period between June 2005 and December 2010.
Other Supreme subsidiaries also agreed to pay $20 million to settle allegations that they overbilled the government for fuel purchased by the Defense Logistics Agency and pay $25 million for allegedly submitting falsified billings for transporting food between the U.S. and Afghanistan.
The whistleblower will receive approximately $16.16 million of the settlement proceeds as his reward under the qui tam provisions of the False Claims Act.