Government Contractor Agrees to Pay $11 Million for Criminal and Civil Cost Inflation Scheme
Schneider Electric Buildings Americas Inc. as agreed to pay $11 million to end criminal and civil investigations into the company’s fraudulent activity regarding contracts with the U.S. government. Schneider Electric has faced probes regarding their contracts to install a variety of energy saving upgrades to federal buildings. The company was contracted install solar panels, LED lighting, and insulation at federal facilities.
According to a Department of Justice (DOJ) release on the criminal resolution with the U.S. Attorney’s Office for the District of Vermont (USAOVT), Schneider Electric admitted to fraudulently charging the government nearly $1.7 million in design costs for projects with the Department of the Navy, General Services Administration, and Department of Agriculture. According to the release, “Schneider Electric specifically spread costs across various line items in these federal projects so that the agencies would pay the amounts without knowing they were design costs that Schneider Electric was prohibited from charging the government.”
Aside from the overcharging, the company also admitted that former convicted Senior Project Manager Bhaskar Patel solicited and received over $2.5 million in kickbacks from various subcontractors who worked on projects with the aforementioned federal agencies, as well as the U.S. Coast Guard and Department of Veterans Affairs.
Under the criminal resolution, Schneider Electric is required to cooperate fully in any and all matters related to the conduct for three years as well as “to report to the USAOVT any evidence or allegation of a violation of U.S. fraud, anti-corruption, procurement integrity, or anti-kickback laws, to implement and comply with an updated corporate compliance program, and to report annually to the USAOVT on its remediation and implementation of its required compliance enhancements.”
To remedy the civil investigation into misconduct, Schneider Electric agreed to pay $9.3 million. These funds resolve the False Claims Act and Anti-Kickback Act liability for Patel’s actions and the improper proposals and overcharging.
“These cases are complex and challenging, and I commend the dogged work of our Assistant U.S. Attorneys and their law enforcement agency partners to ensure that Schneider Electric’s conduct was brought to light and it was held to account,” said U.S. Attorney Christina E. Nolan. “I am proud that our small office not only successfully convicted Bhaskar Patel but went further and unraveled Schneider Electric’s broader criminal scheme of fraudulently inflating costs to boost its profits and steal from taxpayers. In reaching this resolution, we considered that Schneider Electric terminated two employees involved in the schemes and overhauled its compliance program. We also considered the shortcomings of Schneider Electric’s cooperation and its failure to timely accept responsibility.”