HOUSTON – Bering Straits Technical Services LLC (BSTS) and its parent company, Bering Straits Native Corporation (BSNC), have been held accountable for their alleged violations of the False Claims Act, paying a $2 million fine to the Southern District of Texas.
The settlement, finalized on April 26, 2016, without an admission of liability, comes as a result of a whistleblower suit filed under seal in Houston federal court on February 3, 2012. The suit alleged that BSTS and BSNC caused false claims to be submitted to the Defense Department and/or the Defense Logistics Agency (DLA) for maintenance facility services provided at the Red River Army Depot located near Texarkana.
The complaint also claimed that BSTS and BSNC employees were directed to repair equipment that no longer existed or was no longer in service and compelled to claim maintenance hours and supply costs for work that was not performed. Employees were also allegedly coerced to “pencil whip.” That is, make up hours after the fact with no relation to time actually spent on the maintenance. Invoices were based on the fraudulent documents and presented to the U.S. for payment.
BSTS is a limited liability company organized in the State of Alaska with its principal place of business in Anchorage, conducts business in several states, including Texas, and contracts with numerous government facilities. BSTS contracted with the U.S. Army Corps of Engineers to provide services at the Red River Army Depot in Texarkana pursuant to two contracts which were terminated on February 28, 2013, and August 31, 2014, respectively. BSTS ceased providing services at the Red River Army Depot on August 31, 2014.
BSNC is the parent corporation of BSTS and is headquartered in Nome, Alaska. Its regional operations include real estate management, development, tourism, construction, mining services and sales of rock and aggregate. BSNC also has an office in Anchorage, which oversees government contract work under SBA 8(a), HubZone, and small business programs. The Anchorage operations also include construction, support services and shareholder services.
Under the federal False Claims Act, a whistleblower, known as the relator, is entitled to share in the government’s monetary recovery under certain conditions. The settlement was a result of a joint investigation by the Defense Criminal Investigative Service (DCIS), Defense Contract Audit Agency (DCAA), U.S. Army Criminal Investigation Command (CID), and the U.S. Attorney’s Office.
The U.S. Attorney for the Southern District of Texas, Kenneth Magidson, emphasized the importance of accountability in government contracting, stating, “Yesterday’s settlement should serve as a reminder to government contractors of their accountability to the public.”
Special Agent in Charge Janice M. Flores of the DCIS, Southwest Field Office, added, “Contractors are expected to comply with their statutory obligations and act in good faith when dealing with the U.S. government.”
The exact criminal charges brought against Bering Straits Technical Services and Bering Straits Native Corporation are violations of the False Claims Act.
The exact date of the alleged crime is September 2010, with the settlement finalized on April 26, 2016.
The sentence or outcome is a $2 million fine paid to the Southern District of Texas.
Defendant/respondent: Bering Straits Technical Services LLC and Bering Straits Native Corporation.
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Key Facts
- State: Texas
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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