Justice joins False Claims Act suit against EMC

Tuesday - 3/3/2009, 7:20am EST

ByJason Miller
Executive Editor
FederalNewsRadio

The Justice Department is joining a whistleblower lawsuit against EMC Corp., a worldwide network storage, data recovery and information management provider.

Justice announced late March 3 that it has intervened and filed a complaint in a qui tam suit accusing the Hopkinton, Mass. company of failing to disclose its commercial pricing practices during negotiation of its General Services Administration contracts and of providing improper payments and other things of value to systems integrators and other partners on contracts with government agencies.

EMC spokesman Patrick Cooley says the company did not violate the False Claims Act or make improper payments.

"The matters at issue in this case are historical in nature; some of the allegations relate to events nearly 10 years old," Cooley says in an e-mail. "We will vigorously defend this case and the many years EMC has spent serving the U.S. Government. And, we will continue to provide mission-critical information infrastructure solutions to numerous branches of the U.S. Government as this matter proceeds."

Norman Rille, and his co-plaintiff, Neal Roberts, originally filed the suit in U.S. District Court in Little Rock, Ark., under the qui tam or whistleblower provisions of the False Claims Act.

Under the qui tam statute, a private party, known as a "relator," can file an action on behalf of the United States and receive a portion of the recovery. Under the False Claims Act, the United States may recover three times the amount of its losses plus civil penalties.

Rille and Roberts allege that EMC submitted false claims to the United States for information technology hardware and services on numerous government contracts from the late 1990s to the present.

Rille and Roberts allege that EMC made payments of money and other things of value to a number of systems integration consultants and other alliance partners with whom it had relationships.

Justice's complaint asserts that these relationships and the resulting benefits paid by EMC amount to kickbacks and undisclosed conflict of interest relationships.

DOJ also alleges that EMC made false statements to GSA about its commercial pricing practices in order to obtain a higher price on its contracts thereby overcharging agencies purchasing EMC products and services.

The investigation of the allegations in the qui tam complaint was conducted by the U.S. Attorney's office in Little Rock, Ark., DOJ's Civil Division, GSA's Office of the Inspector General, the Defense Criminal Investigative Service, the Office of Inspector General of the Energy Department, the Defense Contract Audit Agency and the Postal Service Office of the Inspector General.

EMC dropped its GSA schedule contract in November 2007 after failing to reach an agreement on its prices with GSA.

EMC earned $614 million in federal contracts between 2000 and 2008, according the federal government's Web site, USAspending.gov. EMC earned more than $37 million in contracts in last year with the Social Security Administration and the Defense Department's Washington Services Headquarters as its largest customers.

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On the Web:

FederalNewsRadio - EMC 4Q profit sinks 45 percent on charges

USAspending.gov- EMC contracts report

Justice Department- EMC case (press release)

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