Two St. Louis-area contractors settled a disadvantaged business enterprise fraud case with federal authorities after a competitor exposed the alleged fraud using a law that dates to the Civil War.
United Ironworkers, Steeleville, Ill., and D&K Welding Services. St. Louis, along with company presidents Kim Rasnick and Dorrie Wise-Harris, agreed to pay $440,000 to resolve the claims against them, the U.S. Attorney’s Office for southern Illinois announced in January. The case formally closed this month.
The investigation into the alleged fraud was kick-started by a False Claims Act lawsuit filed by Karl and Dianna Jefferson, who own a steel construction firm in Illinois. Under the act, a private citizen can file a civil lawsuit on behalf of the government against an alleged fraudster, and the government can intervene in the case to seek a settlement or, more rarely, pursue criminal charges.
The whistleblower receives between 15% to 30% of what the government recovers as the result of a case—in this case, $79,200 from the settlement. If authorities decline to intervene in the case, the whistleblower can still pursue the claims independently, says Michael Brady, a lawyer who represented the Jeffersons in the case.
“The real attempt as a lawyer practicing in this area is to put the pieces together and give a case to the government that gets its attention, and it is pursued,” Brady says. The government has “a lot more horsepower to investigate and also, for example, it can debar bad actors from participating in programs.”
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