Whistleblower & Qui Tam Blog

September 2019

Former CEO Pays $20 Million to Settle False Claims Allegations Related to Small Business Contracting Fraud

The former CEO of Virginia-based defense contractor Atlantic Diving Supply (ADS Inc.), Luke Hilliard, has agreed to pay $20 million to settle False Claims Act (FCA) allegations relating to the fraudulent acquisition of contracts set aside for small businesses. The Department of Justice announced the settlement of the qui tam lawsuit with Mr. Hilliard on August 20th, 2019. 

Businesses must meet specific criteria to be eligible for contracts set-aside for small businesses. These criteria include size, ownership, and operational control. The government alleged that Mr. Hillier falsely represented ADS concerning these criteria so that it would qualify as a small business.  The DOJ also alleged that ADS won several small business set-aside contracts, even though it was ineligible to receive such contracts.

Ameliorate Partners LLP filed the lawsuit under the whistleblower provisions of the False Claims Act. The “qui tam” provisions allow persons with evidence of fraud in government contracts to sue the wrongdoer on behalf of the United States. The whistleblower is eligible to receive between 15 and 30 percent of the monies recovered from the wrongdoer. In this case, Ameliorate will receive $3.6 million from the settlement with Hilliard. 

In a related action, ADS agreed to pay $16 million to the government in 2017 to settle charges brought on from the alleged fraudulent scheme. The settlements related to this FCA lawsuit total over $36 million, making it the largest False Claims Act recovery resulting from small business contracting fraud.

Read the Department of Justice press release: Former CEO of Virginia-Based Defense Contractor Agrees to Pay $20 Million to Settle False Claims Act Allegations Related to Fraudulent Procurement of Small Business Contracts

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The Whistleblower Blog is an editorially independent news and information source, sponsored by a pro bono public service project by Kohn, Kohn & Colapinto, LLP. The blog highlights important news, legal developments and policy issues critical to whistleblowers and their advocates, both in the United States and internationally. The contributors to this blog are respected leaders in their fields, including the authors of key whistleblower law books, current and former legal professors, spokespersons before Congressional committees and other public bodies, directors of non-profit whistleblower advocacy groups, and prominent attorneys specializing in representing/assisting whistleblowers in the United States and throughout Europe, Asia, Africa and South America.