Harper Construction to Pay $5.4M in Whistleblower Lawsuit Involving Military Contracts

SAN DIEGO, CA: A construction company has paid $5.4 million to the United States to resolve allegations that it fraudulently billed the government for work on multiple projects on Camp Pendleton and other military bases, the U.S. Attorney's Office in San Diego reported Wednesday.

It was alleged that Harper Construction, Inc., a privately-held general contractor headquartered in San Diego that earns a substantial portion of its revenue through government contracting on construction projects across the country, knowingly used sham small disadvantaged businesses and then falsely certified to the government that it used legitimate small disadvantaged businesses.

The settlement announced Wednesday involves four government contracts for facilities at Camp Pendleton and Camp Lejeune. As part of the contracts, Harper was required to subcontract a certain percentage of work to small disadvantaged businesses — a stipulation meant to ensure that small subcontracting businesses also benefit from federal dollars, the U.S. Attorney's Office explained.

Federal prosecutors say Harper claimed it met this requirement when, in fact, it subcontracted with sham small disadvantaged businesses. Also, Harper allegedly required the sham small businesses to pass through all of their work to an affiliated large business, Frazier Masonry Corporation, according to court documents.

"This type of fraud siphons taxpayer dollars and takes away opportunities for legitimate small businesses for which this money was set aside,” said U.S. Attorney Laura Duffy.

The whistleblower who brought the lawsuit forward, Rickey Howard, a former employee of Frazier Masonry Corporation, is entitled to receive a portion — nearly $1.49 million — of the $5.4 million settlement under the provisions of the False Claims Act.

"Whistleblowers are essential in our efforts to recover taxpayer dollars and combat fraud," Duffy said. "We commend the whistleblower for coming forward and making the United States aware of this alleged fraud, and we welcome others who are aware of fraudulent conduct to also blow the whistle on fraudsters."

This matter was handled by Assistant U.S. Attorney Dylan Aste of the Affirmative Civil Enforcement Unit of the U.S. Attorney’s Office for the Southern District of California, along with the Commercial Litigation Branch, Fraud Section, Department of Justice and the Defense Criminal Investigative Service.
 
The United States government has recovered over $7 million in this matter in conjunction with an earlier settlement with co-defendants Frazier Masonry Corporation, CTI Concrete & Masonry, Inc., Masonry Technology, Inc., Masonry Works, Inc., Russell Frazier and Robert Yowell.

"DCIS and its investigative partners work diligently to expose corrupt contractors that manipulate or circumvent Federal contracting requirements," stated Special Agent in Charge John F. Khin, Defense Criminal Investigative Service, Southeast Field Office. "DCIS’ earlier investigation of the subcontractors involved in this matter resulted in both criminal and civil actions. We applaud efforts by concerned citizens and relators to assist our investigative efforts, and help the Government hold companies accountable for undermining the integrity of our contracting system.

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