DOJ leverages government ethics law in civil lawsuit over false claims | Wiley Kidney LLP


WHAT: The U.S. Department of Justice (DOJ) filed a six-count complaint Complaint against a federal contractor, Intelligent Fiscal Optimal Solutions, LLC (iFOS), in the District of Maryland, alleging three violations of the Civil False Claims Act (FCA) as well as counts of breach of contract, payment in error and enrichment without cause. As alleged, the primary underlying misconduct for the FCA charges involved an elaborate iFOS scheme to conceal from the US Department of Homeland Security (DHS) the fact that it had hired a former senior DHS official, as a contractor/consultant, who was then subject to a one-year “chill” ban on agency communications and allowed the official to violate that communications ban. iFOS allegedly carried out the subterfuge by, among other things, billing DHS for the time worked by the former official while attributing the time and costs to an iFOS employee.

The communication ban stems from a criminal statute, the Ethics in Government Act (EGA), 18 USC § 207(c), which prohibits certain senior executives from trying to influence their former agencies on official matters during a period of one year from the end of their federal employment. Hence the popular moniker of prohibition as a “cooling off” period to prevent real or apparent irregularities in influence peddling.

WHEN: The DOJ filed the complaint on May 2, 2022.

WHAT THIS MEANS FOR THE INDUSTRY: In the complaint, the DOJ assembled a comprehensive record of text messages and phone calls between the former official and a former senior DHS colleague during the cooling-off period, and presented a detailed account of the bills by which iFOS allegedly concealed EGA violations at the agency. contract staff, as well as an account of how the misconduct corrupted the DHS procurement process. Looking at this story and the array of incriminating evidence that supports it, one might be tempted to draw only the obvious lesson that it is wrong to lie when billing your federal agency client to cover up criminal violations of the US code. That’s a fair conclusion, but there’s more to consider.

iFOS may appear to be a major outlier due to the huge amount of evidence of inappropriate communications traces and associated corruption – for example, the complaint alleges that the former official, upon leaving the agency, helped run a contract with iFOS in influencing its successor to award the prize. But the very grotesqueness of the alleged wrongdoings is likely to generate widespread notoriety which could, in turn, cause agencies, or qui tam relationships, to consider using less egregious violations of the EGA as grounds for action by the FCA. It is no exaggeration to conceive that an investigator, stranded in an attempt to persuade a prosecutor to remedy an EGA violation through criminal action, might find a more receptive audience for an FCA civil action based on a implicit certification theory. This could happen even if the alleged misconduct was not the product of a clear corrupt motive and a lie, even if the issue is an honest mistake or conduct in a gray area, of which there are many in government ethics.

Thus, a comprehensive and conscientiously applied regime to manage ethical risks for former public servants is even more important now. The key elements of such a program have always been the early identification of problems and risks for individual recruitments; verification and scrutiny of the ethical opinions of agencies; and clear, documented records that former managers and their new supervisors understand all limitations on the activities of new employees. Companies should consider this case as clarification for a new assessment of the company’s overall risk in this area, scaled according to the number and seniority of former public servants hired, the adequacy of any process existing risk management and the extent to which the personnel concerned understand and respect these safeguards.

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