Cisco Systems and Westcon Group to Pay United States $48 Million to Resolve False Claims Act Allegations

LOS ALTOS, Calif., Sept. 7 /PRNewswire/ -- Today Cisco Systems and its distributor, Westcon Group, have agreed to pay the United States government $48 million to resolve allegations that it defrauded various federal government agencies, as alleged in a lawsuit filed in 2005 by the False Claims Act law firm of Packard, Packard & Johnson, located in Los Altos, California, an enclave of Silicon Valley. They are one of the few firms in Northern California that represents whistleblowers on large False Claims Act cases.  Two whistleblowers, Norman Rille and Neal Roberts, first approached their attorneys in 2002, and they jointly worked on the case for two years before filing the lawsuit under seal in federal court in Little Rock, Arkansas.  Local counsel is Stephen Engstrom, with Wilson, Engstrom, Corum & Coulter.  Relator Rille had worked for Accenture, a Systems Integrator for the Government, which did many large projects for various federal agencies. During his employment at Accenture, he became aware of alliance activity between Cisco and Accenture. The terms and practices of the alliances called for referral fees and special discounts by Cisco to Accenture, the amounts of which were often kept confidential.  When Mr. Rille left his employment with Accenture, he took with him over 700,000 pages of documents, many of which involve Cisco. Accenture had vigorously insisted that the documents had to be returned, but in a key ruling, the federal judge ruled that protecting the federal taxpayers trumps any non-disclosure agreements and state laws.

The Federal Anti-Kickback Act prohibits a Systems Integrator, who is supposed to provide objective advice to the Government, from receiving anything of value for recommending the purchase by the Government of a vendor's products. At the same time, the Federal Acquisition Regulations require that a vendor provide the Government its current, accurate and best pricing data when negotiating a multiple award schedule with the Government.  Failure to do so results in what is called defective pricing, which is also a violation of the False Claims Act.

Neal Roberts had worked with PricewaterhouseCoopers, another Systems Integrator, for years and also knew about alliance practices and the requirements of disclosure to the Government regarding discounts.  After the lawsuit was filed, the two relators and their attorneys assisted the government over a period of years in the investigation of the allegations and the damages.  The government investigators had each of the whistleblowers place strategic telephone calls that were tape recorded, which assisted in the investigation.  Numerous meetings have been held in the offices of Packard, Packard & Johnson in Los Altos with many federal agents and DoJ attorneys from across the nation.  The attorneys also maintain a database containing over 14 million pages of documents, readily accessibly to the federal agents and government attorneys.  The case was assigned to and handled by the Honorable William R. Wilson, Jr. Cisco and Westcon have consistently denied any wrongdoing.  

The whistleblowers and Packard, Packard & Johnson are delighted to see the case come to a favorable conclusion. "We have represented whistleblowers for 20 years, and in these tough economic times, it's more important than ever to protect the taxpayers' money," stated Ron Packard.

SOURCE Packard, Packard & Johnson