Whistleblowers Allege Fraud in Largest Outsourced Military Transportation Contract in US History

Whistleblowers Help US Recover $13 Million in False Claims Act Settlement

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May 03, 2016, 01:26 ET

DAVIS, Calif., May 3, 2016 /PRNewswire/ -- Two whistleblowers, represented by Hirst Law Group, P.C., in Davis, California, brought fraud allegations against shippers of military freight and helped the Government recover $13 million in a False Claims Act settlement announced today. The case involved a nationwide contract described by Transport Topics Newspaper as "the largest logistics outsourcing in history."

In United States ex rel. Ricks, et al. v. Menlo Worldwide Government Services, LLC, et al., 2:13-cv-0539 (E.D. Cal.), Richard Ricks, 58, and Marcelo Cuellar, 30, filed a complaint under the federal False Claims Act, alleging that contractors under the Defense Transportation Coordination Initiative knowingly inflated charges to the Government for shipping military freight throughout the United States.

According to their counsel, Michael A. Hirst, the whistleblowers alleged in the complaint filed under seal that Defendants knowingly defrauded the Government by submitting false claims for air shipments when the freight was actually shipped by truck. They also alleged that Defendants knowingly submitted inflated charges for air fuel instead of ground fuel, and charges for oversized freight when the freight did not qualify as oversized.

Under the settlement agreement, XPO Logistics Worldwide, Inc., will pay $10 million to resolve the disputed fraud claims, and Estes Forwarding Worldwide LLC (Estes) will pay $3 million. The Government acknowledged the important role played by the two whistleblowers by awarding them 22% of the settlement, or $2.86 million.

"Without the courageous help of these two whistleblowers, the Government might never have learned of the inflated charges for shipments," said Hirst. "We appreciated working closely with the Government in this investigation, and having the Government acknowledge the value of our assistance in recovering the funds. This was truly a partnership under the False Claims Act, which was designed to help the Government uncover and prosecute fraud."

The complaint also alleges that two years into the investigation, Estes discovered Cuellar's cooperation with the Government and immediately fired him. That claim is not released by the settlement agreement. Hirst said, "We will vigorously pursue Mr. Cuellar's employment claims and we fully intend to obtain for him the double damages and other remedies provided to whistleblowers who are retaliated against under the False Claims Act."

Hirst Law Group, P.C., represents whistleblowers in federal and state False Claims Act and employment cases around the country.

SOURCE Hirst Law Group, P.C.