CORPORATE CRIME REPORTER
Fluor to Pay $12.5 Million to Settle False Claims Act Lawsuit
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Corporate Crime Reporter 43(6), November 4, 2005
Fluor Corporation will pay $12.5 million to settle allegations that it knowingly
overbilled the Departments of Energy and Defense.
A False Claims Act lawsuit was brought against Fluor in 2000 by Cosby Coleman,
a 15-year Fluor employee who worked in the company’s government contracting
office.
Coleman alleged that from 1995 to 1998, Fluor knowingly overbilled the government
under the many cost-reimbursable contracts held by its Fluor Daniel subsidiary
– now Fluor Enterprises.
Fluor Corporation, headquartered in Aliso Viejo, California, is a Fortune 500
engineering and construction firm with revenues of $9.4 billion in 2004. It
has recently been in the news as the recipient of large no-bid contracts from
FEMA for Hurricane Katrina cleanup operations.
In the lawsuit, Coleman alleged that Fluor Daniel used a fictitious accounting
entity, Fluor Daniel Federal Operations, to recover corporate overhead costs
that were not proper under the government’s cost accounting standards.
The costs disputed by Coleman included multi-million dollar bonuses paid to
Fluor’s management, $13.2 million invested in raw land, $7.3 million spent
for improvements to office buildings Fluor leased to other companies, $2.6 million
spent for construction of a parking garage Fluor leased to another company,
$410,000 spent for luxury condos in Palm Springs, $1.8 million spent on a fine
art collection, $75,000 spent for a Mercedes Benz convertible driven by the
company’s President and $20,000 spent for an antique Chippendale chair.
Coleman alleged that he made numerous attempts to point out the violations to
senior management, but no action was taken.
The case was sealed and kept out of the public’s eye until last week.
During the time the lawsuit was under seal, the Justice Department investigated
Coleman’s claims and Fluor attempted to convince the government not to
intervene in the action.
In a supplemental complaint filed in 2004, Coleman alleged that after his suit
was filed, Fluor retaliated against him by stripping him of all job responsibilities
and isolating him in a windowless office with no work to perform and no communication
with co-workers for more than three years.
Coleman alleged that when he was unable to endure the tedium and isolation any
longer, he resigned his position with the company in May, 2004.
“This has been an incredible David vs. Goliath battle for both Cosby Coleman
and our firm,” said Lawrence. “We have spent over five years fighting
this giant multi-national corporation’s efforts to delay and dissemble.
Fluor spent untold sums in its attempts to confuse and influence the Justice
Department, but in the end the career public servants at Justice recognized
this situation for what it was and intervened on August 9th to take over the
prosecution of our case. Once that occurred, the case quickly settled.”
Lawrence described Coleman as an “exemplary” whistleblower who placed
his career on the line and crisscrossed the country repeatedly to meet with
government investigators, sort through rooms full of irrelevant documents produced
by Fluor and help government auditors interpret the sometimes arcane Cost Accounting
Standards (CAS) and Federal Acquisition Regulations (FAR).
“Coleman knows the CAS and FAR by heart,” Lawrence said, “because
he served for years as a contracting officer for the government before joining
Fluor’s compliance department.”
Coleman and Lawrence will receive $2.75 million as the whistle blower’s
share of the government’s recovery.
Fluor is also paying Coleman and Lawrence an undisclosed sum to settle Coleman’s
claim that he suffered retaliation and Lawrence’s claim for attorney’s
fees.
The terms of this additional settlement are confidential, Lawrence said.
In a similar whistle-blower suit in 2001, Fluor agreed to pay $8.2 million to
the government and Patrick Hoefer, the company’s former director of governmental
financial compliance.
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