Menlo Worldwide to Pay $10 Million Estes to Pay $3 Million to Resolve False Claims Charges

Menlo Worldwide Government Services will pay $10 Million and Estes Express Lines will pay to settle false claims charges.


The charges were brought by two whistleblowers against shippers of military freight.

The case involved a nationwide logistics contract.


Menlo was represented by Warren Hamel of Venable in Baltimore.

Estes was represented by Josh Durham of Bell Davis & Pitt in Winston-Salem, North Carolina.

Richard Ricks, 58, and Marcelo Cuellar, 30, each working for different companies, together filed a complaint under the federal False Claims Act, alleging that contractors knowingly and falsely inflated charges to the Government for shipping military freight throughout the United States.

Defendants named in the complaint were Menlo Worldwide Government Services, LLC, Menlo Logistics, Inc., Con-Way Inc., XPO Logistics, Inc. (collectively “Menlo”), Estes Forwarding Worldwide LLC, and Estes Express Lines (collectively “Estes”) — all contractors under the Defense Transportation Coordination Initiative (“DTCI”).

The nationwide DTCI contract was awarded to Menlo in August 2007, a year after the Department of Defense received and reviewed bids from numerous other companies, including Federal Express and UPS.

Under the contract, Menlo managed all freight movements in the continental United States under the DTCI with the goal of maximizing efficiencies and reducing costs.

In 2013, the whistleblowers alleged that Menlo and Estes were knowingly defrauding the government by submitting false claims for air shipments when the freight was instead being shipped by truck.

They also alleged that the companies were knowingly submitting inflated charges for air fuel instead of ground fuel, and charges for oversized freight when the freight did not qualify as oversized.

In 2015, the Department of Defense determined to remove all air shipments from the DTCI contract.

The whistleblowers were represented by Michael A. Hirst, of Hirst Law Group, P.C., who previously supervised all False Claims Act cases for Eastern District of California before leaving the government in 2005 to start his own law firm representing whistleblowers.

“Without the courageous help of these two whistleblowers, the Government might never have learned of the inflated charges for shipments,” said Hirst. “The DTCI contract did not provide the Government with direct access to the billing and shipping information of subcontractors, such as Estes.  Instead, the Government only had access to information from its prime contractor, Menlo.”

Under the settlement agreement, Menlo will pay $10 million to resolve the disputed fraud claims, and Estes will pay $3 million.

The government awarded the two whistleblowers 22% of the settlement, or $2.86 million.

“We appreciate having had the chance to work closely with the government in this investigation, and having the government acknowledge the value of our assistance in recovering the funds,” Hirst said. “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, Cuellar’s cooperation with the government was discovered by Estes and he was immediately fired.

“We will now turn to vigorously pursuing 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 said.


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