Department of Justice
Office of Public Affairs
FOR IMMEDIATE RELEASE
Tuesday, January 5, 2016
Wisconsin Architectural Firm to Plead Guilty and Pay $3 Million to Resolve Criminal and Civil Claims
The Department of Justice announced today that Wisconsin-based Novum Structures LLC (Novum) has agreed to enter a guilty plea and pay $3 million to resolve its criminal and civil liability arising from its improper use of foreign materials on construction projects involving federal funds. This use was in violation of contractual provisions implementing various domestic preference statutes, often referred to colloquially as the “Buy America” requirements. Novum specializes in the design and construction of glass space frames often used in roofs and atrium enclosures.
The agreement announced today resolves a criminal Information alleging that Novum repackaged materials and falsified documents relating to some federally funded construction projects in order to hide that it was using noncompliant foreign materials. According to an agreement reached with the government, Novum will plead guilty to one count of concealing a material fact, in violation of 18 U.S.C. § 1001, and pay a $500,000 criminal fine.
“When taxpayer dollars are provided for construction projects, the government expects contractors to comply with all requirements, including ones that ensure the money remains in the U.S. economy,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “This settlement shows that the Department of Justice is committed to pursuing claims against contractors that put financial gain ahead of complying with the law.”
“Domestic preference statutes are designed to promote American businesses and to protect U.S. economic interests,” said Acting U.S. Attorney Gregory J. Haanstad for the Eastern District of Wisconsin. “When companies subvert those interests by violating ‘Buy American’ provisions – and when they undertake efforts to conceal that they have done so – all in an effort to improperly advance their own private financial interests, the U.S. Attorney’s Office will pursue all appropriate criminal and civil sanctions.”
In addition to the criminal fine, Novum has agreed to pay $2.5 million to resolve civil allegations under the False Claims Act that its conduct caused the submission of false claims for payment. Specifically, the civil settlement resolves allegations that Novum caused false claims by knowingly – and in violation of its contractual obligations – using noncompliant foreign materials on several federally funded construction projects from Jan. 1, 2004 through July 11, 2013.
Construction projects funded by the U.S. government are generally subject to laws requiring the use of domestic materials, such as the Buy American Act; the Federal Transit Administration’s Buy America provision; and § 1605 of the American Recovery and Reinvestment Act. The contracts involved in this case covered both government buildings and transit projects partially paid for with federal funds.
As part of the settlement agreement, Novum has agreed not to contest debarment from federally funded projects.
Secretary of Transportation Anthony Foxx stated, “The U.S. Department of Transportation considers compliance with Buy America to be a fundamental requirement when a company is involved in federal projects. As we work to be good stewards of limited federal resources, the department applauds the Department of Justice and our own Office of Inspector General for the successful prosecution of this case.”
“Contractors must follow all federal contracting rules when doing business with the United States,” said General Services Administration Inspector General Carol Fortine Ochoa.
“The settlement agreement entered into by Novum Structures LLC is a positive step following the company’s disregard of its obligations to comply with the clear legal requirements of the Buy America Act designed to spur domestic economic investments and job opportunities in transportation infrastructure projects,” said Regional Special Agent in Charge Thomas Ullom Department of Transportation’s Office of Inspector General.
The allegations resolved by the civil settlement were originally brought by whistleblower Brenda King under the qui tam, or whistleblower, provisions of the False Claims Act. The act permits private parties to sue on behalf of the government those who falsely claim federal funds. The act also allows the whistleblower to receive a share of any funds recovered through the lawsuit. King will receive approximately $400,000 as her share of the civil settlement.
The U.S. Attorney’s Office for the Eastern District of Wisconsin prosecuted the criminal case, and also jointly handled the civil lawsuit with the Civil Division’s Commercial Litigation Branch. Investigative assistance was provided by the Department of Transportation’s Office of Inspector General, the General Services Administration’s Office of Inspector General and the Defense Criminal Investigative Service, with additional support from other agencies.
The lawsuit is captioned United States ex rel. King v. Novum Structures, LLC, Case No. 12-cv-860 (E.D. Wis.). The claims resolved by the civil settlement are allegations only; there has been no determination of liability except to the extent admitted in Novum’s plea agreement.