December 02, 2021 | Military & Defense Contracting Fraud
Defense and Security Contracting: A Big Business
The defense and security contractor Academi is a collection of companies previously known as Blackwater. They were once headquartered in Moyock, North Carolina, 25 miles south of a huge military complex in Norfolk, Virginia. The companies are not publicly traded and thus are not required to file public financial reports, but they are believed to be one of the largest providers of armed security services, with annual revenue in the hundreds of millions of dollars.
Blackwater’s false claims for payment?
The defense industry is believed to be one of the largest sources of improper billing to the federal government. Blackwater and its successors Xe Services and Academi have been the targets of at least two lawsuits alleging contracting behavior in violation of the federal False Claims Act (FCA).
With most FCA lawsuits, a plaintiff is known as a “relator” and is suing on behalf of the United States government. The relator is generally entitled to 15% to 25% of any recovery if the government elects to take over the case and 25% to 30% of any recovery if the government declines to intervene and the plaintiff takes the case all the way to verdict or settlement.
The first allegations against blackwater
In December 2008, two former Blackwater employees sued several Blackwater companies and CEO Erik Prince, alleging that they:
- Overbilled the Department of Homeland Security for disaster relief services following Hurricane Katrina,
- Overstated the number of their personnel in Iraq and Afghanistan, and
- Falsely certified that some of those personnel were properly trained and qualified.
Most of the claims and defendants were dismissed, and a jury found the sole remaining defendant not liable on any of the remaining claims. But there was much more to come.
Another wave of allegations
In April 2011, two former Blackwater snipers filed an FCA lawsuit in U.S. District Court with allegations that Blackwater had falsified records of weapons qualifications for its personnel who were assigned to protect the U.S. embassy in Kabul, Afghanistan. Blackwater put up a significant procedural battle, but eventually settled the lawsuit for an undisclosed amount.
Following the relators’ initial 2011 complaint, a second set of plaintiffs filed a separate lawsuit with additional details about the same alleged falsification scheme. After Wired magazine reported some of the allegations, the original relators amended their complaint to incorporate some elements of the report. The District Court dismissed the amended complaint because the relators were not the original source of the information, but the Fourth Circuit Court of Appeals reinstated the lawsuit in 2016 (the relators had alleged enough non-public information).
Blackwater settled the lawsuit in June 2017 for an unknown amount. It is likely that the two snipers walked away with 25% to 30% of the proceeds, as the government had elected not to intervene.
Blackwater and the Nisour Square Massacre
Known collectively as “Academi” since 2011, the companies were most recently involved in controversy in December 2020. Outgoing President Donald Trump pardoned four former personnel who participated in the shooting and killing of 17 Iraqi civilians – including a 9-year-old boy – in September 2007. The massacre occurred in broad daylight in Nisour Square, Baghdad.
One of the Academi guards had been convicted of murder, and the three others had been convicted of manslaughter. A fifth guard had pleaded guilty to voluntary manslaughter in exchange for testimony against the others. Prosecutors had filed but later dropped charges against a sixth.
Attorney Paul Dickinson and the victims’ Families
Paul Dickinson, a senior litigator at the Law Offices of James Scott Farrin, represented some of the families of the massacre victims while at a different law firm. Among his clients was the family of nine-year-old Ali Kinani, who was among those killed by the Blackwater contractors. For Dickinson and many others, the pardons by President Trump were “unconscionable” and contrary to everything America should represent.
Watch: Paul Dickinson discusses Nisour Square on MSNBC shortly after the pardons were issued.
Nisour Square and the North Carolina Courts
Since the massacre shooters had trained in North Carolina, the victims’ families filed civil lawsuits in 2009 against Xe Services and several of its affiliates, as well as the shooters, in North Carolina Superior Court. For two years, Xe wrangled over which court had jurisdiction. Finally, in 2012, the families and the defendants settled the lawsuit for undisclosed amounts.
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Contact the Carolina
If you’re wondering if it’s a good idea to speak with a whistleblower lawyer about what you know, let us set the record straight.
- Corporate ethics hotlines can be risky and may lead to termination. If you’ve already done this, call us immediately.
- Your coworkers could be aware of the fraud – or complicit in it – and you should not talk to them about it.
- The first claim to be filed under the False Claims Act can proceed – if you’re not first, you’re at a serious disadvantage and may get nothing (another reason not to speak to your coworkers about it).
- A confidential discussion costs you a few minutes, but could save you time, stress, and money.