Construction giant Gilbane Building settles whistleblower case brought by Phillips & Cohen

TAMPA, FLORIDA, March 18, 2015 – Gilbane Building Co. has agreed to pay the government $1.1 million to settle a whistleblower lawsuit brought by Phillips & Cohen LLP that claimed a company it had acquired had fraudulently obtained government construction business that was intended for small businesses owned by disabled military veterans.

The “qui tam” (whistleblower) lawsuit alleged that Veteran Constructors Inc., which won a federal contract set aside for Service-Disabled Veteran-Owned Small Business Concerns under the Veterans Benefit Act, actually was controlled, managed and presumably partially owned by W.G. Mills Inc., formerly one of the largest general contractors in the Southeast. W.G. Mills merged in 2011 with Gilbane, based in Providence, Rhode Island.

The contract, awarded in 2010, was for the design and construction of barracks at the US Coast Guard Air Station in Elizabeth City, NC.

“The construction work was supposed to go to a small business owned by veterans who became disabled while serving our country, to give them a head start in growing their businesses,” said Stephen S. Hasegawa, a San Francisco attorney with the whistleblower law firm Phillips & Cohen.  “When large companies use front companies to capture that business for themselves, as we alleged in this case, it hurts the opportunities for small businesses that really are owned by disabled veterans.”

Veteran Constructors separately settled its liability in 2013 for $50,000, based on its inability to pay anything more. That settlement also requires Veteran Constructors to pay the government an additional percentage of its revenue each year through 2018.

The two whistleblowers in the qui tam case based their allegations on an extensive investigation they conducted after the government contract was awarded to Veteran Constructors. Phillips & Cohen filed the qui tam complaint in federal district court in Tampa, Florida, in 2011. The government intervened in the case and announced the settlement today.

The whistleblower lawsuit alleged violations of the False Claims Act. The law encourages private citizens to expose fraud against the government by filing a qui tam lawsuit. Whistleblowers are entitled to rewards of 15 percent to 25 percent of the recovery if the government joins the case.

Hasegawa and his clients thanked the government attorneys and investigators who worked on the case, particularly Department of Justice Trial Attorney David Finkelstein, and Assistant US Attorney Charles Harden of the Middle District of Florida.

Case citation: US ex rel. Jeske and McIntosh v. Gilbane Building Company, et al., Case No. 8:11 CV 1205T17MAP (M.D. Fla.)

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