Texas Cooking Oil Recycler Pays Government Nearly $1.4 Million to Settle Qui Tam Lawsuit

A Texas company alleged to have defrauded the Army and Air Force Exchange Service (AAFES) out of rebate payments for recycling cooking oil agreed to pay nearly $1.4 million to settle a qui tam lawsuit.

The whistleblower is a former employee of Darling Ingredients Inc., a creator of sustainable natural ingredients from edible and inedible bio-nutrients. The whistleblower alleged the company intentionally underpaid rebates owed the government for collecting the cooking oil, according to a Department of Justice press release.

Darling had contracts with AAFES to collect used cooking oil from food establishments on military bases and provide AAFES with a rebate for the used cooking oil received from AAFES.

According to the 2019 complaint, Darling submitted “inaccurate reports” to AAFES dating back to at least 2008 to decrease its payments. Darling agreed to pay the United States $1.375 million under the terms of the settlement, including $687,500 in restitution to AAFES. Darling does not admit any wrongdoing under the settlement of this qui tam lawsuit.

The case is an example of a Reverse False Claims suit. The False Claims Act is a powerful federal law that imposes liability on entities that defraud governmental programs. Reforms passed in 1986 allow qui tam relators to hold liable anyone who “knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the government.”

Whistleblowers can take action against entities that defraud the government by filing qui tam lawsuits. A qui tam lawsuit allows individuals to file suits on behalf of the government, which the government can join later. If the government declines, the relator may also proceed on their own. Whistleblowers who provide original information that results in a successful prosecution are eligible for rewards of between 15% and 30% of monetary sanctions. Since plaintiffs are liable for civil penalties under the FCA as well as treble damages, whistleblower rewards are often substantial. DOJ did not disclose the amount of the whistleblower award in the Darling settlement.

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