In 2008, two former employees brought a whistleblower lawsuit against the security firm once known as Blackwater (now named Xe Services). On July 27, the trial began in Alexandria, Virginia and is expected to last two weeks. The two whistleblowers allege that the company overcharged the federal government millions of dollars for their services in Iraq and Afghanistan, among other billing fraud and abuse claims. The company firmly denies these accusations.
The lawsuit was first filed by ex-employees Brad and Melan Davis, who accused the company of attaching fake reimbursement bills to their $1 billion security contract. The whistleblowers claim that Blackwater lied about the number of workers who were being dispatched by them to Iraq and Afghanistan and added extra costs to the travel reimbursement amounts.
In calling out the security firm on their misconduct, Melan Davis admits that she participated in the fraud herself as she had been employed to manage the travel expenses of the company. However, employees like Davis are exactly who Congress had in mind when it enacted the False Claims Act in 1863. Senator Howard said in 1863, “I have based [the False Claims Act] on the old fashion idea of holding out on temptations and ‘setting a rogue to catch a rogue’, which is the safest and most expeditious way of bringing rogues to justice.” Being the first witness on the stand, Davis freely declared that “myself, along with others, committed fraud.” However, the intent behind laws such as the FCA is to catch the principal architect who planned and initiated of the fraud scheme. The intent is not to punish employees who were merely following orders to keep their jobs.
Blackwater remains steadfast in their position that no employee was asked to falsify documents, and that no billing fraud took place. We will have to wait and see how the trial plays out.
*Cho Hwang (a NWC intern) contributed to this posting