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Alaska tech firm to pay $2.5M in bribery and kickback scheme

Alaska tech firm to pay $2.5M in bribery and kickback scheme

An Alaska technology firm has agreed to pay $2.5 million to settle False Claims Act and Anti-Kickback Act charges that two of its units submitted false claims to the U.S. Army Corps of Engineers, the Justice Department said Monday.

Anchorage, Alaska-based Eyak Corp. said in a statement the settlement was in the best interests of its shareholders.

The Justice Department said in its statement that Eyak Corp. units Eyak Technology L.L.C. and Eyak Services L.L.C. provide health care, information technology, communications and infrastructure services to the U.S. government.

It said that from 2005 to 2011 Eyak Technology held a $1 billion contract with the U.S. Army Corps of Engineers. It said between Sept. 12, 2007 and Oct. 4, 2011, its then-director of contracts, Harold Babb, accepted kickbacks from several subcontractors of Eyak Tech and Eyak Services in return for using his position to direct subcontracts to them.

The two units allegedly submitted invoices to the Army Corps that included charges for work that was never performed by the subcontractors, and they lacked internal controls to detect the improper charges, according to the Justice Department.

In March 2012, Mr. Babb pleaded guilty to bribery and kickback charges and was sentenced by the U.S. District Court in the District of Columbia to serve 87 months in prison to be followed by 36 months of supervised release and to pay more than $9 million in restitution for his role in the kickback scheme, the Department of Justice said in a statement.

The Army Corps stopped payments to the two units when the scheme came to light, and as part of the settlement the two units will withdraw any appeals seeking the return of those funds, and relinquish all rights to any payments that have been withheld, the statement said.

“The criminal investigation into this wide-ranging bribery and kickback scheme has now resulted in the convictions of 20 individuals, including Eyak's former contracts director,” said U.S. Attorney Ronald C. Machen Jr. for the District of Columbia, in a statement.

“We have aggressively pursued asset forfeitures in the criminal proceedings to make the taxpayer whole and to deprive wrongdoers of their ill-gotten gains. This civil settlement sends a message to contractors who try to cheat in the competition for government funds.”

The company said in a statement, “After careful assessment, Eyak believes a global settlement is in the best interest of all Eyak shareholders, the company and the Federal government.”

Rod Worl, CEO of Eyak, said in the statement, “Pursuing any avenue other than a global settlement would have potentially damaged our relationship with an important business partner and may have led to a lengthy, costly court battle. We are glad this chapter is over and are ready to turn the page.”

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