The Department of Justice announced last week that the ocean-faring companies Sea Star Line LLC and Horizon Lines LLC agreed to pay a total of $3.4 million to resolve allegations under the federal False Claims Act. The agreement will resolve claims that the companies engaged in fraudulent price fixing scams that resulted in the payment of false claims.
“The filing of false claims for payment by companies is harmful to all taxpayers,” commented Christopher Paulos, an attorney with the Levin, Papantonio law firm who practices in the areas of qui tam or whistleblower and False Claims Act litigation. “The government aggressively pursues and prosecutes the entities who engage in such deceptive and fraudulent practices.”
According to the lawsuit’s allegations, the companies’, Sea Star Line LLC and Horizon Lines LLC, former executives would engage secret email exchanges on personal accounts in order to trade confidential bidding information and thereby gain an unfair advantage in establishing transportation rates. According to the Department of Justice, these practices negatively affected the U.S. Postal Service and the Department of Agriculture.
“More often than not, without the information of someone on the inside, a whistleblower, fraudulent practices like these would go unpunished,” Mr. Paulos added.
The lawsuit against Sea Star and Horizon was brought by a former executive of Sea Star Line, William B. Stallings. Both companies have pleaded guilty to their involvements in the scheme. Under the qui tam, or whistleblower, provisions of the False Claims Act, Mr. Stallings was permitted to file suit on the behalf of the government. For his involvement, Mr. Stallings is permitted, under the False Claims Act, to share in the recovery. He will receive $512,719.