A Kuwaiti logistics company has agreed to pay $95 million to resolve allegations that it inflated prices and defrauded the U.S. government for contracts to feed American troops in Iraq, Kuwait and Jordan.
The Justice Department announced the settlement involving Agility Public Warehousing on Friday. The company also agreed to plead guilty to misdemeanor theft of government funds.
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Federal prosecutors said in an indictment that Agility manipulated a complex funding formula to defraud the government of at least $68 million. The indictment said the company provided false invoices and statements to a logistics center, bought high-priced food items and then knowingly inflated prices.
And it said the company received rebates and discounts from vendors that it did not pass to the government as required by contract.
The company also inflated fees by asking vendors to manipulate the way the products were packed, enabling it to bill the government twice as much as it should have, prosecutors said.
Agility had been suspended from federal government contracting since its indictment in 2009. The Department of Defense's Defense Logistics Agency will lift that suspension as part of the agreement.
Deputy Assistant Attorney General Joyce R. Branda said the case is a reminder that the Justice Department will hold accountable contractors who unfairly profit at taxpayers' expense,.
"In simple terms, defense contractor-based fraud is theft directly from the American people," said David J. LeValley, special agent in charge of the FBI's Atlanta office, adding that investigators were pleased with the settlement.
The scheme was first outlined in a civil whistleblower filing that was filed in 2005. It was filed by Kamal Mustafa Al-Sultan, general manager of a contracting firm that partnered with Public Warehousing Co. in 2002.