Settlement reached in whistleblower case against military freight shipper

By Clarissa Hawes, Land Line staff writer | 3/6/2015

A federal judge in South Carolina has approved a settlement in the False Claims Act lawsuit filed by the U.S. government and two whistleblowers against Covan World-Wide Moving Services Inc., and its affiliate, Coleman American Moving Services Inc.

The lawsuit, which alleged that Covan and Coleman engaged in fraudulent billing practices, was scheduled to go to trial on March 9. The terms of the settlement, reached on Monday, March 2, have not been made public.

According to court documents, U.S. District Court Judge Joseph Anderson Jr. dismissed the case without costs or prejudice. In his order, the judge stated that the case could be reinstated within 90 days “if the settlement is not consummated.”

The lawsuit, originally filed in 2012 but under seal until November 2013, claims that Covan World-Wide Moving Services Inc., and its affiliates, including Coleman American Moving Services Inc., defrauded the U.S. government out of millions of dollars.

The whistleblowers, a father and son, who worked in Coleman’s Augusta, Ga., warehouse, allege that they were instructed to “get weights up.” Warehouse manager Mario Figueroa and his son, warehouse assistant Elmer Figueroa, claim they were ordered to falsify weight certificates in a scheme to overbill the U.S. Armed Forces for the shipping costs associated with deploying U.S. service personnel at home and abroad.

The Figueroas alleged in their complaint that some managers destroyed the correct weight certificates created by warehouse staff, and then replaced them with duplicate records that increased the weight of the shipments. Both Figueroas claim they were urged to increase weight certificates, but refused to falsify documents.

In November 2013, the U.S. Attorney’s Office filed a notice of intervention. As part of the ongoing investigation, the U.S. identified 437 instances of fraud as “evidenced by locator card discrepancies,” the complaint stated.

Court documents claim that since 2009, Covan, a major trucking company, and Coleman have billed the government for $723 million for military shipments. No estimate was provided as to how much of that amount may have included false billing.

In an article appearing in The State newspaper prior to the settlement, Richard Harpootlian, a South Carolina attorney who represented the Figueroas, stated the whistleblowers would be entitled to up to 25 percent of any jury verdict or settlement.

Copyright © OOIDA