EMC Corporation Pays $87.5 Million To Settle False Claims Act Case

EMC Corporation has agreed to pay the federal government $87.5 million to settle a lawsuit alleging that the information technology company violated the False Claims Act and the federal Anti-Kickback Act. The government alleged that,

by misrepresenting its commercial pricing practices, EMC fraudulently induced the General Services Administration (“GSA”) to enter into a contract with prices that were higher than they would have been had the company not made false misrepresentations. Specifically, the government alleged that the Hopkinton, Mass.-based company represented during contract negotiations that, for each government order under the contract, EMC would conduct a price comparison to ensure that the government received the lowest price provided to any of the company’s commercial customers making a comparable purchase. According to the government’s complaint, EMC knew that it was not capable of conducting such a comparison, and so EMC’s representations during the negotiations – as well as its subsequent representations to GSA that it was conducting the comparisons – were false or fraudulent. 

The federal government also alleged that EMC engaged in an illegal kickback scheme designed to influence the government to purchase the company’s products, and that EMC maintained agreements whereby it paid consulting companies fees each time the companies recommended that a government agency purchase an EMC product. These kickback allegations are part of a larger investigation of government technology vendors that has resulted in settlements to date with three other companies, with several other investigations and actions still pending. The kickback investigation was initiated by a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act.
 
"Misrepresentations during contract negotiations and the payment of kickbacks or illegal inducements undermine the integrity of the government procurement process," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice.