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False claims scam: Military supplier agrees to pay $389m

False claims scam: Military supplier agrees to pay $389m

KABUL: The Supreme Food service GmbH, who provided food and water to the US troops in Afghanistan, was plead guilty to a major fraud against the United States and agreed to pay USD 389mn to resolve civil violations of the False Claims Act.

The lawsuit was filed under whistleblower provisions of the False Claims Act, by Michael Epp, Supreme’s former Director, Commercial Division and Supply Chain.

The False Claims Act prohibits the submission of false claims for government money or property and allows the United States to recover treble damages and penalties for a violation. Under the Act’s whistleblower provisions, a private party may file suit on behalf of the United States and share in any recovery.

The privately held Swiss logistics company, co-owned by billionaire Stephen Orenstein, entered into a contract with the Defense Supply Center of Philadelphia to provide food and water for US forces serving in Afghanistan.

A court in Philadelphia pleaded them guilty of overcharging the US government by fraudulently inflated the price charged for local market ready goods and bottled water sold to the US under the subsistence prime vendor contract.

The Supreme companies did this by using a UAE company it controlled, Jamal Ahli Foods Co. LLC (JAFCO), as a middleman to mark up prices for fresh fruits and vegetables and other locally-produced products sold to the U.S. government, and to obscure the inflated price the Supreme companies were charging for bottled water.

The fraud resulted in a loss to the government of $48 million.