Wisconsin architectural company pays $3 million in civil, criminal penalties to settle whistleblower’s case

by Ben Vernia | January 6th, 2016

On January 4, the Department of Justice announced that Novum Structures, LLC, had pleaded guilty and agreed to pay $2.5 million in civil damages to settle allegations, originally brought by a whistleblower, that the company had used foreign materials on federally-sponsored building projects. The company will also not contest debarment from federal contracting. According to DOJ’s press release:

The Department of Justice announced today that Wisconsin-based Novum Structures LLC (Novum) has agreed to enter a guilty plea and pay $3 million to resolve its criminal and civil liability arising from its improper use of foreign materials on construction projects involving federal funds.  This use was in violation of contractual provisions implementing various domestic preference statutes, often referred to colloquially as the “Buy America” requirements.  Novum specializes in the design and construction of glass space frames often used in roofs and atrium enclosures.

The agreement announced today resolves a criminal Information alleging that Novum repackaged materials and falsified documents relating to some federally funded construction projects in order to hide that it was using noncompliant foreign materials.  According to an agreement reached with the government, Novum will plead guilty to one count of concealing a material fact, in violation of 18 U.S.C. § 1001, and pay a $500,000 criminal fine.

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In addition to the criminal fine, Novum has agreed to pay $2.5 million to resolve civil allegations under the False Claims Act that its conduct caused the submission of false claims for payment.  Specifically, the civil settlement resolves allegations that Novum caused false claims by knowingly – and in violation of its contractual obligations – using noncompliant foreign materials on several federally funded construction projects from Jan. 1, 2004 through July 11, 2013.Construction projects funded by the U.S. government are generally subject to laws requiring the use of domestic materials, such as the Buy American Act; the Federal Transit Administration’s Buy America provision; and § 1605 of the American Recovery and Reinvestment Act.  The contracts involved in this case covered both government buildings and transit projects partially paid for with federal funds.

As part of the settlement agreement, Novum has agreed not to contest debarment from federally funded projects.

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The government announced that the whistleblower will receive $400,000 of the civil settlement (a 16% relator’s share).

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