WASHINGTON--(BUSINESS WIRE)--The U.S. Department of Justice (DOJ) announced today that it has reached a settlement with the Gallup Organization over charges that Gallup had violated the False Claims Act and the Procurement Integrity Act in connection with federal contracts. Gallup has agreed to pay $10.5 million to resolve these allegations that were first asserted in a whistleblower qui tam lawsuit filed by former Gallup employee Michael Lindley on October 21, 2009. The Department of Justice joined Lindley’s whistleblower lawsuit in August 2012.
According to his lawsuit, Lindley learned while working as Gallup’s Director of Client Services that the company was routinely and knowingly submitting inflated cost projections to the U.S. Mint and State Department when procuring market-research contracts, enabling Gallup to garner huge profits for its work. Lindley's complaint also accused Gallup of corrupting the integrity of the government contracting process by offering a job to Timothy Cannon, former director of the Human Capital Division of the Federal Emergency Management Agency (FEMA), in exchange for steering lucrative contracts to the company. The government’s investigation of Gallup’s alleged conflict of interest led the Department of Homeland Security, FEMA’s parent agency, to suspend Gallup from government contracting. Cannon pled guilty to criminal charges of violating of federal conflict-of-interest law and agreed to pay $40,000 to resolve the charges.
Lindley welcomed today’s announcement, which marks the end of nearly four years of litigation. “I’m sure there are other people out there who are in the same position as I was four years ago,” Lindley said, “people who want to come forward and do the right thing but who are afraid to risk their careers and reputations. Whistleblowers should know that they are not alone. With an experienced legal team to guide you, you can blow the whistle and the Department of Justice will take your claims seriously. Today's settlement proves that the process can work.”
Remarking on the significance of the settlement announced today, whistleblower attorney Robert L. Vogel, a partner at Vogel, Slade & Goldstein who represented Lindley in the lawsuit, said “This case demonstrates that, when doing work for the government, a company has to play it straight when it tells the government what kind of work it will take to complete a job. A company cannot inflate the cost estimates it is providing to the Government when, at the same time, its own internal budgets show that it expects to complete the work at much lower costs.”
In addition to alleging fraud in connection with government contract, Lindley’s lawsuit claimed that Gallup fired him unlawfully after he brought the alleged fraudulent practices to the attention of senior management in 2009 and insisted that the company stop them. On July 23, 2009, Lindley’s lawsuit alleged, he told Gallup’s Government Division Manager that he would report the misconduct to DOJ if Gallup did not end the fraud immediately. Gallup fired Lindley the next day. According to Lindley’s complaint, Gallup’s chief counsel explained that “when you start talking about going to the Department of Justice, I don’t trust you anymore.”
According to whistleblower lawyer David J. Marshall, a partner with Katz, Marshall and Banks, LLP, who also represented Lindley in the litigation, “Michael Lindley stood up to Gallup’s wrongdoing at great risk to himself. The company fired him for trying to stop the fraud, but Michael fought back.” Marshall added, “Michael Lindley used the federal whistleblower law not only to vindicate himself but also to help the taxpayers recover a considerable sum from Gallup.”
Janet L. Goldstein, a whistleblower attorney with Vogel, Slade & Goldstein, LLP, who represented Lindley as well, commented on the significance of the government’s decision to suspend Gallup from receiving contracts during the litigation. “The willingness of the federal government to exercise its right to suspend contractors who engage in wrongdoing,” Goldstein said, “should send a shiver down the spine of every corporate executive doing business with the federal government.”
Lindley and Gallup resolved Lindley’s claims for unlawful termination in a confidential settlement reached earlier this year. Lindley will receive $1,929,363 as his share of the government’s settlement with Gallup announced today.