FALSE CLAIMS ACT

CDW-G pays $5.7M to settle False Claims Act allegations

Settlement doesn't include admission of guilt

CDW-Government LLC is paying $5.7 million to resolve false claims allegations involving a General Services Administration contract.

Between 1999 and 2011, CDW-G allegedly improperly charged for shipping, sold products to the government that were manufactured in China and other prohibited countries, and under-reported sales to avoid paying GSA industrial funding fee, the Justice Department said in March 29 statement.

The allegations against CDW-G were sparked by a whistle-blower lawsuit filed in Illinois under the False Claims Act by a former CDW-G salesman, Joe Liotine. With the settlement, he’ll receive $1.3 million.

“Protecting the federal procurement process is a top priority for the Department of Justice,” said Stuart F. Delery, acting assistant attorney general for the Department of Justice’s Civil Division, in a statement. “Contractors who abuse that process and undermine American trade interests will be held accountable for their actions.”

The claims in the settlement agreement are allegations only, the Justice Department said in its statement, and there has been no determination of liability.

The Washington Business Journal reported that CDW-G is not admitting wrongdoing, and settled the claim to avoid “additional time, inconvenience and expense.”

Just days prior to the announcement of the settlement, CDW-G’s parent, CDW Corp., filed for an initial public offering worth $500 million. No date was set for the IPO.

The proceeds will be used to pay off debt, terminate a management services agreement, and other general corporate purposes, according to the filing with the Securities and Exchange Commission.

About the Author

Nick Wakeman is the editor-in-chief of Washington Technology. Follow him on Twitter: @nick_wakeman.

Reader Comments

Fri, May 10, 2013

I agree that large corporations get no real penalties. What a joke and CDW is about to go public? That IPO will help them pay off their huge debts this included. I hope they crash and burn.

Wed, Apr 3, 2013 Baffled DC

In ref to the other comments, what's not mentioned is value of the contracts in question. As a security professional, China has proven themselves interested in any kind of espionage they are able to implement. The U.S. is being very naive in not drawing a harder line on questionable products/purchases.

Tue, Apr 2, 2013

I agree with many of the previous posts. GTSI was debarred last year and that lasted about a month. Insight was fined $1 million and now CDW is fined $5.7 million - all three are merely slaps on the wrist. How about a minimum debarment of 1 year and a fine of 10% of the contract(s) value that was awarded in the first place?

Tue, Apr 2, 2013

$5.7M fine is nothing for a company like CDW. They should loose their GSA Schedule, be suspended and/or executives prosecuted. This is why large corporations don't respect the federal government because of these laughable penalties. They don't fear federal retribution.

Tue, Apr 2, 2013

This is what is wrong with the federal government and why nothing ever changes. Big companies like CDW-G/CDW, GTSI, Banks and other big corporations get a slap on the wrist and continue business as usual with no charges or wrongdoing.

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