A whistleblower who exposed alleged over-billing by consulting firm Booz Allen Hamilton for defense and national security contracts said the government didn't go far enough to recover the ill-gotten gains.
Sarah Feinberg, whose discovery culminated with a government settlement in July with the McLean, Va.-based firm for $377 million, claims a weak Justice Department continues to incentivize fraud, and that Booz Allen allegedly kept over-billing for five years after she first exposed it, Politico reported.
Feinberg estimated the alleged over-billing totaled at least $500 million.
"Them paying this settlement is — really represents an interest-free loan from the government rather than a penalty for the fraud," she told Politico. "Maybe [the government] didn't have the financial capability to understand what they were looking at."
The Justice Department claims the $377 million recovered from Booz Allen was the largest such settlement in history, and was accepted partly based on prosecutors' assessment of the strength of their case, Politico reported.
Booz Allen declined to address Feinberg's new allegations, and noted that its settlement didn't acknowledge any wrongdoing, Politico reported.
In a case that was brought under the False Claims Act, Feinberg claimed the firm overcharged the government for costs related to its commercial and international operations. According to Politico, the alleged fraud occurred from around 2011 to 2021; an investigation took about six or seven years.
"The fact that [the Department] took so long allowed [Booz Allen] to continue doing this until 2021," Feinberg told Politico.
"When you can make a risk calculation that tells you that you're going to pay back less than what you take from your customers, and that you won't be held accountable from the Department of Justice, then I think it's an easy calculation for people without ethics in finance to decide to continue defrauding the government."
Feinberg also claimed she was told in 2015 that the Defense Contract Audit Agency, a government authority charged with catching potential fraud or overpayments, hadn't yet audited Booz Allen for 2012 — a lag that could have allowed fraudulent billing to go undetected for years, Politico reported.
A spokesperson for the Defense Contract Audit Agency didn't immediately comment to Politico.
Feinberg, a former captain in the U.S. Marine Corps who joined Booz Allen after serving in Iraq and earning an MBA from the Wharton School at the University of Pennsylvania, had complained the firm was losing tens of millions yearly on its commercial and international practice.
In her complaint, Feinberg alleged Booz Allen tried to recoup the funds by over-billing the government for costs related to its billions of dollars of consulting contracts, Politico reported.
Feinberg alleged Booz Allen's explanation was that the government wouldn't be motivated to collect the overpayments in full because, whatever it was, the government "would be proud of whatever they recovered," Politico reported.
"That's really my concern now, is that they've been proven right, and Booz was proven right in that, and so there's an incentive now to defraud the government when you know you're not going to actually have to pay back the full amount," Feinberg told Politico. "I think it's a bad precedent for DOJ to be setting."
Feinberg resigned from Booz Allen in 2016. A month later, she filed the lawsuit under the False Claims Act on behalf of the government. The Securities and Exchange Commission launched its own investigation. The firm recently said the investigation had concluded, Politico reported.
Patricia Hartman, a spokesperson for the U.S. Attorney's Office for the District of Columbia, told Politico the Booz Allen settlement indicated the office's commitment to exposing fraud.
"This settlement, which is one of the largest procurement fraud settlements in history, demonstrates that the United States will pursue even the largest companies and the most complex matters where taxpayer funds are alleged to have been pilfered," Hartman said in a statement. "The Justice Department is committed to ferreting out all fraud, waste, and abuse in government programs — small or large, simple or complex."
In return for her help with the investigation, Feinberg got about $70 million; after taxes, it's about $18.5 million, she told Politico, insisting her motivation was to "reject this kind of behavior by a company."
In a statement to Politico, a spokesperson for Booz Allen said after the conclusion of the government's years-long civil investigation, the firm did not admit civil liability as part of the settlement and "cooperated fully and has always believed it acted lawfully and responsibly."
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