May 25, 2010, 9:38 PM — The U.S. Department of Justice (DOJ) announced today that EMC Corp. has paid $87.5 million to settle allegations that it violated the federal Anti-kickback Act by giving kickbacks to consultants and overcharging for hardware and software.
In March 2009, the DOJ charged EMC with giving kickbacks to federal IT consultants and overcharged the government for hardware, software and technology services dating back to the late 1990s.
Former Accenture employees, Norman Rille and Neal Roberts, under the whistle-blower provisions of the False Claims Act, initially filed a civil lawsuit against EMC in the Eastern District of Arkansas. When the DOJ entered the case, the lawsuit was transferred to the U.S. District Court for the Eastern District of Virginia. The False Claims Act allows for triple damages in any case where a company has filed false or fraudulent claims to the United States for government funds or property.
"The United States alleged that, by misrepresenting its commercial pricing practices, EMC fraudulently induced the General Services Administration (GSA) to enter into a contract with prices that were higher than they would have been had the information technology company not made false misrepresentations," the DOJ said in a statement.
The DOJ also alleges that the Hopkinton, Mass.-based storage vendor made false statements to the GSA about its commercial pricing practices in order to obtain a higher price on its contracts -- thereby overcharging federal agencies purchasing EMC products and services.
EMC denied all of the charges last year, and continued to do so today.
"EMC has always denied these allegations and will continue to deny any liability arising from the allegations made in this case. We're pleased that the expense, distraction and uncertainty of continued litigation are behind us," said EMC spokesman Patrick Cooley. He went on to say that the government's case is "historical" in nature, and that some of the allegations are nearly 10 years old.
"That said, EMC provides mission-critical information infrastructure solutions to numerous branches of the U.S. Government and will continue to serve our important and valuable federal customers," he said.