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Shipping companies fined for falsifying records under defense contract


From Illinois Business Journal news services

Two companies are jointly being fined millions of dollars for violating terms of a contract with a major command headquartered at Scott Air Force Base.

Farrell Lines, Inc. and Damco USA, Inc. have paid to the U.S. $3,659,500 in civil penalties for their failure to comply with certain terms of their contract with the United States Transportation Command, Acting U.S. Attorney for the Southern District of Illinois James L. Porter said Thursday.

Under Farrell’s contract with USTRANSCOM, it was required to perform international door-to-door and/or port-to-port transportation services to move Department of Defense and other government-approved cargo into and out of Afghanistan via multiple modes of transportation (air, sea and land). Farrell subcontracted its work on the contract to its affiliate, Damco. The price of the contract was based almost exclusively on the weight of the shipments, and documented cargo weights, consisting of “weight tickets” issued by a certified commercial scale for each cargo container, needed to be included with billing invoices to the government.

USTRANSCOM discovered that 563 weight tickets submitted by Farrell to support their billing invoices were “recreated” by Damco employees and not authentic weight tickets, a release from Porter said. Farrell and Damco were said to be cooperative in the investigation.

The matter was investigated by the U.S. Army Criminal Investigation Command, Defense Criminal Investigative Service, Defense Contract Audit Agency, Naval Criminal Investigative Service, Air Force Office of Special Investigations, and the Office of the Special Inspector General for Afghanistan Reconstruction and handled by Assistant United States Attorney Nathan D. Stump.

“The determined federal investigators and the attorneys in my office will continue to strive to ensure that dollars paid from the public fund are properly accounted for and that value is received. The United States Attorney’s Office stands ready to bring proper relief, either criminal or civil, whenever necessary, to make that a fact,” Porter said in a statement.

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