U.S. government sues feed dealers in False Claims Act suit

July 20, 2010  |  Class Actions, Whistleblower/Qui Tam

It often seems that government contractor fraud against the United States is limited primarily to the fields of health care and the military.  But no.  Government contractor fraud can be found quite literally in the fields, specifically the fields of Kansas – in which state the U.S. has brought a False Claims Act lawsuit against R&J Feed Co. and Carter Livestock Inc., along with Jerry Goodwin and Richard Carter.  The suit alleges that the defendants violated the federal False Claims Act by improperly exporting nonfat dry milk owned by the U.S. Department of Agriculture (USDA) and promised to U.S. livestock producers in designated drought-ridden states.

In 2002 and 2003, the USDA established livestock feed assistance initiatives to provide ranchers with protein-enriched feed.  As part of the program, U.S. feed dealers received, at a very modest price, nonfat dry milk for use in livestock feed.  To participate in the initiatives, feed dealers were required to certify that the milk product they received would be used solely to produce feed for livestock in specific U.S. states suffering drought conditions.  The Kansas defendants are alleged to have violated that pledge by arranging for the export to foreign countries of millions of pounds of USDA nonfat dry milk that had been allotted for use in this country.

Instead of helping hard-hit ranchers in this country, the defendants allegedly helped themselves to profits to which they were not entitled as part of the USDA initiative.  Under the federal False Claims Act, whistleblowers are encouraged to expose such scams by filing suit on the government’s behalf and sharing in a portion of any recovery.

For the full story, go to the Department of Justice’s press release.

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