A ruling this week from a Houston federal court paved the way for a group of qui tam whistleblowers to continue most of their battle against a private defense contractor that allegedly defrauded the federal government of more than $100 million during the Afghan War.
In a 12-page order, U.S. District Judge Alfred H. Bennett ruled that the plaintiffs’ second amended complaint “sufficiently alleges” charges under the False Claims Act that the defendants, Dallas-based AECOM and affiliate McNeil Technologies, violated their government contract by failing to provide services they billed for. But the judge ruled the plaintiffs did “not plausibly allege” in their complaint that AECOM billed the government for “supplies defendants did not actually procure,” tossing that aspect of the case.
The plaintiffs are a group of 10 former AECOM employees who provided support to the U.S. military in Afghanistan and include a former U.S. Navy Seal, veterans of the U.S. Marine Corps and U.S. Army and individuals who have prior law enforcement and overseas contracting experience.
Barring any appellate hurdles, Smyser Kaplan & Veselka partner Justin Waggoner, who represents the plaintiffs, told The Texas Lawbook that Judge Bennett’s ruling will help discovery finally begin in the seven-year-old case.
“It’s a great result and the right result to preserve the bulk of what we alleged,” Waggoner said. “These gentlemen were put in harm’s way as a result of a fraudulent scheme and I think it’s a tremendous vindication for them to put their allegations to the test and to have their claims publicly aired. The scheme at issue … puts the lives of military personnel and contractor personnel at risk. It creates risks to national security when the type of atmospheric work being contracted for just wasn’t being provided.”
AECOM and McNeil’s lead lawyers, Yetter Coleman partner Bryce Callahan of Houston and Wiley Rein partner Roderick Thomas of Washington, D.C., declined to comment.
According to the lawsuit, the federal government paid AECOM $30 million annually for four years to provide “atmospheric” information, or “open-sourced intelligence services,” to the U.S. Army in Afghanistan. This included information that Afghan subcontractors would collect in local atmospheres — cafes, mosques, markets, bazaars and other places — from residents in order to gain an understanding of local sentiments about the U.S. and Taliban. The “atmospheric information” collected under the contract would then be the basis of reports submitted to aid the U.S. military.
“Instead, the government received essentially useless information as a direct result of defendant’s false claims and failures to comply with the material and plain terms of the contract,” the lawsuit says. “Defendants fabricated intelligence reports that regurgitated television news shows and newspaper clippings; produced atmospheric reports from and about areas of Afghanistan where defendants’ personnel did not speak the language of the local populace … recycled old atmospheric reports; and even generated atmospheric reports based on information from sources, such as family members,” the lawsuit says.
The plaintiffs filed their suit in January 2015 and it remained stagnant for 2.5 years as federal prosecutors reviewed the case. The government declined to intervene in the case in mid-2017 and the case was unsealed in July 2017. The plaintiffs filed a more detailed amended complaint, and shortly thereafter filed a motion to leave to file a second amended complaint. SKV joined the plaintiffs’ team and primarily drafted the second amended complaint, filed in June 2021. The government again declined to intervene in the suit in February 2021 after reviewing an earlier version of the second amended complaint.
Waggoner said SKV was hired through the firm’s co-counsel, Houston solo practitioner Justin Renshaw, whom Waggoner has known since law school. Wagner said Renshaw has litigated against SKV clients in the past.
The defense moved to dismiss, arguing that the plaintiffs had attempted “to bulk-up” their claims in their amended petition, but still failed to “identify a single false claim for payment.” Using evidence the defense claimed was predominantly collected through the Freedom of Information Act, they still failed to plead breach of contract, “let alone fraud” as required for a viable claim under the False Claims Act.
“In sum, this is a classic case of former employees attempting to leverage their personal complaints and anecdotal stories, which are completely untethered to contractual requirements (of which they have no independent knowledge), invoices (of which they have no independent knowledge), or even the purpose of the contract … into an FCA windfall,” the defendants’ motion to dismiss says.
In his Wednesday order, Judge Bennett disagreed.
“Defendants offer no authority for the proposition that such allegations are required,” the judge wrote. “To the contrary, the FCA specifically states that ‘intent to defraud’ is not required.”
The SKV team representing the plaintiffs also includes partners Craig Smyser and Sydney Scott and associate Rick Houghton.