Novum Structures LLC has agreed to pay the U.S. government $3 million to settle civil and criminal allegations that they attempted to hide the improper use of foreign materials in several government-funded construction projects, the Justice Department recently announced.

For filing the initial whistleblower lawsuit against Novum that sparked the government investigation, whistleblower Brenda King will collect a $400,000 cash whistleblower award.

Novum Conceals Foreign Materials Use In Taxpayer-Funded Construction Projects

The Wisconsin-based manufacturer, specializing in the production of glass frames for skylights, atriums and canopies, pleaded guilty to concealing material fact by falsifying documents, resulting in a criminal fine of $500,000.

Novum agreed to pay an additional $2.5 million to settle a civil False Claims Act lawsuit alleging it violated the Buy American Act by using foreign materials on U.S. taxpayer-funded projects from January 2004 to July 2013. Novum has since been disqualified from working on federally funded projects.

Federally-funded construction contracts are required by law to use American-made materials to ensure that funds remain in the U.S. economy. Yet contractors still attempt to put their own financial gain ahead of the law.

Bidding a project with American-made product prices and then substituting inferior or less expensive foreign materials may be profitable, but it’s also illegal.

King, a former Novum employee, filed a False Claims Act lawsuit in August 2012 claiming that Novum used materials made in Italy and China in the production of a ground transportation hub near Miami International Airport. The U.S. government and Florida Department of Transportation provided Novum with two contracts for the project totaling nearly $15 million.

King also reported allegations that Novum used German and Chinese materials for a $515,000 New Orleans streetcar expansion contract – and again used German and Chinese materials on a $110,900 Illinois federal courthouse production contract.

King’s original False Claims Act lawsuit stated, “Instead of providing much needed opportunities for American workers in a time of great need and high unemployment, Novum orchestrated a complex scheme designed to mislead the government and taxpayers, and deprive American workers, all while enriching themselves.”

Federal and state False Claims Acts provide substantial anti-retaliation protections and offer significant cash rewards to those who are willing to come forward and report false or fraudulent behavior that harms the government. Whistleblowers whose claims are successful are eligible to collect between 15 and 30 percent of the total government recovery amount.

King claims in her whistleblower lawsuit that she was asked to lie about the true origin of building materials and falsify documents in order to conceal the Buy American Act violations.

According to King’s attorney, Brian H. Mahany, who specializes in qui tam actions, the False Claims Act violations included fraudulently recording material test numbers from legitimate U.S. products, repackaging foreign steel products to suggest American origin, and expecting employees to be dishonest when questioned.

Buy American Act Serves to Stimulate Economy, Ensure Safety and Preserve Jobs

Since Congress passed the Buy American Act in 1933, the law continues to require that the U.S. government give preference to American-made products in order to stimulate our nation’s economy, ensure safety and protect valuable manufacturing jobs.

Several areas of legislation use the Buy American Act to continue to promote job creation and American manufacturing. The National Defense Authorization Act requires that specified arms and ammunition vital to our nation’s defense be American-made. Similarly, the Berry Amendment requires that our military’s clothing and food come from materials originating in the United States.

The Surface Transportation Assistance Act requires that specified transportation projects give preference to ‘Made in the USA’ materials. Likewise, the American Recovery and Reinvestment Act requires publicly-funded building construction to use only American-made iron, steel and other building materials.

When government contractors substitute foreign materials in a government-funded project, even when those materials are of equal quality, the U.S. government and taxpayers are defrauded.

Waivers are available for foreign material use when justified, yet dishonest contractors and vendors continue in their attempt to pocket taxpayer dollars by claiming they are using American-made materials while incorporating cheap foreign goods.

Not only does this damage the economy, it also brings about safety issues. Building materials like iron and steel are highly regulated in the United States and are certified with origin and composition data. When contractors replace this data in order to hide their fraudulent activities, critical information regarding building material stability and quality is lost.

“Domestic preference statutes are designed to promote American businesses and to protect U.S. economic interests,” said Acting U.S. Attorney Gregory J. Haanstad for the Eastern District of Wisconsin.

“When companies subvert those interests by violating ‘Buy American’ provisions – and when they undertake efforts to conceal that they have done so – all in an effort to improperly advance their own private financial interests, the U.S. Attorney’s Office will pursue all appropriate criminal and civil sanctions,” Haanstad added.

Is Your Company Using or Selling Foreign Materials Under a Government Contract?

This violates federal and state False Claims Acts. A successful case could entitle you to a whistleblower cash reward of up to 30 percent of the government’s recovery in a successful case. To find out if you have a case, fill out the form on this page today for a no-cost, immediate and confidential evaluation. The Buy American attorneys working with Top Class Actions will contact those who qualify and discuss options for an individual or class action lawsuit. Act now! Timing is critical as statutes of limitations apply.