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Balfour Beatty firm pays $65m to settle US military fraud claim

©GCR, illustration by Denis Carrier
A US subsidiary of UK contractor Balfour Beatty has agreed to pay $65.4m to settle a case brought by the Department of Justice into the fraudulent provision of maintenance in military housing.

Balfour Beatty Communities (BBC) pleaded guilty on 22 December to one count of fraud against the United States.

“Instead of promptly repairing housing for US servicemembers as required, BBC lied about the repairs to pocket millions of dollars in performance bonuses,” said Deputy Attorney General Lisa O. Monaco.

“This pervasive fraud was a consequence of BBC’s broken corporate culture, which valued profit over the welfare of servicemembers,” she added.

US District Judge Emmet Sullivan accepted the plea and sentenced BBC to pay over $33.6m in criminal fines and over $31.8m in restitution to the US military. The company will also have to serve a probationary period and engage an independent compliance monitor for a period of three years.

Separately, BBC also entered into a False Claims Act settlement with the US to resolve its civil liability for $35.2m. The amounts paid under the civil settlement will be credited against the amounts owed under BBC’s criminal plea.

According to court documents, BBC, headquartered in Malvern, Pennsylvania, operated privatised military housing at 21 Air Force, 18 Navy, and 16 Army bases across the US, accommodating tens of thousands of service members and their families.

BBC was eligible for performance incentive fees if it submitted proof that it had satisfied objectives related to housing maintenance and resident satisfaction.

According to court documents, however, from around 2013 to around 2019, BBC employees manipulated data in property management software and destroyed and falsified resident comment cards to falsely inflate performance metrics and fraudulently collect fees the company had not earned.

The 22 December resolution follows prior guilty pleas entered by two former BBC managers. In April 2021, Stacy Cabrera, a former community manager of BBC, pleaded guilty to conspiracy to commit wire fraud; in June, Rick Cunefare, a former regional manager of BBC, pleaded guilty to major fraud against the United States.

The case was investigated by the Air Force, Army and the FBI.

“In defrauding our country’s military services, BBC took advantage of their unique position as a military housing provider and put greed and personal profit above our servicemembers,” said FBI Deputy Director Paul M. Abbate.

Deputy Attorney General Monaco added: “Today’s global resolution sends a clear message to companies that if they do not maintain adequate compliance programmes, voluntarily self-disclose misconduct and fully cooperate with the government, they will pay a price that outweighs the profits they once reaped.”

Balfour Beatty issued a statement saying it cooperated fully with the Department of Justice during the investigation, and that the wrongdoing was “completely contrary to the way the company expects its people to behave”.

It added: “The company apologises for the actions of communities to all its stakeholders. It has been made clear to all employees that breaches of policies, procedures, or law will not be tolerated. Communities welcomes the appointment of the independent compliance monitor and looks forward to a constructive engagement.”

As part of the company’s plea agreement, it agreed to self-report violations of federal criminal law and to continue to implement a compliance and ethics programme to detect and deter violations of anti-fraud laws.

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