Moving company to pay government $575,000

Settlement ends fraud case against Guardian

July 19, 2000|By Gail Gibson | Gail Gibson,SUN STAFF

A Baltimore moving and storage company will pay the federal government $575,000 to settle claims that it collected union wage hikes for contract work at the National Security Agency done mainly by nonunion workers who never saw the extra money.

The payment resolves a lawsuit federal prosecutors filed in September against Guardian Moving & Storage after U.S. Defense Department investigators uncovered the overbilling. Guardian did not admit any wrongdoing in the settlement reached Monday, and the South Baltimore hauler is not prohibited from seeking future government contracts.

An attorney for Guardian described the case yesterday as a billing mistake that the company wanted to correct quickly to maintain good relations with the federal government, one of its largest customers.

"It's true that Guardian did make a mistake, and that's why we settled the case," said Bruce M. Luchansky, the company's attorney.

In the complaint filed last fall, federal lawyers contended that Guardian fraudulently profited from its contract with NSA for packing and moving office furniture and equipment at the security agency's Fort Meade headquarters.

When Guardian first entered the contract in October 1991, it specified fixed, hourly labor costs between $15.63 per hour to $17.93 for union workers, court papers show.

The government also agreed to pay any hourly raises that Guardian's union workers received through collective bargaining agreements. Union employees received wage hikes of between $1 and $1.30 an hour in 1992. In 1994, they received another raise of $1.25 an hour, according to court records.

Federal authorities said Guardian then collected those extra wages for all of its employees doing the moving at NSA, though about three-quarters of them were nonunion, "casual" workers who earned $6.50 an hour and did not receive the union raises.

In court papers, federal lawyers said Guardian kept the wage increases that NSA paid for the casual employees. "Such profit was over and above any agreed profit under the contract and should not have been paid," prosecutors said in the original complaint.

The company's attorneys argued that Guardian had relied on NSA's direction in preparing billing statements. They described the Light Street-based business, which also has contracts for local jobs such as hauling voting booths to Baltimore precincts, as trying hard to properly execute its first federal contract.

"At worse, this is a case of mutual mistake by NSA and Guardian, and, at worst, restitution or reformation is the appropriate remedy," company attorneys said in a February court filing. "There was no fraud."

Assistant U.S. Attorney Charles J. Peters said yesterday the government estimated that Guardian had improperly collected about $250,000 in extra wages from NSA. If the government had won the case at trial, it could have collected up to three times that amount under the federal False Claims Act.

The $575,000 agreed to in the settlement includes restitution and a penalty roughly equal to the improper payments.

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