California pays huge sums of money to many firms from whom it purchases specialized scientific services. Two such firms, both providing environmental consulting services, were recently found guilty of allegedly conspiring to submit false invoices to the Underground Storage Tank Cleanup Fund, a fund managed by the State Water Resources Control Board.
The charges
According to a statement released by the State Water Resources Control Board, the two consulting firms performed various services for the board and then conspired with a laboratory to submit inflated invoices that substantially overstated the actual charges.
The State Water Board’s Fraud, Waste and Abuse Prevention Unit investigated the invoices and found evidence suggesting that the two firms had conspired with a private laboratory to submit the inflated invoices in return for an under-the-table kickback from a firm operating under the name Cal Tech Laboratories, Inc. and its owner.
The criminal investigation
The matter was the subject of a parallel police investigation in Los Angeles County. The owner of Cal Tech Laboratories was given a suspended sentence of 16 months and three years of probation. He was also ordered to perform 30 days of community service and to pay $190,000 in restitution.
Administrative penalties
The State Water Resources Board imposed fines of $230,000 on one of the consultants based in Stockton. A Tulare-based company was fined $86,651. Both firms were disqualified from bidding on or participating in further assistance programs.
Conclusion
As this case demonstrates, the penalties for violating the state’s anti-fraud regulations can be severe. Anyone facing such charges may benefit from consulting an attorney who is experienced in handling fraud allegations where the potential penalties can easily run into six figures.