B-134131, FEB. 16, 1960

B-134131: Feb 16, 1960

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TO CARRIED LUMBER COMPANY: FURTHER REFERENCE IS MADE TO A LETTER IN YOUR BEHALF DATED JANUARY 14. DURING PERFORMANCE OF THE CONTRACT AN INVESTIGATION WAS CONDUCTED ON THE BASIS OF INFORMATION RECEIVED THAT EMPLOYEES OF YOUR COMPANY WERE FURNISHING DELIVERY RECEIPTS WHICH SHOWED DELIVERY OF LUMBER IN EXCESS OF THE AMOUNTS WHICH WERE IN FACT RECEIVED BY THE AIR FORCE. CHARGES CLAIMED BY YOU FOR LUMBER NOT ACTUALLY DELIVERED WERE DETERMINED TO BE IN THE AMOUNT OF $8. IT WAS CONCLUDED THAT THE FURNISHING OF SUCH IRREGULAR DELIVERY RECEIPTS CONSTITUTED AN ACT OF FRAUD AGAINST THE GOVERNMENT AND FOR THAT REASON PAYMENT TO YOU HAS BEEN WITHHELD OF THE BALANCE OF $22. FROM YOUR ATTORNEYS IT IS CONTENDED THAT THE FINDING OF IRREGULARITY AND FRAUD WAS IMPROPER SINCE THE PROCEEDINGS WERE ALMOST ENTIRELY EX-PARTE.

B-134131, FEB. 16, 1960

TO CARRIED LUMBER COMPANY:

FURTHER REFERENCE IS MADE TO A LETTER IN YOUR BEHALF DATED JANUARY 14, 1960, FROM PRIMICIAS AND DEL CASTILLO, ABOGADOS-LAWYERS, REQUESTING RECONSIDERATION OF OUR SETTLEMENT DATED NOVEMBER 24, 1959, DISALLOWING YOUR CLAIM FOR $22,624.93 UNDER CONTRACT NO. AF 64/700/ 518, DATED FEBRUARY 8, 1955.

UNDER THE CONTRACT, WHICH YOU ENTERED INTO WITH THE DIRECTORATE OF PROCUREMENT, PHILIPPINE AIR FORCE DEPOT (SECONDARY), CLARK AIR FORCE BASE, YOU AGREED TO FURNISH TO THAT BASE AND TO CAMP JOHN HAY, PHILIPPINES, THE SPECIFIED TYPES AND QUANTITIES OF LUMBER SET FORTH IN THE CONTRACT FOR A TOTAL CONSIDERATION OF $293,035.54. DURING PERFORMANCE OF THE CONTRACT AN INVESTIGATION WAS CONDUCTED ON THE BASIS OF INFORMATION RECEIVED THAT EMPLOYEES OF YOUR COMPANY WERE FURNISHING DELIVERY RECEIPTS WHICH SHOWED DELIVERY OF LUMBER IN EXCESS OF THE AMOUNTS WHICH WERE IN FACT RECEIVED BY THE AIR FORCE. AS A RESULT OF THE INVESTIGATION, CHARGES CLAIMED BY YOU FOR LUMBER NOT ACTUALLY DELIVERED WERE DETERMINED TO BE IN THE AMOUNT OF $8,583.71--- LATER COMPUTED BY OUR OFFICE TO BE $8,743.11. IT WAS CONCLUDED THAT THE FURNISHING OF SUCH IRREGULAR DELIVERY RECEIPTS CONSTITUTED AN ACT OF FRAUD AGAINST THE GOVERNMENT AND FOR THAT REASON PAYMENT TO YOU HAS BEEN WITHHELD OF THE BALANCE OF $22,624.93 UNDER THE CONTRACT. THE REFUSAL OF THE GOVERNMENT TO MAKE THIS PAYMENT HAS RESULTED IN YOUR CLAIM.

IN THE LETTER OF JANUARY 14, 1960, FROM YOUR ATTORNEYS IT IS CONTENDED THAT THE FINDING OF IRREGULARITY AND FRAUD WAS IMPROPER SINCE THE PROCEEDINGS WERE ALMOST ENTIRELY EX-PARTE, THAT THE UNITED STATES SHOULD SUBMIT TO A SUIT AGAINST IT IN THE PHILIPPINE COURTS IN THIS CASE, AND THAT, IN ANY EVENT, THERE SHOULD BE PAID TO YOU THE DIFFERENCE BETWEEN $8,583.71--- THE AMOUNT ORIGINALLY COMPUTED TO HAVE BEEN DIRECTLY INVOLVED IN THE IRREGULARITIES--- AND THE TOTAL UNPAID BALANCE OF $22,624.93, SINCE SUCH DIFFERENCE WAS NOT ASSOCIATED WITH THE IRREGULARITIES.

A REVIEW OF THE RECORD SHOWS THAT CERTAIN CORRESPONDENCE WAS EXCHANGED BETWEEN EITHER YOU, OR THE LAW FIRM OF PRIMICIAS AND DEL CASTILLO, IN YOUR BEHALF, AND THE CLARK AIR FORCE BASE DURING THE PERIOD FROM NOVEMBER 2, 1955, TO NOVEMBER 29, 1955, WHEREIN THERE WAS EXTENDED TO YOU AN INVITATION TO CONFER WITH AUTHORITIES OF THE AIR FORCE BASE REGARDING THE SUBJECT IRREGULARITIES. MOREOVER, IT APPEARS THAT MUCH OF THE EVIDENCE UPON WHICH THE IRREGULARITIES WERE BASED CONSISTED OF TESTIMONY OF YOUR OWN OFFICIALS AND EMPLOYEES. THIS BEING THE CASE, WE CANNOT AGREE THAT THE PROCEEDINGS ESTABLISHING THE IRREGULARITIES WERE EX-PARTE. THE RECORD SHOWS THAT EITHER DURING THE INVESTIGATION OR AT SOME LATER DATE, YOU WERE FULLY AWARE OF THE DETAILS AND NATURE OF THE CHARGES AGAINST YOU AND THAT YOU HAD AMPLE OPPORTUNITY TO REVIEW OR DISPROVE THEM BUT FAILED TO DO SO. IN OUR VIEW THE RECORD BEFORE THIS OFFICE REASONABLY ESTABLISHES THAT THE IRREGULARITIES DETERMINED TO HAVE BEEN PRACTICED ARE SUCH AS TO CONSTITUTE FRAUD AGAINST THE UNITED STATES.

SO FAR AS CONCERNS THE BALANCE OF $22,624.93 DUE UNDER THE CONTRACT, IT IS OUR OPINION THAT ANY RIGHT YOU MAY HAVE TO THIS AMOUNT IS VITIATED BY THE FRAUD. BY STATUTE, SECTION 2514 OF TITLE 28, U.S.C., IT IS PROVIDED THAT A CLAIM AGAINST THE UNITED STATES SHALL BE FORFEITED TO THE UNITED STATES BY ANY PERSON WHO CORRUPTLY PRACTICES OR ATTEMPTS TO PRACTICE ANY FRAUD AGAINST THE UNITED STATES IN THE PROOF, STATEMENT, ESTABLISHMENT, OR ALLOWANCE THEREOF. IT WAS HELD IN GLOBE INDEMNITY CO. V. UNITED STATES, 84 C.CLS. 587, THAT THE PROVISION FOR FORFEITURE BECOMES A PART OF EVERY CONTRACT WITH THE UNITED STATES; THAT CONTRACTORS ARE CHARGED WITH NOTICE OF POSSIBLE FORFEITURE TO THE UNITED STATES OF THE WHOLE OF ANY CLAIM IN CONNECTION WITH WHICH FRAUD IS PRACTICED AND THE FORFEITURE, AS WELL, OF ANY CAUSE OF ACTION BASED UPON THE CONTRACT OF THE PERSON COMMITTING THE FRAUD; THAT THE MAIN PURPOSE OF THE STATUTE IS TO PENALIZE NOT ONLY THE CONTRACTOR FOR WHAT AMOUNTS TO A CRIME AGAINST THE UNITED STATES BUT EVERYONE HAVING A CLAIM AGAINST THE UNITED STATES UPON THE CONTRACT IN CONNECTION WITH WHICH THE FRAUD WAS COMMITTED. SEE, ALSO, JERMAN V. UNITED STATES, 96 C.CLS. 540 AND ANDREW T. LITTLE, D/B/A SOUTHERN SCHOOL OF INSURANCE V. UNITED STATES, 138 C.CLS. 773.

WITH RESPECT TO LITIGATION OF YOUR CLAIM IN THE PHILIPPINE COURTS, THIS OFFICE HAS NO AUTHORITY TO DETERMINE WHETHER THE UNITED STATES SHOULD SUBMIT TO THE JURISDICTION OF FOREIGN COURTS.

FOR THE REASONS ABOVE-INDICATED, IT IS CONCLUDED THAT YOUR CLAIM MAY NOT BE ALLOWED, AND THE SETTLEMENT OF NOVEMBER 24, 1959, IS SUSTAINED.