Direct Resource Inc. Agrees to Pay $450,000 to Settle Allegations

of Selling Foreign Products to Federal Agencies

Direct Resource Inc. has agreed to pay the government $450,000 to resolve allegations that the company falsely claimed payment in violation of the Trade Agreements Act (TAA), which prohibits the sale of products to federal agencies from countries that do not have a reciprocal trade agreement with the United States, the Justice Department announced today. The Columbus, Ohio, company allegedly knowingly sold products from China, a country that does not have such an agreement with the United States.

Direct Resource sells a variety of products to U.S. agencies, including office supplies. The General Services Administration (GSA) contracts at issue require that all products sold to the U.S. government be manufactured in one of a list of designated countries deemed to trade fairly with the United States.

“It is central to the mission of the Department of Justice to protect the federal procurement process from improper charges and false claims,” said Stuart F. Delery, Acting Assistant Attorney General for the Department of Justice’s Civil Division. “Contractors who undermine U.S. trade interests will be held accountable for their actions.”

The allegations regarding the company arose from a whistleblower lawsuit filed in a federal court in the District of Columbia under the qui tam, or whistleblower, provisions of the False Claims Act. Those provisions allow private individuals known as “relators” to sue on behalf of the United States and to share in the proceeds of any settlement or judgment if the suit is successful. The relator, Louis Scutellaro, in this case will receive $67,500 of the total recovery as a statutory award.

“American businesses must get a fair shake in the government contracting process,” said Ronald C. Machen Jr., U.S. Attorney for the District of Columbia. “When contractors violate the Trade Agreements Act, we will step in to hold them accountable. This settlement makes clear the depth of our commitment to ensuring that government contractors play by the rules.”

“Passing off unauthorized foreign products to GSA contract users cheats them out of the products they actually contracted for,” declared GSA Inspector General Brian Miller.

The claims settled by this agreement are allegations only, and there has been no determination of liability. The matter was investigated by GSA’s Office of the Inspector General, the U.S. Attorney’s Office for the District of Columbia and the Justice Department’s Civil Division.