Shaw University and Local Contractor Agree to Pay $316,900 to Settle Claims that They Falsely Obtained Funds From the United States Department of Education

RALEIGH – United States Attorney Robert J. Higdon, Jr., announced that Shaw University and Contractor Freddy Novelo agreed to pay $316,900 to settle claims that a former Shaw University official and a local building contractor made false statements and violated competitive bid requirements to obtain Department of Education grant funds in violation of the False Claims Act.

The United States’ investigation revealed that Novelo and one of Shaw University’s former Vice Presidents fabricated bids for a construction contract to evade the Department of Education’s competitive bidding requirements.  They then used those fabricated bids to justify payment of federal funds.

The government’s investigation began with a whistleblower complaint filed by a private individual under the qui tam provisions of the False Claims Act.  After investigating, the United States intervened to take over part of the lawsuit, and, through settlement, has now fully recovered the federal funds falsely obtained, plus substantial penalties. 

“This settlement demonstrates our firm commitment to protect taxpayer money and to guard the integrity of federal grant programs,” said U.S. Attorney Higdon.  “Universities, contractors, and all those seeking federal funds are required to make honest claims for payment.  Those who do not will be held accountable.”

The federal False Claims Act allows the United States to recover triple the money falsely obtained, plus substantial penalties for each false claim submitted.  The government can also recoup investigative costs.  If the lawsuit was originally filed by a whistleblower, that person may be entitled to a portion of the government’s recovery. 

It should be noted that the claims resolved by settlement here are allegations only, and that there has been no judicial determination or admission of liability.  Shaw University and its current administration have fully cooperated in resolving these allegations.

The settlement was the result of coordinated effort by the U.S. Attorney’s Office for the Eastern District of North Carolina and the Department of Education.  Assistant United States Attorneys Michael Anderson and Neal Fowler represented the government in this case.