Burlington County, New Jersey, Construction Firm To Pay $1.5 Million To Resolve Joint State And Federal False Claims Action

NEWARK, N.J. – A Southampton, New Jersey, construction company will pay $1.5 million to resolve allegations that it committed multiple False Claims Act violations by contracting for public construction jobs despite paying its workers a lower hourly wage than required under state and federal law, U.S. Attorney Craig Carpenito and New Jersey Attorney General Gurbir S. Grewal announced today.

The settlement resolves a joint state and federal investigation of Ranco Construction’s labor practices conducted by the U.S. Attorney’s Office and the New Jersey Attorney General. The investigation began after a former Ranco employee filed a federal qui tam, or “whistle-blower,” lawsuit against the company.

In that lawsuit, the relator claimed that Ranco routinely entered into construction contracts with various state and federal entities and certified to the government that its employees were paid hourly wage rates set under federal and New Jersey prevailing wage laws.

The relator alleged, however, that Ranco systematically underpaid several of its workers and then falsified company payroll records to disguise the conduct. The relator worked for Ranco for a total of nine years – first as a laborer and then as an electrician – and left the company in 2016. He alleged in his lawsuit that Ranco forced him out for objecting to the company’s allegedly unlawful practices.

“Companies that contract with the federal government undertake an obligation to pay their employees a fair wage,” said U.S. Attorney Carpenito. “When contractors pay substandard wages and then falsely certify their compliance to the government, they not only cheat their employees, they also gain an unfair advantage in the contract bidding process, all at taxpayer expense.”

“The rules are simple: if a construction company wants to do business with the State of New Jersey, it has to pay its workers a fair wage. Ranco took the State’s money but then failed to keep up its end of the bargain,” said Attorney General Grewal. “As part of today’s settlement, we are recovering nearly half-a-million dollars for New Jersey taxpayers. Just as importantly, we are sending an important message – vendors who do business with public entities in New Jersey must act with integrity and honesty, and will be held accountable if they don’t.”

"The integrity of the DoD procurement system is a priority for the Defense Criminal Investigative Service (DCIS)," stated Special Agent-in-Charge Leigh-Alistair Barzey, DCIS Northeast Field Office. "This settlement agreement is the direct result of a joint effort by DCIS, the U.S. Attorney's Office and the New Jersey Attorney General to ensure that contractors do not gain an unfair competitive advantage by failing to comply with required federal labor laws."

The relator in the underlying qui tam will receive more than $150,000 as his statutory share of the recovery and to resolve his employment based claims in accordance with the False Claims Act. The civil lawsuit was filed in the District of New Jersey and is captioned United States ex rel. Robert Kleinow and the State of New Jersey ex rel. Robert Kleinow and Robert Kleinow individually v. Ranco Construction, Civ. Action No. 15-7278.

The civil settlement is not an admission of liability or improper conduct by Ranco.

U.S. Attorney Carpenito thanked special agents of the U.S. Department of Defense, Defense Criminal Investigative Service, under the direction of Special Agent in Charge Leigh-Alistair Barzey, for their assistance in the investigation.

The government is represented by the Assistant U.S. Attorney David Dauenheimer, Deputy Chief of the U.S. Attorney’s Office Civil Division, and Assistant Attorney General and Section Chief Janine Matton, Deputy Attorney Generals Paul Juzdan, Carla Pereira and Nicholas Kant of the New Jersey Attorney General’s Government & Healthcare Fraud Section.

Counsel for relator: Jennifer M. Carlson Esq., Vineland, New Jersey
Counsel for defendant: Linda D. Hoffa Esq., Philadelphia