Defense Contractor To Pay $4.02 Million For Alleged Improper Billing

NEWARK, N.J. – A Virginia-based military contractor doing business in New Jersey will pay $4.02 million to resolve allegations that it improperly billed the United States for extra payments to employees, U.S. Attorney Craig Carpenito, District of New Jersey, announced.

Mission1st Group Inc. (Mission First), a Virginia Corporation which provided program management, systems engineering, and information technology and communications, improperly billed the United States for extra payments to employees, known as uplifts, that were not actually paid to its employees.

Employees of civilian contractors in support of U.S. military forces stationed in Iraq and Afghanistan are entitled to uplifts to their salaries in the form of danger pay and hazardous duty pay. The settlement resolves allegations that Mission First billed uplifts that it was supposed to pay to its employees, but did not actually pay the employees. The United States alleged that Mission First also billed the United States for Federal Insurance Contributions Act (FICA) taxes on the uplift billings, which were in most instances in excess of the statutory cap for the affected employees, and then improperly retained those excess tax payments.

U.S. Attorney Carpenito credited Special Agent Peter DeRado of the Defense Criminal Investigative Service; Special Agents William Schelpf and Kim Canady of the Major Procurement Fraud Unit of the U.S. Army’s Criminal Investigation Division; David Gotlib, an auditor with the Department of Defense Contract Audit Agency; and Steven G. Foster, a contracting officer with the Army Contracting Command, Aberdeen Proving Ground, led by Kenyata L. Wesley Sr., Executive Director, Senior Executive Service, with the investigation.

The government is represented by Senior Trial Counsel Anthony J. Labruna and Assistant U.S. Attorney Mark C. Orlowski of the U.S. Attorney’s Civil Division in Newark, and Trial Attorney Art J. Coulter of the Civil Frauds Section of the Justice Department in Washington, D.C.

Defense counsel: Justin A. Chiarodo Esq., Washington, D.C.