United States Ex Rel. Scollick v. Narula
215 F. Supp. 3d 26
| D.D.C. | 2016Background
- Relator Andrew Scollick sued multiple individuals and companies under the False Claims Act (FCA), alleging a scheme to obtain SDVOSB, HUBZone, and 8(a) set-aside construction contracts through false certifications, fabricated past performance, and sham ownership/control structures. The United States declined to intervene.
- Central alleged participants: Neil Parekh, Ajay K. Madan, Vijay Narula, Centurion Solutions Group (CSG), Citibuilders Solutions Group (Citibuilders), and service-disabled veteran Amar Gogia (allegedly the nominal owner of CSG). Plaintiff alleges CSG and Citibuilders were front companies controlled by non-veterans who used others’ statuses and falsified bid materials.
- Specific allegations include: false SDVOSB/HUBZone/8(a) certifications, falsified past-performance projects (e.g., a purported Mehta renovation), misuse of corporate accounts and credit cards, and transfer of contract proceeds among related entities.
- Plaintiff asserted four FCA theories: presentment of false claims (31 U.S.C. § 3729(a)(1)(A)), false statements (31 U.S.C. § 3729(a)(1)(B)), reverse false claims (31 U.S.C. § 3729(a)(1)(G)), and conspiracy (31 U.S.C. § 3729(a)(1)(C)).
- The court granted motions to dismiss for many defendants (insurance companies, CB Construction, OST, Dilip Parekh, Mehta, Goodweather, Centennial, Schendel, Hudson, Hanover), but after further review denied (in part) dismissal as to Citibuilders, Madan, and Narula; Counts I, II, and IV remain against Citibuilders, Madan, Narula, CSG, Neil Parekh, and Gogia. Count III (reverse false claims) was dismissed as to all defendants.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether alter-ego allegations justify imputing corporate misconduct to individuals/other entities | Scollick: pleadings show commingling, common control, diversion of funds and unity of interest so veil piercing is warranted | Defendants: allegations are conclusory and do not show unity or unfairness (undercapitalization or inability to satisfy judgments) required to pierce veil | Court: alter-ego allegations insufficient; legal conclusions without specific facts and no showing of inequitable result — veil piercing denied |
| Whether non-submitting defendants (insurance, CB, Mehta, Goodweather, OST) "caused" submission of false claims or statements | Scollick: defendants aided, bonded, or otherwise facilitated the scheme and therefore caused submission | Defendants: they did not directly submit claims, were peripheral (or performed ordinary business functions), lacked intent or substantial causal role | Court: claims against insurance defendants, CB, Dilip Parekh, Mehta, Goodweather, and OST for presentment/false statements dismissed for failure to plead causation/active role |
| Whether Citibuilders, Madan, Narula committed presentment and false-statement FCA violations (Rule 9(b) particularity) | Scollick: pleadings identify formation, material content of proposals, listed specific contracts and false representations sufficient under Rule 9(b) | Citibuilders et al.: alleged fraud lacks time/place/content specificity and is boilerplate | Court: allegations about Citibuilders, Madan, Narula are sufficiently specific (including listed contracts and copied proposals); Counts I and II survive against them |
| Whether reverse false claims (31 U.S.C. § 3729(a)(1)(G)) are plausibly alleged | Scollick: defendants retained fraudulently-obtained contract funds and insurance defendants concealed/avoided obligations to pay | Defendants: reverse claim cannot rest on concealment alone; no specific duty to repay alleged, no pleaded reduction/avoidance of a defined obligation | Court: reverse-false-claim allegations dismissed as a matter of law for all defendants — plaintiff may not convert presentment/statement allegations into reverse FCA liability |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading must state a plausible claim)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility and no mere labels/conclusions)
- Labadie Coal Co. v. Black, 672 F.2d 92 (D.C. Cir.) (two-prong veil-piercing test: unity and fairness)
- Aktieselskabet AF 21. Nov. 2001 v. Fame Jeans Inc., 525 F.3d 8 (pleading inferences and Rule 12(b)(6) standards)
- United States v. Bornstein, 423 U.S. 303 (FCA penalizes a person for his own acts, not solely others')
- United States ex rel. Totten v. Bombardier Corp., 286 F.3d 542 (D.C. Cir.) (Rule 9(b) applies to FCA; particularity requirements)
- U.S. ex rel. K & R Ltd. P’ship v. Massachusetts Hous. Fin. Agency, 530 F.3d 980 (FCA "knowingly" standard includes actual knowledge, deliberate ignorance, reckless disregard)
- United States ex rel. Miller v. Bill Harbert Int’l Constr., Inc., 608 F.3d 871 (D.C. Cir.) (elements of FCA conspiracy)
- United States ex rel. Martin-Baker Aircraft Co. v. (opinion), 389 F.3d 1251 (D.C. Cir.) (Rule 9(b) who, what, when, where, how standard)