Houston-based Egl Inc. Pays United States $4 Million; Allegedly Inflated Costs for Iraq Military Cargo Shipments

The following press release was published by the US Department of Justice on Aug. 2, 2006. It is reproduced in full below.

FOR IMMEDIATE RELEASE WEDNESDAY, AUGUST 2, 2006 WWW.USDOJ.GOV CIV (202) 514-2007 TDD (202) 514-1888 WASHINGTON – EGL, Inc. has paid the United States $4 million to settle potential civil claims under the False Claims Act based on the company’s alleged inflation of invoices for military cargo shipments to Iraq, the Justice Department and Matthew D. Orwig, the U.S. Attorney for the Eastern District of Texas, announced today. Houston-based EGL, operating as Eagle Global Logistics, was a subcontractor for Kellogg Brown and Root, the prime contractor for the U.S. Army’s Logistics Civil Augmentation Program (LOGCAP III) contract for logistical support of military operations overseas.

Christopher Joseph Cahill, EGL’s former regional vice-president for the Middle East and India, had previously pleaded guilty in the U.S. District Court for the Central District of Illinois, in a case prosecuted by the U.S. Attorney’s Office in Springfield, Ill., and the Criminal Division of the Justice Department, to adding $1.14 million in fraudulent “war risk surcharges” to the invoices. The invoices were for shipments of military goods from Dubai to Iraq from late November 2003 through July 2004. Cahill also admitted that when he became aware of a government investigation of EGL’s charging of the war risk surcharges, he directed a subordinate to create fraudulent invoices purporting to show war risk surcharges billed to EGL.

“The Justice Department remains committed to vigorously pursuing all those who defraud the military, particularly in a time of war,” said Peter D. Keisler, Assistant Attorney General for the Justice Department’s Civil Division.

The war risk surcharge allegations arose in a suit filed against EGL under the qui tam or whistleblower provisions of the False Claims Act. Under the whistleblower provisions of the False Claims Act, private parties can file an action on behalf of the United States and receive a portion of the proceeds of a settlement or judgment awarded against a defendant. As a result of today’s settlement, David Vavra and Jerry Hyatt will receive $800,000 as their relator’s share.

The Defense Criminal Investigative Service; Federal Bureau of Investigation; Internal Revenue Service, Criminal Investigation Division; and the U.S. Army Criminal Investigation Division all have participated in the investigation. 06-485

Source: US Department of Justice