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Home / Legal News / Wis. contractor stung in whistleblower suit over Buy American laws (UPDATE)

Wis. contractor stung in whistleblower suit over Buy American laws (UPDATE)

A Wisconsin contractor’s alleged attempts at passing off Chinese-produced construction materials as “Made in the USA” have resulted in a $2.5 million settlement of a whistleblower case involving accusations of cheating on government contracts.

Novum Structures, of Menomonee Falls, has also agreed to plead guilty to one count of concealing a material fact, a charge that arose from the same alleged practices. The plea agreement calls on the company to pay a $500,000 criminal fine in addition to the settlement.

Separately, Novum officials have agreed to not contest any attempts at barring their company from bidding on future federal projects.

Novum specializes in the installation of glass-space frames in roofs and atrium enclosures. The civil suit — which was filed in the U.S. District Court for Eastern Wisconsin in 2012 — accused company officials of failing to comply with laws that require the use of U.S.-made materials on projects that benefit from federal money.

A U.S. Department of Justice news release alleges that Novum officials had “repackaged materials and falsified documents … in order to hide that (they were) using noncompliant foreign materials.”

In a statement released Wednesday, Novum said it has undertaken steps to ensure it complies with Buy American laws in future. It also said that it has, in many cases, replaced the foreign-built components used in some of its projects with materials that were made in the U.S.

Novum said that nowhere was the quality of the company’s work brought into question.

“It is also important to note that the Buy American requirements applied to a very small part of Novum’s business,” according to the official statement. Additionally, “the noncompliant materials used represented a small fraction — less than 3% — of the value of the work on the few projects that were” subject to Buy American requirements.

The whistleblower in the civil case — Brenda King, a former Novum employee — will receive about $412,000 from the $2.5 million settlement announced Tuesday. A resident of Hubertus, King began working at Novum in June 2004, taking a job as an expediter, and stayed there until March 2012.

According to the civil complaint, King had spoken frequently to Novum officials about the company’s use of materials made outside the U.S. In one discussion that took place in or around November 2011, Ian Collins, Novum president and owner, told project managers that it was their responsibility to lie if they were caught trying to pass off foreign-made materials, according to the civil complaint.

King was also directed by a project manager to falsify records, according to the complaint. The complaint states that King and other employees had told company officials that they were uncomfortable with the falsifications.

Brian Mahany, a Milwaukee lawyer who represented King, said Novum was believed to have taken steel components that were actually manufactured in China, Turkey and Brazil and passed them off as being made in the U.S. The components ended up in projects that were undertaken throughout the country from the start of 2004 to July 11, 2013, according to the U.S. Department of Justice.

Perhaps the most prominent structure to be affected, Mahany said, was the U.S. Capitol’s new visitor center.

Elsewhere, Novum is suspected of using non-U.S. made components in projects related to a hub for various modes of ground transportation near the Miami International Airport and a streetcar line in New Orleans, as well as in federal courthouses and veterans hospitals throughout the country. The building closest to Wisconsin to be affected is the federal courthouse in Rockford, Ill., Mahany said.

Mahany said he believes very little, if any, of Novum’s projects involve structural components.

“In these cases, many times the use of foreign steel involves a huge safety issue,” he said. “But I don’t think safety was a big component in this case.

“I don’t think anyone’s in danger from Novum,” he added. “But in these sorts of cases it’s often about far more than giving preference to American workers, which is a lofty and noble goal in itself.”

The civil case against Novum was brought under the federal False Claims Act. Novum was specifically accused of submitting false claims for payment.

Construction projects that receive federal money are often subject to laws that require the use of domestic materials when possible.

In an official statement, Secretary of Transportation Anthony Foxx said, “The U.S. Department of Transportation considers compliance with Buy America to be a fundamental requirement when a company is involved in federal projects. As we work to be good stewards of limited federal resources, the department applauds the Department of Justice and our own Office of Inspector General for the successful prosecution of this case.”


About Dan Shaw, [email protected]

Dan Shaw is the managing editor at the Wisconsin Law Journal. He can be reached at [email protected] or at 414-225-1807.

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