Federal Judge Agrees With Stsw in Major Ruling Limiting Federal Restitution Awards
A federal district court judge agreed with STSW’s Andrew White in a hotly contested motions hearing regarding the appropriate bounds for a federal restitution order in a bribery case.
STSW’s client, a West Point graduate and a contracting officer on several large engineering programs at the Aberdeen Proving Grounds, steered several very large sub-contracts to an engineering company started by his close friend (and also a fellow West Point graduate) in exchange for 50% of the profit on the contract.
Both the client and his wife pleaded guilty to bribery in the United States District Court in Maryland before Judge Catherine Blake. At a sentencing hearing, federal prosecutors argued that the client should be ordered to pay all of the monies received as a result of the scheme to the United States as restitution. Prosecutors argued that the kickbacks paid by the engineering company proved that the company would have agreed to perform work on the contract at that reduced rate. They argued that the government should get the benefit of that reduced rate and they cited to several Circuit Court rulings agreeing with their position.
STSW partner Andrew White argued that the monies paid to the client should not be considered as actual losses to the government because the government negotiated the rates on the prime contract and received exactly what it bargained for in terms of work from that company. Mr. White argued that there could be no actual loss to the government in cases like this where the government has received the benefit of its bargain under the contract.
After conducting a full day motions hearing, Judge Blake, in a written ruling, agreed with STSW that the government does not suffer any actual loss in situations where a contractor kicks money back to a government official but otherwise fully complies with all of the work requirements of the contract.
Judge Blake noted that there were several Circuit Court rulings siding with the government’s position, but ultimately the Judge reasoned that her ruling was consistent with cases in the Fourth Circuit and was the correct result in any event.