United States ex rel. Scollick v. Narula, Case No: 14-cv-01339-RCL

• Decision Date: 14 October 2016
• Docket Number: Case No: 14-cv-01339-RCL
• Citation: 215 F.Supp.3d 26
• Parties: UNITED STATES of America, EX. REL. Andrew SCOLLICK, Plaintiff-Relator, v. Vijay NARULA, et al., Defendants.
• Court: U.S. District Court — District of Columbia

215 F.Supp.3d 26

UNITED STATES of America, EX. REL. Andrew SCOLLICK, Plaintiff-Relator,

v.Vijay NARULA, et al., Defendants.

Case No: 14-cv-01339-RCL

United States District Court, District of Columbia.

Signed October 14, 2016

Filed October 17, 2016

David K. Colapinto, Michael David Kohn, Kohn, Kohn & Colapinto, LLP, Washington, DC, for Plaintiff-Relator.

Brian W. Stolarz, Leclair Ryan, Alexandria, VA, Michael W. Siri, Bowie & Jensen, LLC, Towson, MD, Juan C. Estevez, Aiken Estevez PLLC, Lake Ridge, VA, Thomas M. Craig, Fluet Huber & Hoang, PLLC, Woodbridge, VA, John Martin Faust, Law Offices of John M. Faust, PLLC, Paul Warren Mengel, III, Pilieromazza, PLLC, Chad E. Kurtz, Iden Grant Martyn, Cozen O'Connor, Aaron L. Handleman, Borislav Kushnir, Eccleston & Wolf, PC, Washington, DC, Cynthia E. Rodgers-Waire, Gerard P. Sunderland, Marc Andrew Campsen, Wright, Constable & Skeen, LLP, Baltimore, MD, Mitchell A. Bashur, Robert G. Barbour, Watt, Tieder, Hoffar & Fitzgerald, LLP, McLean, VA, for Defendants.

Guatam Chitnis, Lynnfield, MA, pro se.

MEMORANDUM OPINION

Royce C. Lamberth, United States District Judge

I. INTRODUCTION

This case was brought by plaintiff-relator Andrew Scollick against eighteen defendants for violations of the False Claims Act ("FCA") in connection with a scheme to obtain certain set-aside government contracts through fraudulent means. The United States has declined to intervene in this matter. See Notice, ECF No. 6. The following defendants have moved to dismiss for failure to state a claim: Hudson Insurance Co., Hanover Insurance Co., Centennial Surety Associates, Inc., Michael Schendel, Ajay K. Madan, Vijay Narula, Optimal Solutions and Technologies, Inc. ("OST"), CB Construction Group, Inc. ("CB"), Dilip Parekh, Shobha N. Mehta, Melvin G. Goodweather, Citibuilders Solutions Group, and Guatam Chitnis. Defendants Amar Gogia, Centurion Solutions Group, LLC ("CSG"), and Neil Parekh have not moved to dismiss.¹ They have filed answers to plaintiff-relator's Complaint. See Defs. Gogia and CSG's Answer, ECF No. 63; Def. Parekh's Answer, ECF No. 103. Plaintiff-relator, with the consent of the U.S. government [110, 113], filed a notice of voluntary dismissal [112] with respect to defendants KCGI, Guatam Chitnis, and Anita Chitnis. Accordingly, no analysis of defendant Guatam Chitnis' motion to dismiss, ECF No. 108, is necessary because he has been voluntarily dismissed from this action.

All of the foregoing motions to dismiss were granted by this Court's Order of September 30, 2016, ECF No. 122. The Court finds that plaintiff-relator has failed to state claims against defendants Hudson Insurance Co., Hanover Insurance Co., Centennial Surety Associates, Inc., Michael Schendel, CB Construction, Dilip Parekh, Shobha N. Mehta, Melvin G. Goodweather, and OST and has granted their motions to dismiss. Upon further review, the Court has determined that plaintiff-relator has stated claims against defendants Citibuilders, Ajay K. Madan, and Vijay Narula for certain FCA violations—presenting false claims in violation of 31 U.S.C. § 3729(a)(1)(A), making false statements in violation of 31 U.S.C. § 3729(a)(1)(B), and conspiracy in violation of 31 U.S.C. § 3729(a)(1)(C) (Counts I, II, IV). The Court will accordingly vacate its prior Order granting the defendants' motions to dismiss as to these three defendants and will grant in part and deny in part defendants Citibuilders, Madan, and Narula's motions to dismiss.

In sum, Counts I, II, and IV remain pending against defendants Citibuilders, Madan, Narula, CSG, Neil Parekh, and Gogia.

II. BACKGROUND

The factual allegations in this case center around an alleged scheme to defraud the United States government by submitting bids to obtain government construction contracts. Plaintiff-relator claims that the defendants participated in this scheme by fraudulently claiming or obtaining service-disabled veteran-owned small business ("SDVOSB") status, HUBZone status, or section 8(a) status for certain companies to bid on and obtain set-aside contracts, when in fact the bidders did not qualify for the statuses claimed. Plaintiff-relator alleges that defendants, as part of this scheme, falsely certified these statuses, made false claims regarding past performance, hid certain aspects of the management and control of the companies at issue, and hid or falsified certain information regarding the employees of the companies at issue.

The central actors in this scheme are Neil Parekh, Ajay K. Madan, Vijay Narula, Centurion Solutions Group ("CSG"), and Citibuilders Solutions Group ("Citibuilders"). Parekh, Narula, and Madan allegedly engaged in conspiracy to defraud the government by bidding on SDVOSB construction contracts although none of them were service disabled veterans. Accordingly, Parekh, Narula, and Madan established CSG as a "front company" for the purpose of allowing them to bid on and obtain SDVOSB set-aside contracts. Compl. ¶ 43. To qualify for SDVOSB status, defendant Gogia—a service disabled veteran—was allegedly falsely identified as a 100% service disabled owner of CSG, although he did not actually exercise control or ownership over CSG. Id. at ¶ 50. Parekh, Narula, Madan, and Gogia also falsely identified that CSG operated out of a HUBZone when in fact it did not. Id. at ¶ 51. Plaintiff-relator alleges that CSG then submitted false claims and statements to the government. Id. at ¶¶ 53–85. Plaintiff-relator claims that the CSG bids contained falsified information regarding past performance, id. at ¶¶ 86–106, and false representations concerning CSG's employees, id. at ¶¶ 107–115. Finally, plaintiff-relator claims that CSG obtained millions of dollars in government contracts as a result of this fraudulent scheme, and lists the specific contracts allegedly fraudulently obtained. Id. at ¶ 116.

With regard to Citibuilders, plaintiff-relator alleges that Parekh established Citibuilders to branch out his fraudulent SDVOSB contracting activity. Id. at ¶ 118. According to the Complaint, Parekh falsely certified Citibuilders as a service-disabled veteran-owned entity—utilizing defendant Goodweather's service-disabled veteran status even though Parekh was the de facto owner and controller of Citibuilders, and misrepresented Citibuilders' past performance and project personnel. Id. at ¶¶ 119–128. Plaintiff-relator claims that Citibuilders obtained millions of dollars in government contracts as a result of this fraudulent scheme, and lists the specific contracts allegedly fraudulently obtained. Id. at ¶ 129. Plaintiff-relator claims that the creation of Citibuilders by Parekh caused a rift between himself and Narula and Madan. Id. at ¶¶ 131–147. Plaintiff-relator claims that Narula is the alter ego of OST, that Neil Parekh, Dilip Parekh, CB, and Citibuilders are all alter egos of each other, that Narula, Neil Parekh, Madan, OST, and CB are joint-alter egos of CSG, and that Neil Parekh, Goodweather, and Citibuilders are joint alter egos. Id. at ¶¶ 29–32.

Finally, Plaintiff-relator claims that similar fraud was committed in the name of a third company, KCGI. Id. at ¶¶ 166–174. Specifically it alleges that Narula, Parekh, Madan, Guatam Chitnis, and Anita Chitnis schemed to use KCGI to defraud the government by seeking Small Business Administration section 8(a) contracts and/or service disabled contracts. Id. at ¶ 166. On December 21, 2015 plaintiff-relator, with the consent of the U.S. government, filed a notice of voluntary dismissal with respect to KCGI, Guatam Chitnis, and Anita Chitnis.

Because of the number of defendants and the various and sometimes disparate allegations against them, the Court will summarize the remaining factual allegations against the rest of the defendants separately.

A. OST Defendants: Ajay Madan, Vijay Narula, Optimal Solutions and Technologies ("OST")

OST is a corporation located in Washington, D.C. Compl. ¶ 11. Vijay Narula is the president and CEO of OST. Id. at ¶ 15. Ajay K. Madan is the chief operating officer of OST and is a 49% owner of CSG. Id. at ¶ 20. Narula is alleged to be the alter ego of OST, and Narula, Madan, and OST are alleged to be (some of) the alter egos of CSG. Id. at ¶¶ 29, 31. Regarding OST, the Complaint alleges that CB's business operations were relocated to OST's office, id. at ¶ 42, that CSG's business operations occurred out of OST's headquarters, id. at ¶ 51, and that Narula, Madan, and Parekh prepared CSG bid proposals while working out of OST's office space, id. at ¶¶ 67, 84. It alleges that OST never qualified for SDVOSB or HUBZone status and was not a small business enterprise. Id. at ¶ 45–47. The Complaint further alleges that CSG's bid proposals "include[d] statements pertaining to work alleged to have been completed at defendant OST's corporate headquarters ... [but] CSG never performed any such construction activity." Id. at ¶ 102. Narula allegedly "would personally provide past performance survey responses [regarding the OST project] to the government." Id.

Factual allegations regarding defendants Narula and Madan are interspersed throughout the Complaint, which paints them as having a central role in the scheme. In sum, plaintiff-relator claims that Narula and Madan, along with Neil Parekh, were involved in the creation of CSG for the purpose of submitting fraudulent bids on certain government contracts, that Parekh, Narula, and/or Madan had control over and ownership of CSG, that they prepared the CSG bid proposals and decided the content, and that Gogia was subservient to them. Plaintiff-relator then describes Narula and Madan's reaction to the formation of Citibuilders—that it caused a rift among the three defendants. Id. at ¶ 131. He also discusses several communications between the defendants regarding the following: the transfer of funds, payroll and payment disputes, CSG's projects and profits, the separation of CB and CSG, the distribution of surplus CSG income between Parekh, Madan, and Narula, and the financial needs...