United States ex rel. Vasudeva v. Dutta-Gupta
| Decision Date | 07 November 2014 |
| Docket Number | C.A. No. 11-114ML |
| Parties | UNITED STATES OF AMERICA ex rel. REKHA VASUDEVA and KARAN VASUDEVA, Plaintiffs, v. ANJAN DUTTA-GUPTA, INDRANI DUTTA-GUPTA, AMRITA DUTTA-GUPTA, and RALPH M. MARIANO, Defendants. |
| Court | U.S. District Court — District of Rhode Island |
REPORT AND RECOMMENDATION
In 2006, Relators Rekha Vasudeva and Karan Vasudeva ("Relators") brought this whistleblower qui tam suit under the False Claims Act ("FCA") alleging a criminal scheme of billing the United States Navy for work not performed and sharing the proceeds of the scheme among the individuals and entities participating in the conspiracy. The Relators cooperated with the governmental investigation triggered by their claim, which led to the exposure of a $17.9 million theft from the United States Navy. Ultimately, six criminal defendants were convicted for their role in the scheme, including "the mastermind" and "most culpable," Ralph M. Mariano, who pled guilty to theft from the government (among other claims) on May 30, 2013. United States v. Mariano, CR No. 12-61-01ML (ECF No. 155 at 26). After his plea, but before sentencing, Mariano made filings that denied his guilt and attempted to shift the blame to what he claimed was the government's negligent investigation. As a result, Mariano was sentenced to ten years of incarceration, near the top of a guidelines range that did not take cognizance of his supposed acceptance of responsibility at the time of the plea. This harshsentence has been summarily affirmed. United States v. Mariano, No. 13-2441, Judgment (1st Cir. Oct. 9, 2014). At sentencing, the Court explained the unusually long sentence imposed on Mariano, a white-collar first-offender:
I consider the devastation you left in your wake, not only to your own family, to your friends, to the taxpayers, the Navy and all of those people who lost their jobs who had to dip into their savings, who could not find a job that was as well paying, whose lives were absolutely devastated by you all because you wanted to be a big shot.
Mariano, CR No. 12-61-01ML (D.R.I. Nov. 1, 2013) (ECF No. 155 at 36).
Mariano is a defendant in this qui tam action; he has propounded counterclaims against the Relators accusing them of malicious prosecution, defamation and violation of federal privacy laws. Consistent with his unsuccessful attempt to villainize the government for his own heinous criminal conduct, Mariano's counterclaim asks this Court to unlock the door to allow him discovery on his theory that the Relators' conduct in disclosing "incendiary allegations" to the government caused him to be defamed and wrongfully accused of "masterminding a bribery and kickback scheme that never occurred." ECF No. 62 ¶ 38. The Relators have moved to dismiss the counterclaims for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6) - their motion challenges whether an FCA whistleblower whose qui tam action resulted in the unraveling of a massive criminal scheme and successful criminal prosecutions is nevertheless susceptible to civil liability for making the allegations. I find that the Relators cannot be found liable under such circumstances; for the reasons that follow, I recommend that the Relators' motion to dismiss be granted.1 ECF No. 67.
The Relators brought their qui tam complaint in May 2006 in the Northern District of Georgia under the FCA, 31 U.S.C. § 3729, alleging a scheme of fraudulent invoices, bribery and kickbacks that featured Mariano as the Navy insider at the epicenter of an interconnected web of Navy contractor/subcontractors. ECF No. 1. The complaint alleged that the Relators became aware of the criminal activity when Relator Rekha Vasudeva, who was working for a Navy subcontractor, became concerned that her company was receiving payments indirectly from the Navy, yet was not performing any work. Their qui tam complaint describes how payments were made to subcontractors for dummy work and how the stolen proceeds eventually made their way back to Mariano, among others. Id. ¶¶ 56-58. As required by FCA, the complaint was filed under seal and served on the government to allow the United States time to decide whether to intervene and take over the suit. 31 U.S.C. § 3730(a)(2). Also as required by FCA, the Relators provided the government with a "written disclosure of substantially all material evidence and information the [Relators] possess" to assist the government with its decision on intervention ("the investigative report"). 31 U.S.C. § 3730(b)(2); ECF No. 1 ¶¶ 20-22. As a result, in June 2007, the government obtained a stay of the civil case and launched an extensive criminal investigation based on the Relators' allegations.
The criminal investigation went on for four years3 and involved special agents from multiple agencies, forensic accounting, cooperating witnesses and audio and video surveillance. See Mariano, CR No. 12-61-01ML (D.R.I. Feb. 3, 2011) (ECF No. 3). In the course of theinvestigation, on October 27, 2009, the Assistant United States Attorneys who were conducting the investigation, and who prosecuted the criminal cases, interviewed the Relators in the presence of agents from the Federal Bureau of Investigation ("FBI"), the Naval Criminal Investigative Service and the Internal Revenue Service ("IRS"). ECF No. 62 ¶ 23. Ultimately, the investigation culminated in the disclosure that $17.9 million had been stolen from the Navy; a criminal complaint was filed on February 3, 2011, followed by criminal prosecutions against six defendants, including Mariano's prosecution by indictment. Mariano, CR No. 12-61-01ML (D.R.I. Apr. 26, 2012). By August 2011, three of Mariano's coconspirators had pled guilty to paying bribes and kickbacks to Mariano in consideration for his funding of contracts for which no services were performed; all three agreed to cooperate with the ongoing investigation of Mariano. United States v. Dutta Gupta, CR No. 11-63ML (D.R.I. Apr. 18, 2011) (ECF No. 16); United States v. Spencer, CR No. 11-100ML (D.R.I. June 17, 2011) (ECF No. 5); United States v. Nagle, CR No. 11-140ML (D.R.I. July 29, 2011) (ECF No. 2). On June 21, 2012, a superseding indictment against Mariano, his father and his female companion was returned by the grand jury. Mariano, CR No. 12-61-01ML (D.R.I. June 21, 2012) (ECF No. 43).
The superseding indictment alleged that Mariano used his influence as a Navy insider to steer Navy contracts to entities that became conduits for dummy invoices and the payment of kickbacks. Mariano, CR No. 12-61-01ML (D.R.I. June 21, 2012) (ECF No. 43). It charged conspiracy to commit theft of government property, wire fraud and bribery (Count 1), theft of government property (Count 2), wire fraud (Counts 3 to 27), bribery (Count 32), extortion (Count 33) and tax evasion (Counts 34 to 37). On the brink of trial, on May 30, 2013, Mariano pled guilty to conspiracy to commit theft of government property, theft of government property and tax evasion for the 2007 tax year. Mariano, CR No. 12-61-01ML (ECF No. 155). During the plea colloquy with the Court, Mariano admitted that he was an "organizer, leader, manager or supervisor" of a criminal scheme involving "fraudulent invoices . . . submitted at Mr. Mariano's direction," and that "[u]pon receipt of the funds [a coconspirator] made payments to others as directed by Mr. Mariano," and "delivered cash from Navy contracts to Mr. Mariano on a biweekly basis." Mariano, CR No. 12-61-01ML (ECF No. 112 at 24, 36-37, 39).
While awaiting sentencing, Mariano filed a document with this Court and the Department of Justice Office of Professional Responsibility, in which he denied the material facts and responsibility for his conduct. Mariano, CR No. 12-61-01ML (D.R.I. Nov. 1, 2013) (ECF No. 155). As a result, the government did not ask the Court to give Mariano credit for acceptance of responsibility as it had agreed to do in the plea agreement, leaving him exposed to the unreduced guidelines range of 97 to 121 months. Mariano, CR No. 12-61-01ML (D.R.I. Oct. 24, 2013) (ECF No. 123). Over Mariano's objection, on November 1, 2013, the Court sentenced Mariano to 120 months (ten years) and ordered him to pay $17.9 million in restitution to the Navy. Mariano, CR No. 12-61-01ML (D.R.I. Nov. 1, 2013) (ECF No. 155). After this harsh sentence was imposed, the counts for bribery, extortion and conspiracy to commit bribery were dismissed pursuant to the plea agreement. Mariano, CR No. 12-61-01ML (D.R.I. Nov. 1, 2013) (ECF No. 135).
Mariano appealed the sentence, contending that the appeal waiver in the plea agreement should not apply because the government did not give him credit for acceptance of responsibility; the First Circuit disagreed, noting that "the government's obligation to recommend [a sentencing reduction] was conditional on [Mariano's] continued acceptance of responsibility through sentencing, a condition which the government and the court reasonablyconcluded did not occur." Mariano, CR No. 12-61-01ML (D.R.I. Oct. 9, 2014) (ECF No. 162) (First Circuit Judgment).
Meanwhile, the civil qui tam complaint remained sealed until January 2013, and remained stayed until August 2013, when the United States filed a notice of election to intervene with respect to the claims against Mariano and some but not all of the other defendants; after settling with other defendants, but not with Mariano, the United States withdrew its intent to intervene and exited the civil case on January 10, 2014. ECF No. 47. On January 17, 2014, the Relators filed a Second Amended Complaint that repeats substantially the same allegations as were asserted by their prior qui tam complaints, but with a trimmed list of defendants, leaving only Mariano and three others, as to whom the United States had either declined to intervene or withdrawn its intervention. ECF No....
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