United States ex rel. Fadlalla v. DynCorp Int'l LLC, Civil Action No. 8:15-cv-01806-PX

• Court: United States District Courts. 4th Circuit. United States District Court (Maryland)
• Writing for the Court: Paula Xinis United States District Judge
• Parties: UNITED STATES OF AMERICA ex rel. ELGASIM MOHAMED FADLALLA, et al., Plaintiff-Relators, v. DYNCORP INTERNATIONAL LLC, et al., Defendants.
• Docket Number: Civil Action No. 8:15-cv-01806-PX
• Decision Date: 04 September 2019

UNITED STATES OF AMERICA ex rel. ELGASIM MOHAMED FADLALLA, et al., Plaintiff-Relators,
v.
DYNCORP INTERNATIONAL LLC, et al., Defendants.

Civil Action No. 8:15-cv-01806-PX

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

September 4, 2019

MEMORANDUM OPINION

This qui tam action concerns the provision of translators to assist our armed forces in the Middle East. Pending before the Court are seven motions to dismiss filed by Defendants TigerSwan, Inc. (ECF No. 64), AECOM National Security Programs, Inc. (ECF No. 80), KMS Solutions, LLC (ECF No. 81), DynCorp International, LLC (ECF No. 83), Global Linguist Solutions, LLC (ECF No. 85), Thomas/Wright, Inc. (ECF No. 100), and Shee Atika Languages, LLC (ECF No. 129). The motions are fully briefed, and no hearing is necessary. See Loc. R. 105.6. For the following reasons, the motions are GRANTED in part and DENIED in part.

I. Background

Relators'¹ false claims allegations arise out of the performance of two government contracts awarded to Global Linguist Solutions, LLC ("GLS") by the Commander, Headquarters, United States Army Intelligence and Security Command ("INSCOM"). ECF No. 9 ¶ 2. Relators are 29 United States citizens who worked for GLS under one or both of the contracts "as security-cleared linguists, translators and interpreters for U.S. military and intelligence-gathering

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operations in the Middle East." Id. ¶ 5.

A. Subcontractor Fraud Scheme

On December 5, 2007, INSCOM selected GLS as the "proposed awardee" of Contract W911W4-08-D-0002 ("Contract 1"), a $4.645 billion contract of an indefinite duration and quantity for "the provision of linguists to support U.S. military and intelligence-gathering efforts in the Middle East." Id. ¶¶ 59-61. To be awarded Contract 1, GLS had to submit a "Small Business Subcontracting Plan." Id. ¶¶ 69, 70. This plan included a statement of total dollars to be subcontracted to various categories of small businesses, to include those owned by veterans, women, and those considered "disadvantaged" businesses. Id. ¶¶ 69, 77. GLS was required to submit reports at the close of each fiscal year, in which it would note any subcontract awards to small disadvantaged business. The contract also specifically stated that GLS' failure "to comply in good faith with its subcontracting plan" would amount to a "material breach." Id. ¶ 79. Relators assert that the small business subcontract provisions were designed to "enhance the ability of small businesses to perform the contracts and provide the services needed to enhance the competition necessary to promote a free marketplace" as envisioned in the Aid to Small Business Act. Id. ¶ 73 (emphasis in original).

In bidding for Contract 1, GLS entered into "Teaming Agreements" with Small Business Defendants KMS Solutions, LLC ("KMS"), Shee Atika Languages, LLC ("Shee Atika"), Thomas/Wright, Inc. ("Wright"), TigerSwan, Inc. ("TigerSwan"), and Invizion, Inc. ("Invizion"). Id. ¶¶ 8, 83. GLS next represented to INSCOM "that it intended to utilize the Small Business Defendants in accordance with the subcontracting requirements of Contract 1." Id. ¶ 84. However, in practice, and through the Teaming Agreements, the Small Business Defendants acted as "GLS affiliates" and not "bona fide independent small business entities."

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Id. ¶ 86. As part of GLS' contracting scheme, GLS performed all of the contract work while giving the appearance that the Small Business Defendants performed the same work under the subcontracts. Id. ¶ 88.

As part of the scheme, GLS had Relators sign various employment contracts to make it appear, falsely, that one of the Small Business Defendants was the Relator's employer. Each Relator executed multiple employment contracts, seriatim, within a matter of months. See, e.g., id. ¶¶ 190, 230-32. GLS managers interacted with Relators almost exclusively, not the Small Business Defendants who nominally appeared on the employment contracts. Id. ¶ 94. GLS oversaw the recruitment and hiring process, paid for Relators' training, coordinated background investigations and medical testing, determined where Relators were deployed, and managed Relators' transportation to Kuwait. Id. ¶¶ 96-111. When these "transfers" occurred, GLS often told Relators to not worry and that nothing about their employment would change, except they would now be paid by the new subcontractor. Id. ¶¶ 261, 278-79, 283, 310, 340, 405. Small Business Defendants, in turn, "did not know, at any given time, which Relators were on their payrolls." Id. ¶ 115. Accordingly, "GLS received unjustified payments from the U.S. by falsely representing its employees, including Relators, as working for the Small Business Defendants, outsourcing task orders to them, and earning fees for such outsourced work." Id. ¶ 117.

In the National Defense Authorization Act for Fiscal Year 2008, Congress established the Commission on Wartime Contracting in Iraq and Afghanistan ("CWC") to investigate "fraud, waste, abuse and mismanagement of wartime government contracts." Id. ¶ 164. On August 12, 2009, the CWC "held a hearing on linguist support services provided by GLS," calling GLS President John Houck to testify. Id. ¶ 165. In questioning Houck on the role of the subcontractors, Houck falsely testified that GLS was "leasing" linguists from the Small Business

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Defendants. Id. ¶ 167. Houck also stated that 60% of the linguists were employed by subcontractors, and that only 40% were GLS employees, when in fact GLS employed almost all linguists. Id. According to Relators, Houck's false testimony "thwart[ed] discovery . . . of GLS's material breaches of Contract 1 and false claims thereunder." Id. ¶ 177.

On July 11, 2011, INSCOM awarded Contract No. W911W4-11-D0004 ("Contract 2") to GLS for $9.7 billion. Id. ¶ 92. Like Contract 1, Contract 2 "calls for provision of similar linguistic, interpretation and translation services for U.S. military personnel and other agencies, only on a global basis." Id. ¶ 4. In submitting its proposal for Contract 2, GLS "falsely represented that it had complied with Contract 1," including the small business contracting requirements. Id. ¶ 92. Relators aver that INSCOM awarded Contract 2 to GLS, relying at least in part on these false representations. Id. ¶¶ 4, 180.

B. Work Visa Fraud Scheme with Alshora

Under Contract 1, GLS was responsible for ensuring that employees such as Relators secured necessary travel documents, and that all personnel, including subcontractors, complied with "Host Country, local and international laws and regulations . . . applicable to the contractor in the area of operations." Id. ¶ 65. As part of this contractual obligation, GLS represented that performance under Contract 1 complied with Kuwaiti labor and immigration laws. Id. ¶ 506. However, foreign nationals must obtain a Resident Visa to work in Kuwait, and businesses owned by foreign nationals cannot serve as employers. Id. ¶¶ 127-28.

To circumvent Kuwait's prohibition on GLS employing the Relators directly, GLS subcontracted with Alshora International General Trading and Contracting Company ("Alshora"), a Kuwaiti owned business, for Alshora to obtain Resident Visas for GLS employees in exchange for a "sponsorship fee." Id. ¶ 124. Beginning December 9, 2009, "Alshora and

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GLS obtained Relators' signatures on documents purporting to identify Relators as Alshora employees." Id. ¶ 129. To further this scheme, GLS forced Relators to open bank accounts in Kuwait and then deducted from Relators' pay an amount for Alshora to deposit into the Kuwait accounts all to make it appear as if Relators worked for Alshora. Id. ¶ 130. GLS also held Relators' passports for weeks or months at a time and without explanation, thus preventing Relators from leaving Kuwait or venturing off the U.S. military bases to which they were assigned. Id. ¶¶ 194-97, 201, 219, 229, 249, 265, 373, 391, 419.

In late 2012, the business relationship between GLS and Alshora began to deteriorate and GLS planned to find a different Kuwaiti company to assist in the performance of Contract 2. Id. ¶ 134. GLS notified Alshora on January 10, 2013 to expect final payment under the subcontract on February 17, 2013. Id. ¶ 135. This notice prompted Alshora to demand that the linguists who had been issued Resident Visas "report to Alshora to have those visas cancelled" prior to February 17. Id. ¶¶ 136-37. Although GLS agreed to send linguists to the Alshora office to process the visa cancellations, GLS did not comply with the plan, which would have required their linguists to leave Kuwait and return to the United States. Id. ¶¶ 138-40. When the linguists, including certain Relators ("Resident Visa Relators"), failed to cancel their visas, Alshora "reported to Kuwaiti authorities that these linguists—its alleged 'employees'—had abandoned their worksites." Id. ¶ 141.

Under Kuwaiti law, abandonment of a worksite amounts to the criminal offense of "absconding." Id. ¶ 142. During this time, Alshora also learned that other GLS linguists, including certain Relators ("Non-Resident Visa Relators") had been working in Kuwait without having obtained Resident Visas. Id. ¶ 143. GLS never obtained Resident Visas for a number of linguists, who entered Kuwait on tourist visas and, unbeknownst to the linguists, worked in

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violation of Kuwaiti law. Id. ¶¶ 316-19, 395-96, 440-43. Alshora reported these linguists "to Kuwaiti authorities as working illegally in Kuwait." Id. ¶ 145.

As a consequence of Alshora reporting the Relators to Kuwaiti authorities, Kuwait "ordered that Relators immediately stop work for the U.S. military and intelligence forces in Kuwait" as of February 19, 2013. Id. ¶ 146. As a further consequence, affected Relators faced arrest if they tried to leave the country. Id. ¶ 149. One Relator was in fact arrested en route to Jordan to visit his ill mother. Id. ¶¶ 235-38.

In April 2013, GLS transported Resident Visa Relators to the Kuwaiti Ministry of Labor...