United States ex rel. Menoher v. Fpolisolutions, LLC, Civil Action 19-855

CourtUnited States District Courts. 3th Circuit. United States District Courts. 3th Circuit. Western District of Pennsylvania
Docket NumberCivil Action 19-855
Decision Date10 August 2021



Civil Action No. 19-855

United States District Court, W.D. Pennsylvania

August 10, 2021



This is a qui tam action brought on behalf of the United States of America by PlaintiffRelator Daniel Menoher (“Relator”), under the False Claims Act (“FCA”), 31 U.S.C. § 3729 et seq., as amended. Relator alleges that FPoliSolutions, LLC (“FPoli”), and Cesare Frepoli (“Frepoli”) (collectively, “Defendants”) violated the FCA by knowingly submitting false claims to the federal government for work performed in connection with awards and federal contracts with the United States Department of Energy (“DOE”).

Presently before the Court is Defendants' Motion to Dismiss First Amended Complaint, ECF No. 56, asserting that the Amended Complaint fails to meet pleading requirements and fails to state a claim for relief. For the reasons that follow, the Motion to Dismiss is denied.[1]


At this stage of the litigation, the factual allegations in the First Amended Complaint are taken as true, and all reasonable inferences are drawn in Relator's favor. Malleus v. George, 641 F.3d 560, 563 (3d Cir. 2011). Therefore, the essential facts, derived from the First Amended Complaint are as follows.

Frepoli is FPoli's sole owner, and on its behalf submitted several applications for awards and contracts with the DOE. ECF No. 50 ¶ 6. Relator worked as a technical business development director for Defendants during the period July 2016 through May 2019. Id. ¶ 7.

Coinciding with Relator's employment, FPoli received about $3.4 million from the DOE under five Small Business Innovation Research (“SBIR”) awards; about $80, 000 under a subcontract with the DOE's Idaho National Laboratory (“INL”); and was awarded about $375, 000 in matching funds as a private business partner in two Technology Commercial Fund (“TCF”) projects. Id. ¶¶ 21-24. To obtain each award or contract, FPoli certified to DOE that its financial management system met the standards set forth in 2 C.F.R § 200.302, requiring the ability to trace all funds “to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 C.F.R. § 200.302(a); ECF No. 50 ¶ 42.

Relator alleges that during the performance of the phased SBIR awards and INL subcontracts, Defendants submitted invoices or claims for payment to the United States, setting forth costs incurred for each quarter under a relevant award and phase. The total amounts claimed on each invoice or financial report were paid by the United States. Id. ¶¶ 27-33. Defendants also made representations to the DOE that while working on each private partner TCF project, FPoli made required in-kind contributions, and FPoli employees spent the claimed numbers of hours working on the TCF projects. Id. ¶ 34. Defendants' invoices and claims for payment certified that the labor costs claimed on each award or contract were for work performed as stated and that the work related to the award to which it was charged. Id. ¶ 42.

As pled, contrary to their express certifications, Defendants claimed labor costs for time spent on unrelated projects and funds expended for purposes other than DOE awards. Id. ¶ 48. Defendants also did not possess a financial management system compliant with its certification. Id. ¶ 49.

Relator provides details of the scheme and examples of instances when Defendants manipulated timekeeping records by falsely entering employee work hours with billing codes for federal award projects, although the time claimed was not spent on DOE projects. Id. ¶ 50. “Frepoli instructed the employees to record their time falsely, by directing them to assign a specific number of hours in Toggl [FPoli's timekeeping program] to a billing code for a specific federal project, and by directing them, if they had already recorded their time in Toggl to one billing code, to change their entry and assign it to another billing code for a federal project, although in both cases, the employee had not in fact worked those hours on the federal project and the hours were not allowable on the federal project.” Id. ¶ 52. Once employees manipulated the entries, either Frepoli or an FPoli employee created a separate log of labor hours based on the falsified Toggl entries to support invoices and claims submitted for payment to the United States.

Defendants allegedly conducted this scheme regularly, from 2016 through 2021, on every award and subcontract identified in the Amended Complaint. Relator provides eight specific examples of manipulated timekeeping and falsified claims for payment. The examples include:

(1) On or about July 31, 2018, Defendant Frepoli and two FPoli employees traveled to Bloomsberg, Pennsylvania, to explore FPoli's potential investment in or purchase of a private company called “APT.” At 6:37 AM the next morning, August 1, 2018, before the employees had recorded their time in Toggl, Defendant Frepoli directed each employee to record in Toggl a specific number of hours from the APT visit, and directed one to assign his hours to the RAVEN SBIR billing code, and the other to assign his hours to a different billing code for a Department of Defense (“DOD”) subcontract. The APT visit was unrelated to the RAVEN SBIR project or the DOD subcontract. However the employees did as Defendant Frepoli directed. Defendant Frepoli, or an employee at his direction, then used the falsified Toggl entries to submit a claim for the falsified and unallowable hours under the RAVEN SIBR award, which the United States paid. Id. ¶ 58
(2) On or about March 6, 2019, Defendant Frepoli emailed an FPoli employee that ‘moving forward (including this week), stop charging to SBIR04 [EMRALD SBIR] until further notice and charge to RISA so we can improve a little the cash.' Defendant Frepoli issued this instruction without regard to the actual work the employee was doing; that is, he did not mean for the employee to stop working on the EMRALD SBIR project, he meant that, no matter what work the employee was doing, he should charge to the INL RISA subcontract. The employee did as directed. Defendant Frepoli, or an FPoli employee at his direction, then used the falsified Toggl entry to submit a claim for the employee's falsified and unallowable hours under the INL RISA subcontract, which the United States paid. Id. ¶ 62
(3) In or around the final two weeks of January 2019, an FPoli employee spent time developing business for FPoli and recorded his hours in Toggl accordingly, as “C-BDEVEL.” Approximately one to two weeks later on or about January 30, 2019, at 7:36 AM, Defendant Frepoli directed the employee to “go back and change your C-BDEVEL, to the TCF last week and ask Lana to rerun the report ... do the same this week for the TISA[RISA] proposal time.” The business development time was unrelated to the TCF or RISA projects. However, the employee did as directed. Defendants or FPoli employees at Defendant Frepoli's direction then represented to the DOE that FPoli had spent the committed hours on the TCF project, when in fact they had not. Id. ¶ 65.

Relator alleges that Defendants concealed much of their fraudulent conduct by manipulating billing codes on future or unrelated matters. For example, after a DOE contract award was exhausted for one calendar year, Frepoli instructed his employees to use a specific billing code with a nonspecific activity, so that FPoli could bill the time in the next calendar year. Id. ¶ 67. Employees complained to each other that it was difficult to maintain records without evident discrepancies, but Frepoli wanted “the employee to ‘keep clean records' so that his fraud would not be exposed.” Id. ¶ 68.

In summary, Relator asserts that Defendants knowingly submitted false claims and certifications for federally funded DOE contracts and awards, and that the DOE paid the full amounts of the labor costs claimed relying on Defendants' representations. This resulted in payment of funds for labor costs that Defendants did not expend on DOE awards and that were unsupported by a compliant financial management system. Id. ¶ 72.


Relator filed this case under seal on July 17, 2019, and the case remained under seal while the United States evaluated whether to intervene in Relator's qui tam action. ECF No. 1. On June 30, 2020, the United States filed a Notice with the Court that it was declining to intervene. ECF No. 9. On July 1, 2020, the Court ordered that Relator's Complaint be unsealed, with all other contents of the Court's file remaining under seal, except for the Notice and matters occurring after the date of the Order. ECF No. 10. Upon reassignment of this action to the undersigned, Defendants filed a motion to dismiss. ECF No. 33. Relator followed with a motion for leave to file an amended complaint, which the Court granted. ECF Nos. 48, 49. On March 2, 2021, Relator filed his First Amended Complaint, and Defendants filed the pending Motion to Dismiss. ECF Nos. 50, 56. Relator has filed a Response to the Motion to Dismiss, and Defendants have filed their Reply. ECF Nos. 59, 60. The pending Motion to Dismiss is now ripe for resolution.


A complaint may be dismissed under Federal Rule of Civil Procedure 12(b)(6) for “failure to state a claim upon which relief can be granted.” “[D]etailed pleading is not generally required.” Connelly v. Lane Const. Corp., 809 F.3d 780, 786 (3d Cir. 2016). Rather, the rules require “‘only a short and plain statement of the claim showing that the pleader is entitled to relief, in order to give the defendant fair notice of what the ... claim is...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT