Companies Pay to Settle Food Aid Lawsuit

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food aid in Kenya

By MarEx 2016-08-02 17:59:15

Jacintoport International LLC and Seaboard Marine Ltd have agreed to settle false claims allegations related to the delivery of humanitarian food aid.

The U.S. Justice Department announced the development on Monday, saying the companies have agreed to pay $1.075 million to settle a lawsuit alleging that they violated the False Claims Act in connection with a warehousing and logistics contract for the storage and redelivery of humanitarian food aid.  

Jacintoport is a cargo handling and stevedoring firm headquartered in Houston, Texas, and Seaboard Marine, an affiliate of Jacintoport, is an ocean transportation company headquartered in Miami, Florida.

In its lawsuit, the United States alleged that in 2007 Jacintoport executed a warehousing and logistics contract with the United States Agency for International Development (USAID) for the storage and redelivery of emergency humanitarian food aid. This contract contained explicit caps on the rates Jacintoport could charge ocean carriers to load humanitarian food aid onto ships (referred to as “stevedoring” charges) bound for crisis areas around the world.  

The complaint alleges that beginning around January 2008 and continuing through at least October 2009, Jacintoport, under the supervision and control of Seaboard, charged ocean carriers more for stevedoring than permitted to load over 50,000 tons of humanitarian food aid. These inflated stevedoring charges were subsequently lumped into other costs for delivering humanitarian food aid and passed on to the United States.

“USAID’s humanitarian food aid program provides critical assistance to starving people all over the world,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “The Justice Department will hold accountable those who seek to abuse this important program.”  ‪

The allegations resolved by this settlement were initially brought in a lawsuit filed under the qui tam or whistleblower provisions of the False Claims Act by John Raggio, a shipping contractor who allegedly received an invoice from Jacintoport that contained the excessive stevedoring charge.  Under the Act’s qui tam provisions, a private citizen, known as a “relator,” can sue on behalf of the United States and share in any recovery.  The United States is permitted to intervene in the lawsuit, as it did here.  Raggio will receive $215,000.