Agave BioSystems: Family Labor on Defense Research

The Agave BioSystems settlement resolved allegations of false time cards and inflated family salary expenses with a $300,000 payment by the company and its president. The government alleged that Agave sought payment for labor expenses it had not incurred and work that had not been performed, affecting payments on approximately 44 defense contracts. If you know who actually did the research, you may recognize the distance between a name on a time card and the work behind a government payment.

Agave was a small defense contractor in Ithaca, New York, performing scientific research and other government defense work. The Justice Department’s June 4, 2013 announcement reported that the defendants had paid to settle the civil case under the False Claims Act. A former employee brought the whistleblower case, and the government later joined it after an investigation.

False Time Cards During a Defense Audit

The government alleged that Agave’s president created two false time cards during a Defense Department audit of the company’s claimed expenses in 2006. The cards said his daughter had worked on a government contract when, according to the allegations, she had not. The president then submitted those cards to the Defense Department.

The audit was examining the claimed expenses, and the president allegedly created false support while that examination was underway. We expect an audit to test the paperwork, not become the occasion for making it up. According to the government, the president supplied time cards for work that never happened when the Defense Department was already checking the bill.

The government’s allegations also covered salary expenses Agave claimed for other family members. Those family members allegedly had not performed work to the extent the company claimed. The government directed its misconduct allegations at Agave and its president, without accusing the other family members of wrongdoing.

How the Salary Claims Reached Government Payments

The government alleged that the Defense Department relied on false and inflated salary expenses when calculating payments to Agave. The government identified contracts with the Army, Navy, Air Force and Defense Threat Reduction Agency. That connection turns the story from an internal payroll problem into defense contractor labor fraud allegations involving public money. Taxpayers were funding defense research, and the government alleged it was being charged for labor the company had not received.

The contract determines how a salary claim reaches the government’s bill. A cost-reimbursement contract pays costs the company actually incurs and can charge under the contract. Under time-and-materials terms, the company bills qualifying hours at set rates that include wages, overhead and profit. We follow how the contract turns the claimed labor into a charge, rather than treating the salary figure as the whole bill.

Federal contract cost rules require supporting records showing that claimed costs were incurred and belong to the contract. For Agave, the government’s account put the creation of the time cards during the audit itself. That makes when a supporting record was created part of the story, alongside the work it claims to document.

For someone inside a research contractor, knowledge of the work matters alongside knowledge of the accounts. Agave’s allegations drew a distinction an insider may recognize: the daughter allegedly did no work on the claimed contract, while other family members allegedly worked less than the company claimed. We examine both the existence of the work and the amount attributed to it.

What Evidence Is Needed to Prove Fraud?

For allegations like Agave’s, the evidence connects the work claimed, the work performed, the salary expense and the government payment. We examine that chain with the insider, starting with the part they know firsthand.

Our review of defense contractor fraud evidence follows the claim through time records, payroll, project assignments and the submission used to seek payment. We compare those representations with what you know about the actual work. A researcher may know who worked on an assignment, while someone in accounting may know which expense reached a government submission. We bring that knowledge together without expecting either person to explain the entire billing chain alone.

A Former Employee Brought the Case

A former Agave employee started the qui tam lawsuit, and federal investigators and auditors examined the allegations. The Justice Department identified the Defense Criminal Investigative Service, the U.S. Army Criminal Investigation Division, the Defense Contract Audit Agency and the FBI as participants in the investigation.

The release says that investigation confirmed material parts of the former employee’s allegations. The United States then joined the lawsuit and filed its own complaint reflecting those findings.

The Agave BioSystems Whistleblower Share

The Justice Department said the former employee would receive 18% of the settlement proceeds. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. If the work you know differs from the labor your employer claimed, we can assess that connection with you and help build a case around the government’s payment.

The Same Mismatch in Deployed Labor

The MPRI case shows another way personnel records can contradict billed labor. In its announcement of MPRI’s settlement, the Justice Department described allegations that the company billed the Army for employees who were on leave outside Afghanistan. The whistleblower had worked in finance and contract support there.

Agave’s allegations concerned family time cards and salary expenses, while MPRI’s concerned the whereabouts of employees whose labor was billed. Both accounts put knowledge of the person and the actual work alongside the charge. A salary entry or a labor bill tells the government one story; the assignment and personnel records may tell another.

You Know Who Did the Research

If you saw research labor claimed for work that never happened, talk with our whistleblower experts about what the time cards and salary claims concealed. We work beside you to turn your knowledge of the assignments and payments into a defense contractor whistleblower case, and bring in defense contractor fraud whistleblower lawyers who understand labor billing. From the first conversation through the pursuit of the case, we stay in your corner.