Gosselin: The Competitors Had Already Divided the Work

The Gosselin military moving case produced a $24 million civil-penalty judgment over rigged bids and a false promise that prices were set independently. Gosselin had arranged prices and divided work with supposed competitors, then certified that its bid was independent. If you handled rates, subcontracting or invoices, that gap between the agreement inside the business and the promise to the government is the heart of this military moving fraud case.

The judgment concerned direct European moving services. The government paid approximately $3.3 million for the contract’s packing and loading line item, yet the false invoices led to a much larger civil penalty. A separate claim over international shipment rates ended with a ruling for the defendants.

Two Military Moving Programs, Different Routes to the Bill

The Defense Department’s Military Traffic Management Command bought European moving services directly under its Direct Procurement Method, or DPM. For transatlantic moves, the command’s International Through Government Bill of Lading program used American freight forwarders that subcontracted the European work. Gosselin, a Belgian moving company, supplied services in that European portion of the business.

Under the international program, a freight forwarder bid a through rate for a particular route and direction. That price covered the door-to-door move: packing, inland transportation, port services, ocean transport and delivery. The price quoted by a European subcontractor therefore fed into the American forwarder’s bid to the government. The same businesses could also compete directly for packing, loading and transportation work within Europe.

The international bidding ran in two stages. An initial low bid set the prime through rate for a route, and other forwarders could match it in the second, me-too phase to improve their chances of getting the work. That made the lowest bid everyone’s business: pushing it out could move the matching bids up.

How the Low Bid Was Pushed Out

The government alleged that Gosselin and other moving businesses agreed on a minimum price for local German services in November 2000. The Fourth Circuit’s account placed the meeting in Sonthofen and described that non-negotiable price as a component of the landed rate quoted to American freight forwarders. The alleged arrangement reached the bids before the government saw them.

Covan International nevertheless submitted the lowest bid on several Germany-to-United States routes for the summer 2001 cycle. The court’s account described Gosselin threatening to withdraw financing for the lift vans Covan needed to perform the work. In that account, Covan withdrew its bid, and Gosselin told other forwarders to match the second-lowest bid during the matching phase. We call that competition in reverse: the alleged scheme pushed out the low bidder and left taxpayers with the higher price.

In its guilty plea, as the 2016 appellate opinion recounts, Gosselin admitted conspiring with the Pasha Group to prevent matching bids from reaching the lowest through rate. The court’s account of the criminal case describes the chief executive’s written agreement to pay twelve of the largest German moving agents a fee. In exchange, the agents agreed to refuse work from forwarders unless they bid at the second-lowest level or above. Access to the people who packed and moved the goods became a way to enforce the higher price.

The earlier appellate opinion’s account of that criminal case describes Gosselin and Pasha persuading Cartwright International Van Lines to withdraw its low bids for the summer 2002 cycle. With the low bidder out and local agents enlisted to refuse service, the supposed competitors could converge on the higher rate. The agreement behind the matching bids is what a rate-setting or subcontracting insider could recognize.

The False Certification Behind the DPM Judgment

The direct European contract case connected agreements between supposed competitors to a written promise of independent pricing. Gosselin won a contract effective May 1, 2001 after colluding to inflate the packing and loading portion of the bids. It then subcontracted much of the work to its fellow bidders in allocations arranged beforehand.

Gosselin filed a Certificate of Independent Price Determination assuring the military that it had not discussed pricing or bidding strategy with other potential suppliers. The trial evidence described agreements on prices and on who would serve particular territories, regardless of which company won the contract. The certificate promised independence after the competitors had already divided the work.

On August 4, 2011, the jury found Gosselin liable under the False Claims Act for the direct-contract scheme. The court held the company liable for 9,136 false claims, corresponding to the invoices submitted under that contract. The connection ran from the false certification to the contract and then to the invoices requesting payment.

The trial court initially imposed no civil penalty, but the appeals court ordered the judgment. It covered Gosselin Group, Gosselin Worldwide Moving and the group’s chief executive. The whistleblower brought this direct-contract claim without the government joining it.

The International Rate Claim Ended Differently

The government joined the separate whistleblower claim over international shipment rates. The later appellate opinion records that the district court ruled for the Gosselin defendants on that claim in December 2014, setting aside the jury’s verdict for the government. That ruling concerned the international-rate claim, while the civil-penalty judgment concerned the false certification on the direct European contract.

GovLog and the Business Behind the New Name

The GovLog dispute concerned an alleged attempt to move the government-shipping business beyond the reach of civil claims while Gosselin kept its benefits. The whistleblower sought to hold Government Logistics, known as GovLog, responsible for the claims against the business it took over.

The court reviewed evidence that Gosselin’s chief executive funded the new company’s principals through interest-free loans and directed the agreements transferring the business. GovLog paid nothing upfront. It promised a share of future net revenues, calculated after deducting Gosselin’s service invoices. The agreements also committed GovLog to use Gosselin’s services exclusively to perform the government contracts.

In the court’s account, GovLog signed contracts and arranged shipments while Gosselin continued to perform nearly all the shipping services and leased it warehouse space. GovLog earned no net revenues under the agreements in fiscal 2007 or 2008, so it owed no purchase payment for the business. It did pay Gosselin for the facilities and services. The old company continued earning from the work placed in the new company’s name.

GovLog argued that the transfer served practical business reasons. The appellate opinion reproduced the Gosselin chief executive’s explanation in his deposition:

The explanation put continued earnings from the government business at the center of the transfer. The appeals court said a jury could find that the transfer was meant to dodge the claims, and it reopened the case against GovLog.

Separate Moving Settlements and the Whistleblower Reward

The Pasha Group settlement brought a $13 million payment to resolve the government’s bid-rigging allegations. Seven American freight forwarders and the German subcontractors ITO Möbel Transport and Birkart Globistics agreed to smaller civil settlements.

The forwarder settlements addressed allegations that bids were submitted at elevated levels under the conspirators’ instructions. The German subcontractor settlements addressed the alleged agreement to raise local rates and refuse work below the agreed price. The seven forwarders and the German subcontractors also agreed to cooperate with the government in pursuing the remaining defendants.

The cases began with people who knew the moving trade: two had worked with a German moving company, and another owned an American freight forwarding company. The Justice Department announced a collective $2.6 million whistleblower reward from the Pasha settlement. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

What Evidence Is Needed to Prove Fraud?

In Gosselin’s direct European contract case, the evidence connected the agreement between bidders, the promise of independent pricing and the invoices submitted under the resulting contract. For an insider, those are different views of the same business decision. A rate manager may know who chose the price, a subcontracting employee may know how territories were allocated, and a billing employee may know which contract the invoices charged.

We connect that knowledge to the representations and payment records that give it meaning. Bid communications can explain why an attractive rate disappeared. Subcontracting agreements can explain why a losing bidder still received work. In the GovLog dispute, the transfer agreements and service invoices also showed how the business and its earnings continued under a new contracting name.

You Know Who Really Set the Rate

If you saw a rival’s price arranged, a low bid withdrawn or work divided before the award, talk with our whistleblower experts about the moving contracts you know. We build your case around those decisions and bring in defense procurement fraud whistleblower lawyers who understand coordinated bids and government payment claims. We stay on your side as the case develops, connecting what you saw inside the moving business to the money the government paid.