South Carolina’s Thompson Construction Group Fined Over Violation of U.S. False Claims Act

Acting United States Attorney Lisa G. Johnston announced Monday that Thompson Construction Group Inc., of Sumter, South Carolina, has agreed to pay the United States $191,070 to resolve civil allegations that it violated the federal False Claims Act by submitting false claims for payment from federal disaster recovery grant funds and by falsely certifying that homes it had constructed were compliant with contract conditions. 

On June 26, 2016, portions of central and southern West Virginia experienced extreme levels of rainfall, resulting in historic flooding over a vast swath of the region. 

Flood waters rushing across West Virginia’s mountainous landscape damaged or swept away thousands of homes, businesses, bridges and other infrastructure, leaving thousands of West Virginia residents homeless and at least 23 dead.

Following a presidential disaster declaration issued in response to the flooding, Congress appropriated funds for disaster recovery in West Virginia to be administered by the U.S. Department of Housing and Urban Development (HUD) in the form of Community Development Block Grant – Disaster Recovery (CDBG-DR) funds.

These funds were made available to fund various recovery needs in West Virginia, including housing rehabilitation and replacement for low-income homeowners.

Thompson was awarded a series of contracts to reconstruct damaged or destroyed homes during the catastrophic flood. 

Because future flooding and water intrusion were concerns, the contracts included specific requirements for water management, including crawl space drainage systems and sump pumps to be installed in homes constructed in a flood plain. 

These requirements were detailed in pre-bid construction specifications and incorporated into the contracts awarded.

Thompson completed the construction of these homes and submitted invoices certifying compliance with the contract terms and was paid from federal CDBG-DR funds.  Investigators later learned, however, that crawl space drainage systems and sump pumps had not been installed as required, making Thompson’s claims and certifications false.

The settlement agreement requires Thompson to pay $95,535 in restitution and $95,535 in double damages pursuant to the False Claims Act.