In The News

Novum Structures LLC to Plead Guilty and Pay $3 Million to Resolve Criminal and Civil Claims

The US government appears to be resolute in its attempt to protect US economic interest when it comes to the outsourcing of foreign materials for federally funded construction projects. Earlier this month, the Justice Department announced that Novum Structures, LLC (Novum) agreed to plead guilty and to pay $3 million to resolve criminal and civil charges that it improperly used foreign materials on construction projects involving federal funds. Moreover, the government alleged that Novum used these materials in violation of the government’s “Buy America” requirements. (The Wisconsin based company had a contractual obligation to implement various domestic preference re the use of materials on constructions projects.)

The agreement resolved allegations that Novum repackaged materials and falsified documents relating to federally funded construction projects in order to hide the fact that the materials were of foreign origin in violation of the “Buy America” requirements. Novum plead guilty to violating 18 U.S.C. § 1001 and agreed to pay a $500,000 criminal fine. “Domestic preference statutes are designed to promote American businesses and to protect U.S. economic interests,” said Acting U.S. Attorney Gregory J. Haanstad for the Eastern District of Wisconsin. “When companies subvert those interests by violating ‘Buy American’ provisions – and when they undertake efforts to conceal that they have done so – all in an effort to improperly advance their own private financial interests, the U.S. Attorney’s Office will pursue all appropriate criminal and civil sanctions.”


Novum also agreed to pay $2.5 million to solve allegations under the False Claims Act that its conduct caused the submission of false claims regarding the origin of non-compliant construction material to federally funded projects. The activities are alleged to have occurred from Jan. 1, 2004 through July 11, 2013. Construction projects funded by the U.S. government are generally subject to laws requiring the use of domestic materials. (See Buy American Act and § 1605 of the American Recovery and Reinvestment Act.) “Contractors must follow all federal contracting rules when doing business with the United States,” said General Services Administration Inspector General Carol Fortine Ochoa.


The allegations resolved by the civil settlement were brought by whistleblower Brenda King under provision of the False Claims Act. The act permits private parties to file a qui tam lawsuit on behalf of the government against those who falsely try to receive federal funds. King is scheduled to receive a $400,000 award as part of the civil settlement. If you are a whistleblower involved in a False Claims action, you should consult with a False Claims Act attorney who can advise you on your rights under this act and determine if you are entitled to whistleblower rewards. The U.S. Attorney’s Office for the Eastern District of Wisconsin prosecuted the criminal case, and also jointly handled the civil lawsuit with the Civil Division’s Commercial Litigation Branch. The lawsuit is captioned United States ex rel. King v. Novum Structures, LLC, Case No. 12-cv-860 (E.D. Wis.)