On behalf of John McDuff, Attorney at Law
In May of 2007, a former contract specialist for Oracle filed a lawsuit against the company. The suit alleged that Oracle overcharged the federal government by “tens of millions of dollars.”
In April of this year, the Justice Department announced its intention to review the matter. According to a report in The New York Times, the federal government has now joined the lawsuit.
The Times reports that from 1998 to 2006, the federal government had a software contract with Oracle. According to the contract, Oracle was required to notify the government of price fluctuations and offer the same discounts to federal agencies that it offered commercial clients. The suit alleges that Oracle intentionally hid discount information from government officials, ultimately overcharging the government.
The complaint notes that over $1 billion in software was purchased by a number of government agencies under the contract. Oracle has not commented on the matter.
The False Claims Act, the statute under which the lawsuit was filed, allows the government to recover up to three times any damages awarded at trial. The employee who initiated the suit may also be entitled to a portion of the award. Bloomberg is reporting that legal experts believe damages in the case could exceed $1 billion. The same experts also note that 98 percent of False Claims Act cases in which the government is involved settle for far less, and they expect the same to happen in this case.
This is not the first time Oracle has faced allegations of pricing fraud. In 2006, the company paid $98.5 million to settle charges that it provided false pricing information to the government in conjunction with a PeopleSoft contract, a division Oracle purchased in 2005.
Although Oracle is headquartered in California, Texas companies that contract with the government may pay close attention. Oracle is the world’s second-largest software manufacturer and the lawsuit’s implications may potentially be far-reaching.
Central Texas businesses charged with tax fraud face potentially devastating consequences. It is crucial to contact a business litigation attorney who has documented experience in dealing with tax litigation cases.