Three Adobe employees filed False Claims Act lawsuits exposing the scheme and will share a $555K whistleblower reward.
Adobe Inc. (NASDAQ: ADBE) has agreed to pay $3 million to resolve allegations that it violated the False Claims Act by paying illegal kickbacks to software-reseller partners in return for their promotion of the company’s products to government customers.
The U.S. government was fraudulently tricked into purchasing unnecessary software licenses, the U.S. Department of Justice alleged. It was also allegedly deceived into purchasing software bundles containing applications it never requested, and fraudulently billed for software licenses for the personal use of government employees on their home computers.
San Jose, California-based Adobe, which provides a wide range of desktop publishing software including Photoshop and Acrobat, allegedly funneled the kickbacks to IT and data-services providers which were federal contractors through the company’s Solution Partner Program. Those payments violated the federal Anti-Kickback Act, according to Justice Department. This meant that the claims for payment the contractors submitted to the U.S. General Services Administration or GSA, the federal government’s procurement agency, for payment under their contracts were legally false and fraudulent.
Three Adobe executives exposed the fraud by filing lawsuits under the qui tam provisions of the False Claims Act. They will share $555,000 of the proceeds as a whistleblower award.
The False Claims Act and Anti-Kickback Act
The False Claims Act imposes significant liability on parties who knowingly defraud the federal government or its agencies, whether by means of overcharges or underpayments. Parties with information about violations are entitled under the False Claims Act’s qui tam provisions to file whistleblower lawsuits on the government’s behalf and share in the proceeds. Whistleblowers generally are entitled to 15-30% of the recovery as a reward.
The Anti-Kickback Act prohibits parties from offering, paying, soliciting, or receiving kickbacks in exchange for government contracting, subcontracting, or procurement business. It covers federal contracts involving both goods and services, including construction. Parties are also prohibited from including kickback amounts in contract prices. Courts interpret the term “kickback” broadly to include compensation of any kind—money, fees, commissions, credits, gifts, gratuities, or anything else of value.
The False Claims Act and Anti-Kickback Act are integral to combatting fraud and abuse in federal contracting and procurement. As the allegations against Adobe illustrate, a party can violate the False Claims Act by billing the federal government—or causing it to be billed—for transactions that resulted from Anti-Kickback Act violations.
Contact a whistleblower attorney
If you know of contractors or other parties paying or receiving illegal kickbacks in connection with federal contracts or subcontracts or otherwise defrauding the U.S. government or its agencies, it is important to speak with an experienced whistleblower attorney. Qui tam lawsuits are complex and require the expertise of a capable whistleblower attorney who will fight to maximize the size of your whistleblower award.
Reach out to whistleblower attorney Mark A. Strauss to schedule a free consultation. All communications are protected by the attorney-client privilege and subject to strict confidentiality.
To recover a whistleblower award, you must file a qui tam lawsuit in federal court—simply reporting wrongdoing to a government tipline will not suffice.