Gallup to Pay $10.5 Million to Settle U.S. Contract Claim

Gallup Organization agreed to pay $10.5 million to settle U.S. claims that it inflated contract prices and engaged in prohibited employment negotiations with a government official, the Justice Department said.

Gallup knowingly overstated costs in contract proposals to the U.S. Mint and the State Department that were to be awarded without competition, the U.S. alleged in a False Claims Act suit against the polling and market-research firm. The company also improperly discussed employment with a then-Federal Emergency Management Agency official, Timothy Cannon, to obtain a FEMA subcontract at an inflated price, the government alleged.

“This case exposed a cozy arrangement between a contractor and government employee where nobody was looking out for the American taxpayer,” Ronald Machen Jr., U.S. Attorney for the District of Columbia, said today in a statement.

In addition to the financial settlement, Gallup agreed to strengthen its corporate compliance program.

Alena Naff, a spokeswoman for Gallup, said in an e-mail, “By ending this civil action with no admission of wrongdoing, Gallup can avoid further distraction and focus on serving its customers.”

Cannon in April agreed to pay $40,000 to resolve allegations that he tried to get a job with Gallup while overseeing its FEMA subcontract. He was sentenced to probation in a related criminal case.

Whistle-Blower Provisions

The allegations against Gallup were originally brought in 2009 under the whistle-blower provisions of the False Claims Act by Michael Lindley, Gallup’s former director of client services.

Lindley will receive $1.9 million as his share of the government’s recovery.

Lindley’s lawsuit alleged that he was fired after telling a Gallup official that he would report the company’s alleged misconduct to the Justice Department if it wasn’t halted immediately.

When he was let go, a company official said to him that “when you start talking about going to the Department of Justice, I don’t trust you anymore,” according to his complaint.

“Today’s settlement proves that the process can work,” Lindley said in a statement issued by Katz Marshall & Banks LLP and Vogel Slade & Goldstein LLP, the Washington-based law firms that represented him in the suit.

The case is U.S. ex rel. Lindley v. Gallup Organization, 09-cv-01985, U.S. District Court, District of Columbia (Washington).

Before it's here, it's on the Bloomberg Terminal.