You thought the contract was legitimate. The work got done. The invoices got paid. Years passed. Maybe there was some gray area in the billing, some ambiguity in what you promised versus what you delivered - but the government kept paying. You assumed everything was fine. You assumed that if there was a problem, someone would have said something by now.
But somewhere - in a sealed qui tam complaint, in an Inspector General's referral, in a DCIS file you've never seen - an investigation has been building.
You probably don't know about it yet. By the time you do, the government will have been working on your case for two years.
Welcome to Spodek Law Group. We handle federal defense for government contractors facing fraud investigations, False Claims Act liability, and criminal prosecution. If you're reading this because agents have contacted you, because you've received a Civil Investigative Demand, or because something at your company just doesn't feel right anymore - this article explains exactly what you're facing and what options still exist.
The Machine You Never See Coming
September 2024. FBI and DCIS agents execute a search warrant at Carahsoft Technology headquarters in Virginia. One of the largest government IT vendors in America. The raid is linked to a DOJ price-fixing investigation that's been building for months - maybe years - before anyone outside the investigation knew it existed.
Most contractors don't understand how these investigations actualy start. They don't begin with a raid. They begin with an audit. A DCAA auditor flags "questioned costs" on a contract. That report goes to the Inspector General. The IG refers it to DCIS - the Defense Criminal Investigative Service. DCIS coordinates with FBI. And then, months or years later, agents show up with warrants.
The Procurement Collusion Strike Force has been running since 2019. As of September 2024, according to DOJ data: more then 140 federal grand jury investigations opened, over 60 criminal guilty pleas or trial convictions, $65 million in fines and restitution. There specifically targeting bid-rigging, price-fixing, and market allocation among government contractors. This isn't a side project for DOJ. Its a priority.
October 2024: Raytheon pays $950 million to settle False Claims Act allegations - fraudulent pricing and foreign bribery. The second-largest government procurement FCA recovery in history. December 2024: Gen Digital, formerly known as Symantec, gets ordered to pay $55.1 million after a four-week bench trial. A contract administrator named Lori Morsell filed the qui tam whistleblower lawsuit that started it all. Shes entitled to a share of the recovery.
If the largest defense contractors in America cant avoid prosecution, what makes you think your mid-sized company is invisible?
Why Criminal and Civil Happen at the Same Time
Most contractors make a critical mistake when there facing investigation. They assume there dealing with one thing - a civil matter, paperwork, something that can be settled with a check.
Thats not how it works.
When the government investigates contract fraud, they don't choose between civil and criminal. They run both. Simultaneously. The criminal investigation typicaly runs parallel to civil proceedings for 18 to 24 months before you even know anything is happening. DCIS builds the criminal case while civil attorneys pursue False Claims Act liability. And heres the part nobody tells you: they share everything.
DOJ Justice Manual section 1-12.000 requires "early and regular communication between civil attorneys and criminal prosecutors." The Yates Memorandum from 2015 makes it mandatory. Civil attorneys must brief criminal prosecutors on all discovery obtained.
What does that mean for you? Every answer you give to a Civil Investigative Demand goes to criminal prosecutors. Every document you produce in response to a civil subpoena. Every interrogatory response, every deposition answer - criminal prosecutors will have it within weeks. You think you're responding to a civil inquiry. You're actually building the government's criminal case.
The trap most contractors fall into: they treat a Civil Investigative Demand like paperwork. Answer the questions. Hand over the records. Be cooperative - cooperation helps, right?
Wrong. Cooperation without counsel can destroy you.
Refuse to cooperate civilly and you look guilty. Cooperate without strategy and you hand them admissions. There is no good option here. Only less bad ones that require counsel who understands both tracks from day one.
This is why timing matters. This is why the moment you recieve any contact from a government investigator - civil, criminal, or unclear - you need an attorney who understands how both systems work together against you.
The Real Threats: Whistleblowers, Debarment, and the Cascade
Three things destroy government contractors. Most executives only worry about one of them.
Threat #1 - Whistleblowers
The numbers from FY 2024 should terrify every contractor:
- 979 qui tam whistleblower lawsuits filed - a record
- $2.4 billion in whistleblower-driven recoveries
- More then 18 new cases filed every week
- 82% of all False Claims Act recoveries came from qui tam cases
Your employee. Your subcontractor. Your competitor's disgruntled bookkeeper. Your former accountant who left on bad terms. Any of them could be building a case against you right now, under seal, that you wont know exists until federal agents arrive with a warrant.
Your biggest threat isn't the government. Its your own people.
Whistleblowers can collect 15-30% of whatever the government recovers. In a major case, thats millions of dollars. The incentive to file is enormous. And once a qui tam is filed, the government has years to investigate while you operate completely in the dark.
Threat #2 - The Charge Stack
One fraudulent government contract dosent trigger one charge. It triggers many:
- Wire Fraud (18 U.S.C. § 1343) - up to 20 years
- False Claims Act (31 U.S.C. § 3729) - treble damages plus $27,894 per claim
- Anti-Kickback Act - up to 10 years
- Sherman Act for bid-rigging - up to 10 years
- Bribery of public officials - up to 15 years
January 2025: four defendants plead guilty in Maryland for rigging bids on IT contracts for the Department of Defense. One contractor paid $630,000 in bribes to a federal official over two years. A retired Navy admiral was sentenced to 6 years in federal prison for bribery related to government contracts. The DCIS special agent said it clearly: "No individual, regardless of rank or prior service, is above the law."
These are real people going to real federal prison.
Threat #3 - Debarment
This is the one executives forget about.
Suspension or debarment from federal contracting can last up to 3 years. During that time, your company cant bid on new contracts. Cant work as a subcontractor. Cant recieve federal grants. Your name goes on the System for Award Management exclusion list for everyone to see.
For companies whose primary customer is the federal government, debarment is a corporate death penalty.
Executives focus on avoiding prison while there companies bleed out from debarment. Both threats are real. Both require different strategies. Both require early intervention before the government makes final decisions about how to handle your case.
What You Should Do Right Now
If you've recieved a Civil Investigative Demand. If agents have contacted you - FBI, DCIS, OIG. If a DCAA audit has suddenly turned hostile. If an employee has made threats about going to the government.
Stop talking. Get counsel. Now.
Critical rules when your facing a government contract investigation:
- Don't respond to any government inquiry without counsel
- Don't produce documents without attorney review
- Don't assume its "just civil" - criminal is usually running parallel
- Don't discuss the matter with employees who may be witnesses
- Dont destroy anything - obstruction is its own federal charge
Todd Spodek has handled government contractor fraud cases in federal court. He understands the difference between cases that can be resolved through civil settlement and cases that are heading toward indictment. That distinction matters enormously for how you respond to early government contact.
If your a government contractor facing investigation, Spodek Law Group can help you understand where you stand and what options still exist.
The consultation is free. What you'll get is an honest assessment. Are you still in the pre-indictment window were intervention is possible? Has criminal referral already happened? Is this a case that might be resolved civilly, or is DOJ treating you as a prosecution target? What's the realistic range of outcomes - not best-case fantasies, but actual possibilities based on how these cases play out?
Call us at 212-300-5196. The earlier you have counsel, the more options exist. By the time agents arrive with a search warrant, most of those options are gone.
Don't wait until your facing a grand jury subpoena.
Were here when you need us.
