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What is Government Contract Fraud?

Government Contract Fraud: Understanding the Issues

In carrying out their duties, the federal government and state governments routinely do business with private companies. From hiring a construction company for a public works project to buying the weapons that arm the military, all sorts of transactions take place within the government sphere. All these transactions require an official contract between the government and the private company. When someone involved with that contract breaks the rules, the resulting crime is known as government contract fraud.

Who Typically Commits Government Contract Fraud?

In theory, any contractor that works with the government could commit government contract fraud. In practice, fraud is especially prevalent in certain key industries. Defense contractors, or the companies that supply the military with supplies, sometimes commit fraud in their dealings with the government. Infrastructure projects and detention facilities, due to their scope and complexity, are also given to illegal activity. Professionals who work as consultants for the government can commit fraud, as can software or technology experts. Even subcontractors that don’t have direct contact with the government can commit government contract fraud if they engage in certain illegal behaviors.

Common Types of Government Contract Fraud

Not all instances of government contract fraud take the same form. There are many ways to defraud the government, and the only thing they share is their illegality. Here are five of the most common behaviors that fall into the category of government contract fraud.

Bid Rigging

To win a government contract, private companies typically compete with other firms to offer the lowest price. This process is called bidding, and it’s meant to happen in a climate of fairness and competition. Sometimes, however, companies will act as if they’re competing when they’re actually working together to keep the cost of the contract higher. This type of activity is illegal, and it falls squarely within the category of government contract fraud.

George FernandezGeorge Fernandez
14:16 30 Apr 24
Excellent 10 out of 10, Helped resolve my case. Jeremy explained everything and made everything easy to understand.
21:33 24 Apr 24
If you are looking for a lawyer that listens, is aggressive where needed, and holds his word above all else, Todd is the best pick. I had hired multiple attorneys prior to hiring the Spodek Group for a white collar case. The first thing that stood out to me was the cost, as anyone going through the process and dealing with the system, money was tight at that time - especially after hiring and firing multiple lawyers. The cost was not as high as others which was definitely a plus. Todd's intake process was also unlike other attorneys. He took the time to actually listen. He cared. He was trying to put himself in my shoes while I was explaining the situation to him and he really took the time to understand the whole situation. Other lawyers will give you 15 mins and send you a retainer agreement. Not Todd, I think he spent almost two hours with me as I was explaining everything.Not only was he great during the onboarding process, he was supportive and very informative through the entire plea process and eventually sentencing. After hiring him, I asked if I should hire a prison consultant, he told me to save my money as he would do everything they would. He was right and held up to his word. Later on I would hear from others that went with the prison consultants that they were a waste of money - I am glad I listened to Todd!When it came time for sentencing, two days prior to sentencing, the prosecutor tried increasing my proposed prison time by almost double - apparently a normal move. Todd and his team worked with me non-stop through the weekend prior to sentencing to ensure that I was not given additional prison time. Again, he took the time to listen and came up with a strategy to explain the case with great detail.Unfortunately, I did plead guilty as that was my best option. Todd and his whole team wrote up nearly 300 pages of a summary of what happened and why I should not be given prison time. If I breakdown the amount I spent with Todd versus the amount of work that I saw being done, I am shocked I was not charged four times as much. The other benefit was, a lot of criminal defense lawyers were just a single attorney with a paralegal or two. Todd had a team of people that I dealt with (5-7 people that I interacted with), but he was ALWAYS accessible. It would never take him more than an hour to reply unless he was in court.I was sentenced to prison and I was emotionally distraught. Todd and his team did whatever they could even after sentencing to make sure I was alright. He personally stayed in touch with my family to ensure I was doing alright and offered support to them. Most lawyers would consider the job complete at sentencing, not Todd.After prison, Todd still spent time with me to make sure I was on the right track and avoiding any potential risks in the future. He has also been giving advice on how to navigate probation etc and has not been looking at the clock for billing.Although I wish I had never been arrested in the first place, I am glad I had Todd and his team in my corner. Without them I likely would have had to spend a lot more time in prison than I did.Thank you, Todd, and the entire Spodek Law team, for helping turn what was a nightmare into a manageable situation!
Yelva Saint-PreuxYelva Saint-Preux
19:26 19 Apr 24
I am immensely grateful to the entire team at Spodek Law Group for their unwavering dedication and exceptional expertise throughout my case. From our initial consultation to the final resolution, their professionalism and tireless advocacy made all the difference. Their strategic approach and attention to detail instilled confidence in me every step of the way.Thanks to their hard work and commitment, we achieved a truly favorable outcome that exceeded my expectations. Not only did they navigate the complexities of my case with precision, but they also provided invaluable support and guidance during what was undoubtedly a challenging time. I cannot recommend Spodek Law Group highly enough, especially attorneys Todd Spodek and Claire Banks; they are beacons of excellence in the legal profession.YSP.
Katherine SunKatherine Sun
18:08 18 Apr 24
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17:48 18 Apr 24
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Keisha ParrisKeisha Parris
20:45 15 Mar 24
Believe every single review here about Alex Z!! From our initial consultation, it was evident that Alex possessed a profound understanding of criminal law and a fierce dedication to his clients rights. Throughout the entirety of my case, Alex exhibited unparalleled professionalism and unwavering commitment. What sets Alex apart is not only his legal expertise but also his genuine compassion for his clients. He took the time to thoroughly explain my case, alleviating any concerns I had along the way. His exact words were “I’m not worried about it”. His unwavering support and guidance were invaluable throughout the entire process. I am immensely grateful for Alex's exceptional legal representation and wholeheartedly recommend his services to anyone in need of a skilled criminal defense attorney. Alex Z is not just a lawyer; he is a beacon of hope for those navigating the complexities of the legal system. If you find yourself in need of a dedicated and competent legal advocate, look no further than Alex Z.
Taïko BeautyTaïko Beauty
16:26 15 Mar 24
I don’t know where to start, I can write a novel about this firm, but one thing I will say is that having my best interest was their main priority since the beginning of my case which was back in Winter 2019. Miss Claire Banks, one of the best Attorneys in the firm represented me very well and was very professional, respectful, and truthful. Not once did she leave me in the dark, in fact she presented all options and routes that could possibly be considered for my case and she reinsured me that no matter what I decided to do, her and the team will have my back and that’s exactly what happened. Not only will I be liberated from this case, also, I will enjoy my freedom and continue to be a mother to my first born son and will have no restrictions with accomplishing my goals in life. Now that’s what I call victory!! I thank the Lord, My mother, Claire, and the Spodek team for standing by me and fighting with me. Words can’t describe how grateful I am to have the opportunity to work with this team. I’m very satisfied, very pleased with their performance, their hard work, and their diligence.Thank you team!
K MarK Mar
01:37 25 Jan 24
I recently had Spodek Law Group represent me for a legal matter in NYC and I am thoroughly impressed with their services.Alex Zhik secured the best possible outcome for my case.It was a seamless journey from the initial consultation to the resolution of my legal matter. From the moment I spoke to Todd about my case, his enthusiasm to help was evident, setting a positive tone for the entire experience. The efficiency and professionalism displayed by the team is commendable.A particularly noteworthy aspect of their service is their user-friendly portal to upload your documents/evidence. This not only simplified the process, but showcases their commitment to streamline the client experience.Lastly, in an industry where legal fees can often be a concern, I found their pricing to be very reasonable, making needing legal assistance feel accessible and stress-free.I am grateful for their support and wouldn't hesitate to turn to them again in the future.


Sometimes, a company will pay secret fees in exchange for the receipt of a contract. These illegal payments are called kickbacks, and, if discovered, they can land a company in serious legal trouble.

Conflict of Interest

For contracts to be awarded fairly, all government officials should be looking out for the general welfare, not pursuing their own interests. If an official involved with the process has a financial incentive to choose one company over another, they’re obligated to disclose the fact. Any undisclosed conflict of interest may be illegal, especially if it results in the unfair rewarding of a contract or an inflated price.


Perhaps the oldest trick in the book, bribery is when a company gives illicit gifts, often in the form of money, to an official in exchange for a government contract. Companies may also bribe officials to ignore overcharges and other fraudulent behavior. No matter where in the process the bribery occurs, it constitutes flagrant government contract fraud.

Overcharging for Materials and Time

The dollar amount that private contractors charge the government usually depends on the time and materials needed to complete the project. Some companies inflate these numbers to increase their profits. Whether or not this behavior is accompanied by bribes to officials, it is considered both fraudulent and illegal.

Investigating and Prosecuting Government Contract Fraud

The federal government is fully aware that these types of schemes exist, and it puts considerable resources into uncovering and prosecuting them. Official audits search for unscrupulous behavior, and government employees are encouraged to come forward if they witness anything untoward. While some suspicious cases turn out to be nothing more than a reporting error or unfortunate misunderstanding, others are genuine examples of egregious government contract fraud.

Someone credibly accused of government contract fraud can be prosecuted in a court of law. Potential penalties include hefty fines and even lengthy prison sentences. This process promotes a fair, clean system for awarding and carrying out government contracts.

Understanding Government Grant Fraud

What is government grant fraud? It happens when an individual or entity that receives a government grant makes a form of false claim to the government regarding the grant. According to the Department of Justice, government grant fraud is considered lying, stealing and cheating. Although it is a serious offense to behave fraudulently with private grant funds, it is even more serious when the federal government is the victim. Grant fraud differs from a grant scam, which is a scheme that someone designs to pose as a government grant maker and solicit fake offers to people. Scam artists typically charge a fee for applying, so it helps to remember that it is always free to apply for a real government grant.

Common Types of Grant Fraud Claims

Federal grant funds are issued to provide a wide array of public services and benefits. They may be for health initiatives, community improvement, law enforcement, research or something else. Under the False Claims Act, there are several types of fraud claims that can be made by the government against recipients in any area. These are the most common types of grant fraud claims:

  • Using funds for purposes other than those specified in the agreement.
  • Providing false information on a grant application.
  • Not complying with the accounting and record-keeping requirements of the grant maker.

Risks of Government Grant Fraud

Not all people who are charged with grant fraud willfully commit a crime. When this happens, it is important to have an attorney who knows how to handle the issue. It is possible to be charged with grant fraud because of an error or negligence. There have been some cases in which grant recipients failed to file certain reports or documents and faced fraud charges.

Because of the complexities of government grants, it is critical to ensure full compliance of the terms. The Department of Justice provides several specific examples of risks that organizations must mitigate to avoid grant fraud. These are some examples:

  • Issuing reimbursement checks, credit cards or ATM cards liberally to multiple employees.
  • Failing to meet requirements for documentation or accounting.
  • Lacking internal controls and accountability steps to limit financial misconduct among employees.
  • Failing to regularly examine the internal structure of the program for fraud vulnerabilities.
  • Not properly vetting employees who are trusted to handle or account for grant funds.
  • Reporting erroneous, inaccurate or embellished information to obtain or maintain grant funds.

The best defense against fraud is ensuring that trustworthy employees are hired and that internal procedures minimize all risks of fraud. However, even the best measures require cooperation from many people, and fraud charges can leave organizational leaders wondering what happened.

Government Grant Fraud Penalties

The False Claims Act was established in 1863. At the time, it stated that anyone who made false claims to the government was liable for double the damages plus a set fee. Over time, that fee grew, and the act was amended to allow for even more financial recourse for the government. The penalties vary based on circumstances. However, there are strict legal and financial penalties for individuals or entities that knowingly and willfully deceive the government regarding grants. The Criminal False Claims Act guidelines state that anyone who knowingly makes false claims to the government may face between five and eight years in federal prison. The Civil False Claims Act guidelines allow for up to three times the amount of the total damages. Also, there may be a fee between $5,500 and $11,000 in addition to the damages.

Choosing a Government Grant Fraud Attorney

Any grant fraud allegation is a serious issue and warrants the need for an attorney who understands federal laws concerning government grants and fraud. Whether the claim is criminal or civil, it is important to have a winning defense strategy. Our attorneys know the right strategies and approaches for a variety of situations, and they consider all the complexities of each case’s unique details. Please contact us for a consultation.

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