Whistleblower alleges Booz Allen was overcharging U.S. taxpayers for losses
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We will continue to witness this scenario in the USA as long as deferred prosecution agreements remain in place. Observe how no individuals face jail time; instead, substantial fines are levied, and business continues as usual. The company benefits, often reflected in a rise in stock price, while prosecutors add another accomplishment to their résumés.
Contemplating an extreme measure, if such infractions were punishable by the death penalty, one wonders how many top-tier executives would risk such behavior.
4.6%, maybe not a rounding error, but definitely cost of doing business area
I wish I could get away with that, but i'm middle class.
When you say you are "middle" what do you mean?
I was just curious what separates the "middle" from the "bottom".
But what separates the middle from the lower?
Property. Historically, this meant land. Today, it means assets. Savings of any kind. The poor live pay check to pay check; the middle class could survive a bad harvest.
This makes sense to me. Owning things at all makes you middle class, and not destitute. Why is this distinction important?
The safety buffer it provides lets you take more risk, personally, civically and societally. That lets you access rewards someone fighting for sustenance can’t countenance. Consider the years we, as a society, spend educating our youth when they could be working a field to produce food.
It also means leverage. If a harvest failed, the poor in the army got fed. The others didn’t. The middle class, on the other hand, wasn’t forced into that choice simply to survive. (We use the term “survive” nowadays to mean maintain some arbitrary quality of life, but I’m speaking literally.)
And there are plenty of the very rich who go bankrupt and die penniless.
Someone relying solely on income from labour to sustain their standard of living may live as the middle class do, just as a poor person accumulating debt may sustain a middle-class lifestyle, but that doesn’t change their fundamental economic situation.
Also: When middle class folk talk about living paycheck to paycheck, they’re usually ignoring retirement assets. But I don’t deny that plenty of people consume their economic security because they, and many times rightly, don’t believe they need it.
https://en.wikipedia.org/wiki/Middle_class
Roughly, today middle class is directly related to the amount of discretionary income, not assets.
Broadly, what constitutes a middle class depends on the society we are observing. Every society has its elites. Some had slaves, some have destitutes. In between is gradation defined, variously, by income, assets, education and lineage. (See the history section; modern/British middle class was originally defined by education.)
In America, discretionary income is a good definition because most people have a reasonable expectation of lifelong economic stability. (We gripe when it isn’t improving.) In Europe (and most of the world), the asset test is far more sturdy. And even within America, you see this vary.
Did you read the history and evolution of the term section?
“Friedrich Engels saw the category as an intermediate social class between the nobility and the peasantry in late-feudalist society. While the nobility owned much of the countryside, and the peasantry worked it, a new bourgeoisie (literally "town-dwellers") arose around mercantile functions in the city.” In the French Revolution, “the new ruling class or bourgeoisie in the new capitalist-dominated societies.” Capital, it’s there in the term. The Stevenson definition, which follows in the next paragraph, cites the “chief defining characteristic of membership in the middle-class [as] control of significant human capital.” This British education-and-skill-derived definition is the basis of the top-of-the-article summary definition, since that human capital produces excess income.
Would note that the article appears poorly cited (as many notes on it claim), despite a cursory review of the bibliography shows they’ve covered the basics.
We make ends meet, can afford the things we want to do, but never seem to actually build any savings. (grocery costs are eating us alive this past year or two)
There are three classes: Struggling, comfortable, and rich. If paying for necessities like transport, housing, and food requires significant efforts to manage cash flow or is even impossible, you are struggling. If you don't know when your employer pays you because you haven't had a cash flow problem in a decade, you are comfortable. If you don't have an employer because your wealth comes from things, you are rich.
That doesn't change the fact that almost everybody wants to think of themselves as middle class, but especially here on HN most people are definitely not. If you make $200k cash plus RSUs on top of that you may not be rich but you're certainly on your way there and you're certainly not middle class in the way that carpenter making $75k with his stay at home wife in Houston is.
I'm just griping with, time after time, a company stealing 100m dollars or whatever and then reaching a settlement that lets them get off scott free after paying back 50m.
In short, penalties aren't theoretically capped at 100%. That said, it's still theoretically possible to construct situations where the expected cost of lawsuits is less than what can be gained by the illegal act. However to make that claim you'd need to correctly calculate what the chances are of getting caught is, which is far more complex than pointing to a court case where someone settled.
Yes, which makes it all the more galling that they seem to never even reach that much in such cases.
It reads like your typical story where a Kennedy family member kills some girl and gets away with it (one of them went to prison once until the supreme court overturned the conviction).
I think they implied retaliation in the form of assassination.
Government whistleblowers, of course, is a different story.
Are they just stalking you or are things going to get worse? If you are Jeffrey Wigand and some goons steal your computer, what do you do?
She's worked at BAH. I'm sure she's not worried about them sending a hit squad to take her out....but only because she knows that if they did, the mission would turn into a 200 person engagement that would end up overbudget and overdue..and the end result would be one mean comment on her facebook page.
Maybe the powers that be should really think about nationalizing this type of companies, if you’re getting the great majority of the your revenues from the Government that looks like a better way to keep things under more direct control.
It is a joke on "justice" that this is legal.
This is so awesome. Good work and well deserved!
> Booz Allen last month admitted no wrongdoing while paying a $377 million settlement
Sounds like a cool way to wash $123M of theft. I wish I could steal stuff, give back 2/3 of that, and walk away Scott free.
Also we're missing half of the story there, because there's no way they sent $Bs worth of invoice with overpriced rates without at least an accountant noticing, and being shutoff by some chain of command.
It is 'scot-free' apparently, and interestingly has nothing to do with the Scottish, it seems:
> Etymology From Middle English scotfre, from Old English scotfrēo (“scot-free; exempt from royal tax or imposts”), equivalent to scot (“payment; contribution; fine”) + -free.[1]
Unlicensed Internet detective here, this suggests scot descends from scratch and Macbeth.
https://www.theguardian.com/notesandqueries/query/0,5753,-27...
Settlements are often used when the case is complex and both parties aren't sure of the outcome. Rather than spend millions in legal fees fighting it out, they meet in the middle and settle for the expected value of the lawsuit. A toy example would be if the plaintiff thought the defendant owed them $100M worth of damages, but also thinks there's also a 50% chance of winning. Rather than spending millions on legal bills and possibly winning, they settle for $50M, which is better for everyone involved. Yes, it's not satisfying to think "bad guy got away with it and only paid 50%", but keep in mind that victory isn't assured, and it's very possible that the outcome if it went to trial was "bad guy got away with it and paid 0%".
The reason why this doesn't happen with thefts is that they're simple cases that don't require drawn out legal battles. A far better example that people would understand are car accidents. Someone rear-ends you and causes $10k worth of damage. The other driver therefore owes you $10k, right? But no, the other person alleges that you cut him off, and therefore you're partially at fault. Rather than battling it out in court racking up billable hours @ >$200/hr for both sides, you (or your insurance) meet in the middle and settle for $5k. Yet, nobody would characterize this as "Sounds like a cool way to wash $10k of damage. I wish I could wreck stuff, give back 1/2 of that, and walk away Scott free.".
No, there are https://en.wikipedia.org/wiki/Punitive_damages
As JP Morgan said, a man always has two reasons to do something, a good reason, and the real reason.
There is big money in whistleblowing, if your claim makes it through the gauntlet-- otherwise it's just a career-ending humiliation.
It's a lot of risk for a mother of three to assume; I'm sure she expected something (the DoD posters in the breakroom suggest as much) but I doubt she knew what the eventual payout would be from the start.
Isn't Booz Allen the same place another infamous whistleblower worked for? Not really sure how ethical this place can really be
> … Booz Allen has counted former senior U.S. intelligence officials among its corporate officers.
Remember, Snowdon raised concerns internally ten times prior to going rogue. I like to think there's a story in there about Snowdon raising his concerns to the ethics advisor who advised him to go rogue, after which the advisor was fired and they dropped the title. Why else would someone leave behind their nameplate title? Anyway it's fun to hypothesize.
The position was held by some guy named Pepe Silvia. The mailroom could never find him to deliver Snowden's stack of concerns.
Well sure, when there’s 40M (her share of the 300M fine paid) on the line, there’s a lot of incentive to sign and be done with things.
Not defending Booz Brothers at all, but alleging is all that happened
If this went to trial and it were proven that the company did XYZ, or even individuals in the company did X, Y, Z, presumably the company would in turn fire/discipline the employees (nominally) responsible for doing X, Y and Z.
Now, someone at the company probably knows if someone did X, Y, Z, even if there was no admission of wrongdoing. Do these employees still get disciplined, or does this mean the company doesn't acknowledge it happened internally (if it did), or do the employees get bonuses if doing XYZ netted more money than the settlement cost?
Where did they say that?
>At that moment, Feinberg told NBC News, “I realized that this was a very intentional setup. And it wasn’t just that there was the potential to overcharge the government; the rates were built to overcharge the government. If we should have been charging $100 to the government for an hour of work, we were charging $120 for that hour of work, so that that $20 could go to subsidize the international business.”
How is this fraud? In that line of work, it’s common to not charge customers the same price. Each contract is individually negotiated. And work for the US government is not necessarily even comparable to work for another entity. US government contracts are notoriously complex and fraught with red tape and legal risks.
Without knowing more, I’m kind of sympathetic to Booz Allen here. Settlement doesn’t mean admission of guilt. It just means they thought there was a risk of losing + risk of reputational loss + cost of litigation that it was worth paying $377 million to avoid.
>Under government contracting rules, there must be a nexus between the costs charged to a government contract and the objective of the contract. Thus, a contractor may charge to a government contract costs directly related to that contract, as well as indirect costs that benefit multiple contracts including the government contract. A contractor may not charge costs to a government contract, however, that have no relationship to that contract. This prohibition prevents government contractors from using taxpayer funds to subsidize non-government related work.
And her case was strong enough that the government decided to pursue it. That doesn't always happen - whistleblowers sometimes have to pursue these cases on their own (crazy as that sounds to me).
Ok, but in this case, they were.
Cost-plus accounting is a horrible way to do business, it's basically designed to facilitate this kind of fraud.
Charging $20 extra, to US tax payers, to support products that do not benefit US tax payers.
Additionally, these aren’t abstract users at the receiving of the practice - it’s US service members who just want their booze products to “work,” under a very tight budget environment.
US contractors have had the US military over a barrel for so long because of variations on these themes, and it actively hinders Soldiers in harms way, even if way down the supply chain. This is the reason Palantir, Anduril, etc are cleaning up now, to hugely summarize those companies.