Department of Justice sues Oracle, joins whistleblower lawsuit

July 30, 2010 — 8:49am ET | By Molly Bernhart Walker

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The Department of Justice joined a whistleblower lawsuit against Oracle (NASDAQ: ORCL), and posted a press realse on July 29, filing a complaint under the False Claims Act.

DOJ alleged that Oracle defrauded the government on a General Services Administration software contract that was in effect from 1998 to 2006, which cost hundreds of millions of dollars in sales. DOJ claimed Oracle, essentially, overcharged GSA by not giving steep enough discounts; the software company was required under contract to provide the same markdowns to government that it gives commercial customers. According to the suit, Oracle misrepresented its true commercial sales practices.

"We take seriously allegations that a government contractor has dealt dishonestly with the United States," said Tony West, assistant attorney general for the Civil Division of the Department of Justice in a press release. "When contractors misrepresent their business practices to the government, taxpayers suffer."

The suit, now called United States ex rel. Frascella v. Oracle Corp. et al., No. 1:07cv:529 (E.D. Va.), was originally filed by whistleblower Paul Frascella, former senior director of Contract Services at Oracle in May 2007, according to a New York Times article. In April 2010 the government provided notice that it was reviewing the complaint as part of a National Procurement Fraud Initiative. It has since joined the lawsuit.

The Procurement Fraud Task Force is headed by the assistant attorney general for the Criminal Division and is comprised of the Civil Division, the U.S. Attorneys' Offices, the FBI, the Inspectors General community and several federal law enforcement agencies.

For more:
- see the complaint
- see the Department of Justice press release
- see this New York Times article