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Instec Inc., owner to pay $625,000 to settle False Claims Act allegations

BOULDER — A Boulder company and its owner have agreed to pay $625,000 to settle allegations that they violated the False Claims Act, according to a press release issued by the U.S. Attorney’s Office for the District of Colorado.

Instec Inc. and its owner and president, Zhong Zou, were accused of failing to comply with the requirements of the Buy American Act when selling scientific instruments to federal agencies and national laboratories.

The Buy American Act was enacted in 1933 to protect U.S. manufacturing by creating a preference for domestic products in federal purchasing.

The U.S. alleged that Instec and Zou knowingly violated the 1933 Buy American Act. Allegations included that Instec and Zou falsely certified that scientific instruments sold to the government pursuant to contracts containing domestic-preference requirements were of domestic origin, when the goods were actually manufactured in China.

The case involved microscopy, spectroscopy and electrical probing tools with advanced precision thermal controls that were sold to federal agencies and national laboratories, including the Department of Energy, the U.S. Navy, the U.S. Army, and the National Aeronautics and Space Administration.

Claims resolved by the settlement remain allegations only, with no determination of liability.

“Those who contract with the government must comply with all applicable terms” Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division, said in a written statement. “This settlement demonstrates the department’s commitment to protect American businesses by enforcing domestic preference requirements.”

“When companies commit to manufacture their goods in the United States, then shirk that commitment, they violate the law and undermine American manufacturing jobs, too. The U.S. Attorney’s Office for the District of Colorado is committed to enforcing the Buy American Act and pursuing companies that violate it,” said U.S. Attorney Cole Finegan.

The settlement was coordinated by the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the District of Colorado, with assistance from the Department of Energy Office of Inspector General, the Defense Criminal Investigative Service (DCIS), the National Aeronautics and Space Administration Office of Inspector General, and the Army Criminal Investigation Division.

“Federal contractors cannot simply dispense with contractual requirements designed to protect American industry,” said Department of Energy Inspector General Teri L. Donaldson. “I applaud the investigators as well as the DOJ and U.S. Attorney’s Office for the District of Colorado for their efforts in reaching this settlement.”

“This settlement demonstrates the commitment of the Department of Defense, Office of Inspector General, DCIS, along with our law enforcement partners, to aggressively pursue those who defraud the United States Government,” said Gregory Shilling, acting special agent in charge of the DCIS Southwest Field Office. “This type of activity undermines the procurement process, and those responsible will be held accountable.”

The civil settlement includes resolution of claims brought by a former Instec employee under the qui tam provisions of the False Claims Act, which allow a private party, known as a relator, to file an action on behalf of the U.S. and receive a portion of any recovery.  The relator will receive $124,500 as part of the Instec settlement.

 The case is captioned United States ex rel. Swanton v. Zou, et al, No. 20-cv-01742 (D. Colo.).

Source: BizWest