Criminal Investigation | April 12, 2019

Sunnyvale-Based Network Security Company Agrees to Pay $545,000 to Resolve False Claims Act Allegations

On April 12, 2019, Sunnyvale, California-based Fortinet, Inc. agreed to pay $545,000 to resolve alleged violations of the False Claims Act by falsely representing its products were in compliance with the Trade Agreements Act.  According to the settlement agreement, Fortinet acknowledged that from approximately 2009 to 2016, A Fortinet employee responsible for supply chain management arranged to have labels on certain products altered to fraudulently claim that the products complied with the Trade Agreements Act.  The employee has since been terminated from Fortinet.  To settle the allegations, Fortinet has agreed to pay $400,000 and to provide the United States Marine Corps with additional equipment valued at $145,000.  The lawsuit was filed by Yuxin “Jay” Fang under the qui tam provisions of the False Claims Act.  Under the act, private citizens can bring suit on or behalf of the government for false claims and share in any recovery.  The act also permits the United States to intervene in and take over a whistleblower suit, as was done here.  This was a joint investigation with DCIS, the General Services Administration OIG, the Air Force Office of Special Investigations, the U.S. Army Criminal Investigative Division/Command, DHS-OIG, the Department of the Navy, and the Coast Guard Investigative Service.