State Continues to Pursue Fraud, Misconduct Lawsuit

A court decision was recent made in a Hawai’i Department of Transportation lawsuit against consulting firm Ciber, Inc. that allows DOT to pursue its claims against the firm.

The lawsuit stems from a failed project that involved upgrading the computer accounting systems in DOT’s Highways Division.

On Feb. 15, the Circuit Court for the First Circuit rejected nearly all of Ciber’s challenges to DOT’s claims, which included claims against Ciber for fraud, unfair competition, and violating the False Claims Act by submitting false invoices to the state.

Ciber allegedly acted unlawfully while working on the Financial Accounting System Transportation, or FAST, project. The company collected over $8 million in fees from the State but overall failed to implement a new Oracle computer system to manage the financial operations of the Highways Division.

In 2015, DOT terminated Ciber after the company abandoned the project.

Accoding to DOT, Ciber’s work on the project was “marred by missed deadlines and repeated performance failures, including its delivery of a system that was unable to perform basic functions towards obtaining reimbursements from the Federal Highway Administration.”

In its fraud claims, DOT alleges that Ciber admitted its fraud in internal reports. In those reports, Ciber officials reportedly acknowledged that Ciber submitted what it called “erroneous invoices and fictitious change orders” to HDOT, billed HDOT for work that Ciber knew was of no value, and deliberately under-staffed the project to meet Ciber’s own internal profitability benchmarks.

DOT is also claiming that Ciber pulled a “bait and switch” in which they misrepresented their capabilities to design and build the new system.

The Court has granted DOT’s motion to compel Ciber to turn over internal documents referenced above, including internal emails, which Ciber was seeking to avoid producing.

“This ruling marks a big step forward in the State’s case and we will continue to fight on behalf of Hawai’i’s residents,” said Ford Fuchigami, DOT Director. “It also solidifies our commitment to holding contractors accountable when they do not deliver what was promised and violate the public’s trust.”

DOT is seeking recovery of tens of millions of dollars in damages, including the fees it paid to Ciber.  DOT’s fraud claims expose Ciber to possible punitive damages, and DOT’s false claims and unfair competition claims expose Ciber to trebled damages.

The next court date has yet to be scheduled.