The Department of Justice has announced that it resolved a case against a foodservice company contracted to provide food and water to the U.S. military. According to the press release, Supreme Foodservice GmbH and Supreme Foodservice FZE pled guilty to “major fraud against the United States and paid $288.36 million in the criminal case, a sum which includes the maximum criminal fines allowed.”  Those companies and Supreme Court B.V. have also paid $101 million to settle a related civil False Claims Act suit.  Court documents allege that:

between July 2005 and April 2009, Supreme Foodservice AG together with Supreme Foodservice KG (which is now called Supreme Foodservice FZE) devised and implemented a scheme to overcharge the United States in order to make profits over and above those provided in the $8.8 billion Subsistence Prime Vendor Contract (“the SPV contract”).  The companies fraudulently inflated the price charged for Local Market Ready goods (or LMR) and bottled water sold to the United States under the SPV contract.   Supreme did this by using a UAE company it controlled, called Jamal Ahli Foods Co., LLC (“JAFCO”), as a middleman to mark up prices for fresh fruits and vegetables and other locally-produced products sold to the U.S. government, and to obscure the inflated price Supreme was charging for bottled water.  The fraud resulted in a loss to the government of $48 million. In addition, as a result of the criminal investigation, Supreme paid $38.3 million directly to the DSCP as a refund for separate overpayments on bottled water.

Supreme AG, Supreme FZE, and Supreme’s owners (referred to in court documents as Supreme Owners #1 and #2) made concerted efforts to conceal Supreme’s true relationship with JAFCO, and to make JAFCO appear to be an independent company.  They also took steps to make JAFCO’s mark-up on LMR look legitimate, and persisted in the fraudulent mark-ups even in the face of questions from DSCP about the pricing of LMR.

Read the entire press release, “Defense Contractor Pleads Guilty To Major Fraud In The Provision Of Supplies To U.S. Troops In Afghanistan”