The Justice Department issued the following statement:
Acting United States Attorney Lisa G. Johnston announced today that Horne LLP, of Ridgeland, Mississippi, has agreed to pay the United States $1,207,600 to resolve civil allegations that it received improper payments from federal disaster recovery grant funds in connection with disaster recovery services it provided in 2017 and 2018 in West Virginia.
On June 23, 2016, portions of the Southern District of West Virginia experienced extreme levels of rainfall, resulting in historic flooding over a vast swath of the region. Flood waters rushing across West Virginia’s mountainous landscape damaged or swept away thousands of homes, businesses, bridges and other infrastructure, leaving thousands of West Virginia residents homeless and at least 23 dead. Following a presidential disaster declaration issued in response to the flooding, Congress appropriated funds for disaster recovery in West Virginia to be administered by the U.S. Department of Housing and Urban Development (HUD) in the form of Community Development Block Grant – Disaster Recovery (CDBG-DR) funds. These funds were made available to fund an array of recovery needs in West Virginia including housing rehabilitation and replacement for low income homeowners.
Soon after CDBG-DR funds were appropriated, Horne was selected by the West Virginia Development Office (WVDO) to develop the state’s Action Plan for use of the disaster recovery grant funds. Horne is an accounting and professional services firm specializing in administering state and federal disaster recovery programs across the United States. Horne’s contract with the State of West Virginia included task orders requiring Horne to assist the WVDO in developing a CDBG-DR Action Plan which were to be used to secure additional project funding and to provide program guidance, design and development services. The contract which provided for total compensation of $900,000 was approved by the West Virginia Department of Administration Purchasing Division (WVDAPD).
Although the contract provided for total compensation of $900,000, additional “task orders” were added to the contract that inflated the cost of the contract to more than $18,000,000. As a result of these additions, Horne was awarded responsibility for the housing rehabilitation program, which was later re-branded as “Rise West Virginia Housing Restoration Program” (WV-HRP or “RISE”).
The RISE program came under scrutiny in late 2017 when Horne’s contract was reviewed by the West Virginia Department of Administration Purchasing Division. During the review, it was discovered that Horne’s original contract price had ballooned from $900,000 to more than $18,000,000 without competitive bidding, review, or approval by the WVDAPD or the West Virginia Attorney General’s Office.
The administration of then-Gov. Jim Justice declared the additional work orders to be illegal, and that Horne could not be paid for any services completed under them. This prompted Horne to seek to sell the data it had generated through its operations in West Virginia to the government at a price intended to reflect the value of its prior services. Horne submitted an invoice totaling $6,739,575, and the invoice was paid on November 6, 2018, from the federal CDBG-DR funds.
After Horne transmitted its project data to state officials, investigators discovered that many of the services sold to the sate were problematic. In particular, investigators discovered that many of the “personal consultations,” included on Horne’s invoice at $950 each, were for cold calls that resulted in a finding of “no unmet need.” Despite a quick call confirming the homeowner had no need of Horne’s services, Horne created an applicant file for each person, complete with fictitious birthdates, social security numbers, and fake signatures on legal documents. Investigators also found that in some cases these personal consultations were actually performed by staff for Voluntary Organizations Active in Disaster (VOAD), not Horne. Investigators found that approximately 48 of the physical property inspections, costing the government $1,850 each, were for vacant lots where an inspection was not required. Similarly, Horne billed $1,650 for each of 72 repair estimates where there was nothing to repair.
The Settlement Agreement announced today requires Horne to pay $1,207,600 to resolve the government’s claims.
“Thousands of West Virginians remained in need after historic flooding damaged or destroyed their homes, and the Horne firm took advantage of the situation,” said Acting United States Attorney Lisa G. Johnston. “This settlement agreement is a result of the excellent work by HUD-OIG and the West Virginia Commission on Special Investigations, our office’s Affirmative Civil Enforcement and Health Care Fraud Investigative Specialist Tyler E. Japhet, and Assistant United States Attorney Gregory P. Neil.”
“The alleged actions of Horne, LLP undermine the mission of HUD’s disaster recovery efforts and takes critical resources away from those who need them the most,” said Special Agent-in-Charge Shawn Rice with the U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG). “HUD OIG is committed to partnering with the U.S. Attorney’s Office to pursue accountability for those who seek to exploit federal programs.”
“The Commission on Special Investigations began investigating the handling of flood related disaster assistance in December of 2018,” said West Virginia Commission on Special Investigations Director Rick Eplin. “Investigators conducted interviews and documented conditions throughout 12 counties in West Virginia touched by the flooding. Investigators documented tragic stories from the families whose homes were destroyed by flood waters. They were struck by the resiliency of the citizens and their commitment to their communities. In the course of the investigation, it was determined that data collected by Horne did not accurately reflect the conditions and circumstances observed by CSI investigators. In partnership with the HUD Office of Inspector General and the United States Attorney’s Office for the Southern District of West Virginia a positive resolution was achieved.”
Horne did not admit to any wrongdoing. The company issued the following statement:
Horne, a professional services firm, has resolved a contractual dispute concerning a small percentage of a 2018 data invoice related to work performed for the RISE West Virginia Disaster Recovery Housing Program. The State of West Virginia acknowledged issues with its own internal procurement process and shifted program management to volunteer organizations. To compensate HORNE for work performed, the West Virginia Department of Commerce, HUD, and all appropriate state agencies agreed on the payment terms prior to invoicing. HORNE maintains the invoice reflected fair compensation and followed agreed-upon payment terms for program data collected. “HORNE stands by the value delivered and the appropriateness of the data invoice approved by all parties in 2018,” said CEO and Managing Partner Rusty Butcher. “After reviewing the cost of litigation, we determined settling this dispute is the right business decision.” The settlement resolves this dispute. As part of the agreement, HORNE will not pursue any further contractual claims related to this specific matter.
28 comments:
Sounds like a brother-in-law settlement.
Let’s see here. You pay me 18 mill and I pay you back 1.2 mill. Are those the facts? If so that’s a really sweet deal
Sounds like “investigators” and politicians justifying their existence. They always find something. A settlement that small on a claim that big should tell you all you need to know.
If you did $18 mil worth of work, no that’s not a sweet deal.
Most people don’t work for free
It sounds like there could have been some legitimate expectation of additional compensation regarding the sale of the data to the government for resources used to collect said data. However, it also looks like a lot of the funds collected through the "personal consultations" and use of fictitious birth dates, SSNs, etc. were fraudulent, ill-gotten gains.
Especially considering how easy it would be for authorities to discover the validity of the "personal consultations," why the F can people just not do the right thing? Is it just that the numbers are too big, it's "government money," and the pickings seem too easy? In my opinion, it'd be hard to measure the damage this type of disclosure would do to a company's reputation. I know I wouldn't hire them after this "settlement!"
I worked as a state employe during Katrina recovery in Mississippi. Horne LLP was selected to oversee all projects and there were tens of thousands of projects. Horne LLP saved the state millions of dollars. Horne was and is recognized across 5he country for its professionalism & ability to work well with
Federal, state, & local governments, & private companies.
15:1 ROI. Not bad, though some palm grease may have been some hidden overhead.
I have seen this movie before with other government contractors. They start off pure in mission and then the money gets so big that greed poisons the culture.
These government centric firms start off pure in mission until the money gets so big that it corrupts. Happens almost every time
Hey 6:23. Horne is handling the $1.8B the State got for the American Rescue Plan Act. They probably helped write the legislation and now they are overseeing the program. I’m betting numerous lawmakers got big donations! Plus a big building in Ridgeland. CPAs are one notch above lawyers!
Now do PPP money.
Worked harder creating the fraud than if they would have just performed the work.
Such contract disputes and project overruns are common. Indeed, our President was involved in more than a few of them. No news here. The matter was resolved.
6:23 absolutely true. The difference is that in 1604 Horne was only doing auditing and accounting, not planning or project management. They earned a good reputation in Katrina, but that was almost 20 years ago. This is going to hurt their reputation.
Looks like the Horny employees are busy posting on JJ today.
CPA, auditing, accounting firms are thought to be the ones preventing corruption, extortion, embezzlement, fraud. But..
Government largesse is just too much temptation, DOGE should be a permanent watchdog at Federal and State levels.
The real question is whether this will impact them getting future contracts. This sector created a massive upswing for Horne in early 2000s, and each of the partners running it made millions year over year for well over a decade. I'm sure this was more a payment to preserve good graces to keep the federal aid money coming in than any acknowledgment involving this case.
What a shame. Horne was a good name. This is a sad thing to read. Why can't folks just do the job they are hired for.
Rotten conduct no way how you slice it
here what horne says: "we will pay uncle sam $1.2 million dollars but we did not do anything wrong.
this was just a business deal gone bad".............now just stop for a moment and think about that.
if you had done nothing wrong would you pay over $1.2 million?
this sort of thing will continue to go on so long as mega corporations , mainly insurance companies, are allowed to settle cases with NO ADMISSION OF LIABILITY.
this is a perfect example of corporate welfare here in the good ole U S of A.
little history of welfare........i promise to be brief:
1.welfare for the poor has existed since about the 1960s;
2. welfare for the rich has always existed;
3. welfare for the middle class has never existed.
case closed.
But will they be successful in horning in on future govt. contracts?
It changed about time they took “CPA Group” out of the name. I would not engage them in any form of assurance work now and once they were regional leaders in that sector.
18 mil worth of work? Hmmm. The following makes me wonder why somebody at Horne is not headed to prison...
"...Horne created an applicant file for each person, complete with fictitious birthdates, social security numbers, and fake signatures on legal documents. Investigators also found that in some cases these personal consultations were actually performed by staff for Voluntary Organizations Active in Disaster (VOAD), not Horne. Investigators found that approximately 48 of the physical property inspections, costing the government $1,850 each, were for vacant lots where an inspection was not required. Similarly, Horne billed $1,650 for each of 72 repair estimates where there was nothing to repair."
How is this not jail-time material?
The arrogant and pompous attitude prevalent at Horne starts at the top with their CEO. We should expect nothing less of their staff and management.
"...file for each person, complete with fictitious birthdates, social security numbers, and fake signatures on legal documents."
Again...How does that not warrant jail time, or at minimum, barring Horne from ever again contracting with the government?
It gets worse. Just wait until Louisian, Texas, Arkansas, and California starts reviewing the work horne has done or hasn't done for them!!!
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