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Former BOP Official Pays $50,000 to Settle Anti-Kickback Claims

by Scott Grammer

Last year, the U.S. Department of Justice (DOJ) announced that it had accepted a $50,000 settlement from Cary J. Hudson, a former Bureau of Prisons financial administrator, to resolve allegations that he took kickbacks from Integrated Medical Solutions, Inc. (IMS). Hudson was accused of accepting the payments in return for helping IMS obtain contracts with the BOP. The company and its former president, Jerry Heftler, agreed to pay $2.4 million to settle related claims in May 2017.

Hudson allegedly gave IMS access to information that provided an advantage in bidding for contracts for healthcare services at federal prisons. He had previously pleaded guilty to a felony for failing to disclose his business relationship with IMS, and was sentenced in October 2014 to three years of probation plus a $5,000 fine.

Acting Assistant Attorney General Chad A. Readler with the DOJ’s Civil Division said, “This settlement demonstrates that the Department of Justice is committed to protecting the integrity of the federal contracting process from unscrupulous contractors.”

According to a DOJ press release, Hudson had also served as a consultant for IMS and assisted with the performance of the company’s contracts while he was still employed as a BOP financial administrator. 

“This case, in which our office both criminally prosecuted the responsible employee and civilly recovered almost $2.5 million for the federal fisc, should serve as an example and warning to others who might be similarly tempted to abuse positions of trust in federal programs funded with taxpayer dollars,” said U.S. Attorney Erin Nealy Cox.

The DOJ press release added that except for what Hudson admitted to in his guilty plea, the civil claims resolved by the settlement “are allegations only, and there has been no determination of liability.”

The Anti-Kickback Act of 1986, codified at 41 U.S.C. §§ 8701-8707, prohibits any payment or gratuity made for the purpose of inducing an award of a prime contract or subcontract with the federal government, and imposes both criminal and civil penalties. 

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Sources: federaltimes.com, justice.gov, fedsmith.com, counsel.cua.edu