Insect Shield LLC and Co-Founder’s Estate Agree to Pay $1.4M to Settle False Claims Act Allegations

Insect Shield LLC, located in North Carolina, and the Estate of Richard Lane, a co-founder and co-owner of Insect Shield, have agreed to pay a combined $1.4 million to resolve allegations that Insect Shield and Lane caused the submission of false claims to the Department of Defense (DoD) under contracts to provide Army Combat Uniforms. Lane served as the president and chief operating officer of Insect Shield until his death in December 2022.

The United States filed its complaint-in-intervention in December 2023 alleging that Insect Shield, a subcontractor to multiple defense contractors who manufacture Army uniforms, violated the False Claims Act by falsifying test results regarding the application of permethrin, an insect repellant, to Army uniforms. The United States alleged that between 2015 and 2021 Insect Shield and Lane failed to follow the permethrin testing requirements by inappropriately combining results from different rounds of testing, re-labeling test samples to hide the true origin of the samples, performing re-tests of uniforms in excess of what the contract permitted, and concealing failing test results.

"Government contractors and subcontractors must comply with contractual commitments and share truthful information with the government," said Assistant Attorney General Brett A. Shumate of the Justice Department's Civil Division. "The Justice Department will aggressively pursue those who defraud the American taxpayers by failing to properly perform required testing on goods supplied to our soldiers."

"The Defense Criminal Investigative Service (DCIS), is fully committed to safeguarding the integrity of the DoD procurement process," said Special Agent in Charge Christopher Dillard of DCIS Mid-Atlantic Field Office. "Manipulating and failing to perform contractually required testing is not only fraudulent, but compromises military readiness. DCIS will continue to collaborate with our law enforcement partners and the Department of Justice to investigate and hold accountable those who submit false claims."

"Our Soldiers rely on government contractors to provide equipment that they can depend on while serving their country," said Special Agent in Charge Keith Kelly, Department of the Army Criminal Investigation Division, Fraud Field Office. "The result of this investigation shows that our Army CID and our partner law enforcement agencies are relentless in their pursuit of anyone who may attempt to defraud the U.S. Government by falsely reporting compliance with contractually obligated requirements for equipment used by our Soldiers

The civil settlement resolves a lawsuit brought under the qui tam or whistleblower provisions of the False Claims Act, which permit private parties to sue on behalf of the United States when a defendant has submitted or caused to be submitted false claims for government funds and receive a portion of any recovery. Ms. Downs will receive $315,000 as her share of the settlement. The qui tam case, which was filed in the United States District Court for the Middle District of North Carolina, is captioned U.S. ex rel. Downs v. Insect Shield, LLC et al., No. 1:19-cv-1026 (M.D.N.C.).

The resolution obtained in this matter was the result of a coordinated effort between the Justice Department's Civil Division, Commercial Litigation Branch, Fraud Section, and the U.S. Attorney's Office for the Middle District of North Carolina with assistance from the DoD Office of Inspector General, Army Criminal Investigation Division, Defense Contract Management Agency, and Defense Contract Audit Agency.

The matter was handled by Fraud Section Attorneys Jonathan Hoerner, Jikky Thankachan, and Jeffrey McSorley and Assistant U.S. Attorneys for the Middle District of North Carolina.

The claims resolved by the settlement are allegations only and there has been no determination of liability.

Note: Read the Insect Shield Agreement here; and the Estate of Richard Lane Agreement here.