A company responsible for network security, based in the Sunnyvale area of San Francisco, was accused of breaking a trade agreement by selling Chinese-made equipment. The company, Fortinet Inc., agreed to pay more than a half million dollars in order to settle these allegations without further action.
The allegations stemmed from a lawsuit filed by a Fortinet employee who was living in China. The False Claims Act allows private citizens the right to bring up lawsuits in the name of the U.S. government when it comes to false claims and allows the U.S. to intervene, such as what occurred in this situation.
During these allegations, Fortinet did disclose that between 2009 and 2016 they had an employee that they claim took it upon himself to direct employees to relabel their products to state that they were designed and assembled in the United States or Canada. The items in truth though were Chinese-made.
This action was in direct conflict with the Trade Agreements Act that prohibits contractors from purchasing products not entirely from the U.S. or other agreed upon parties’ countries. This is a U.S. violation of the False Claims Act, and without settlement, Fortinet would have been most likely severely prosecuted for this fraudulent activity.
“Contractors that supply the U.S. government with Chinese-made technology will be pursued and held accountable when violating the Trade Agreement Act,” stated Defense Criminal Investigative Service special agent, Bryan Denny.
His words were supported by General Special Agent of Homeland Securities Office Amanda Thandi, who stated, “Contracting companies that conduct business with the federal government must uphold our trade laws,”. She then went on to add, “Any misrepresentation during this process undercuts its integrity.”.
The cost of the settlement was exactly $545,000. Fortinet also fired the director responsible for these criminal deviations from the agreed method of production. The settlement will be paid as $400,000 in funds, with an addition of $145,000 in equipment for the U.S. Marine Corps. That being said, since this was a settlement there will be no legal proof of any criminal activity on the record or admittance of guilt required.
“We hold ourselves to the highest ethical standards of trust and integrity,”, Fortinet representatives said in a statement addressing this case. They added, “This was an isolated incident that involved events from more than two years ago in which a rogue former employee acted against our policies.”.
Fortinet claims that when they were made aware of the incident that occurred they were more than eager to take action and continue to follow all the correct protocols. Many believe this is why the settlement has been set at a lower amount than is standard in similar cases, in order to reflect their willingness to address the matter themselves.
Those who are interested in gaining more information about situations like this, or who want to keep up-to-date on the latest legal proceedings, can find more details at Jeff Newman Law!
