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HP to Pay $55M in Fraud, Kickbacks Settlement

By Jason Beahm on August 31, 2010 2:41 PM

Hewlett-Packard has settled for $55 million dollars with the U.S. Department of Justice. HP was accused of paying kickbacks to companies in exchange for persuading U.S. Government agencies to purchase HP products. In addition, the settlement covers allegations dating back to 2002, when a contract was executed between California-based HP and the General Services Administration.

The contract allegedly had errors in pricing caused by HP's failure to provide complete and accurate information to the government. The settlement is part of a several year investigation by the DOJ which began after whistleblowers Norman Rille and Neal Roberts came forward in 2004, The Associated Foreign Press reports.

Fraud is a serious charge, particularly when committed against the U.S. Government. Had the HP kickbacks case gone to trial, the prosecution would have had the burden of proving that HP intentionally defrauded the GSA. In order to prove fraud, the government would have meet five general elements:

(1) a false statement of a material fact by HP, (2) knowledge on the part of HP that the statement is untrue, (3) intent on the part of HP to deceive the GSA, (4) justifiable reliance by the GSA on the statement, and (5) injury to the GSA as a result.

The HP settlement allows the company to avoid a drawn out and potentially highly damaging kickbacks trial. At the same time, the government is able to avoid prosecuting what could have been a tricky case. Like perjury, fraud cases can be very hard to prove because not only does the prosecution have to prove that the underlying act occurred, they must also prove intent.

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