The Waterbury Democrat., 1945-07-31


 represents the kick-back on only the first cases, making the average case recovery little under $100,000. Of these 89 cases, "A were settled without U. s. attorneys having to go to court, so conclusive was the evidence of fraud.
 Seventy-five additional cases are now pending in court and 200 more are under investigation, some of which will go to trial and some won't. Actions of this kind will be going through the courts for three years or more after the end of hos tilities, however, so it's entirely pos- sible that the War Frauds civil sec tion in the Department of Justice Claims Division now operating under Joseph M. Friedman will eventually get back the equivalent cost of a battleship with maybe a couple of destroyers to boot.
 FALSE CLAIMS STATUTE
 BASIS OF FACTION
 How the Department of Justice has had to go about recovering this money makes better reading than the stories of the frauds themselves. Basic legislation for this kind of action was the False Claims Statute enacted during the Civil War. In those days patriotic Yankee con- tractors didn't hesitate to sell the Northern Army bullets stuffed with sawdust, maggoty beef, weevily flour, shoddy wool and to charge all the traffic would bear. The scan- dals of those days beat anything dug up by the Truman and Mead committees in this war.
 To correct the Civil War frauds, Congress passed complicated law which provided for court martial of defrauderS in the Army, fine or im- prisonment for civilian defrauders and civil action to permit the gov ernment to recover damages. In ad- dition, any private individual might bring suit in the name of the U. S. government to get half of the money recovered.
 Informer suits were not much used, however, until 1940 when one smart New York attorney filed an informer suit to collect from a group of contractors who had de- frauded the government through colusive bidding on PWA job. This lawyer had no direct link to the case. He simply took information from criminal indictment previ- ously filed by government attor- neys and attempted to cash in on the old Civil War law.
 The case finally went to the held his right to his gravy. To date, he has collected $130,000, or half of the $260, 1000 recovered from a $315,- 900 judgment against 40 contractors. TROUBLE FOR THE
 CLAIMS DIVISION
 The case put the Claims Division of the Department of Justice in hot water up to it's eyebrows. Using newspaper clippings, factory rumors or scraps of information picked up from reports of Congressional in- vestigations into waSteful practices of war contractors, sharpers from all over rushed into court to file claims on fraud money. For time U. s. attorneys spent more effort fighting off these informer suits than they did in prosecuting their own war fraud claims. Late in 1943, Congress had to change the law.
 Today, private claims for war fraud money based on information collected by the FBI or other gov- ernment agencies are outlawed. And whenever a real informer files a suit, the government has 60 days in which to take over prosecution. In a suit begun by an informer and taken over by the government, the maximum which the informer can collect is 10 per cent of the amount recovered. In a suit which the gov ernment doesn't take action and the informer carries through his own prosecution, the most he can collect is 25 per cent of the sum recovered. It's still nice piece of business for any informer who can crash in on 1t.