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7 ON YOUR SIDE: Whistleblower claims Arlington federal contractor cheated taxpayers

PAE building (Nathan Baca/ABC7) 

Arlington-based company Pacific Architects & Engineers (PAE) is paying $5 million to the DC U.S. Attorney’s Office after allegations the federal contractor falsely charged taxpayers for employee background checks they never did.

The company has over 60 years experience building infrastructure and providing security in the world’s most dangerous countries. PAE “strongly disagrees” with the allegations brought forward by a former employee, Robert Palombo.

Former DEA agent Palombo worked for PAE in Lebanon and Afghanistan. “When I looked into the vetting, and when I looked into the contract requirements, there were some glaring missteps taking place,” Palombo told 7 On Your Side. There's a definite potential security risk when you hire people that aren't thoroughly vetted.”

The US Attorney's Office sued PAE, saying it falsely charged taxpayers for employee background checks from 2007 to 2014.

While admitting no wrongdoing, PAE paid a $5 million settlement to the U.S Attorney’s Office. They also paid Palombo $875,000 as a government.

“This settlement proves that the system can work to help people provide the government with important information. Mr. Palombo took action to report his allegations and now is being rewarded as a true whistleblower," said Palombo’s attorney, Tony Munter of Price Benowitz LLP.

PAE declined an interview, writing in a statement, “PAE is confident that it fully met its contractual obligations. PAE hired Americans with high-level security clearances and performed robust background checks.”

“If this case were to have gone to trial, PAE is confident that a jury would agree that PAE more than satisfied the intent of the contractual requirements. PAE chose instead to resolve the lawsuit to avoid the distraction that this four-year-old dispute had imposed on both PAE and its customer, the State Department, as well as to avoid the cost of litigation,” added PAE.

Palombo added his choice to speak out was an easy one, "You really don't have a choice. It's your responsibility as an employee and I think it's your moral responsibility as well."

PAE continues to do global work with the US government.

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