Virginia receives $1.1 million settlement from corporations for allegedly overbilling localities for liquid aluminum sulfate

On March 3, 2022,  multiple corporations, including General Chemical Corporation, Chemtrade Chemicals Corporation, and GEO Specialty Chemicals,[1] collectively paid $1.1 million to the Commonwealth of Virginia to settle false claims lawsuit. The suit includes allegations that the defendants conspired to unlawfully rig and inflate prices during the public bidding process to defraud the Commonwealth and its taxpayers in the purchase of coagulant liquid aluminum sulfate, a chemical used in water treatment and purification.

The Virginia Fraud Against Taxpayers Act permits private citizens with knowledge of fraud perpetrated against the government to bring a civil action on behalf of the Commonwealth and to share in any recovery obtained. The 2017 lawsuit, which was filed by whistleblower Lawrence McShane in the Circuit Court for the City of Norfolk, alleged that the Defendants participated in a nationwide conspiracy to allocate territories and/or not to compete for each other’s historical business by rigging bids, allocating customers, and fixing the price of liquid aluminum sulfate sold in the United States from January 1, 1997, through at least February 28, 2011, and that Defendants submitted or caused to be submitted false or fraudulent claims for payments to certain Commonwealth localities.

The Commonwealth’s settlement is a part of a multi-jurisdictional $11.7 million settlement agreement.

The case was handled at the Office of Attorney General by its Civil Litigation Division, Financial Recovery Section, Fraud and Complex Recoveries Unit, led by Steven G. Popps, Deputy Attorney General-Civil and Rodolfo R. Remigio, Section Chief, and Senior Assistant Attorney General, with Peter E. Broadbent, III, Assistant Attorney General and Unit Manager as lead attorney. The Office of Attorney General’s fraud investigation was performed with the help of Investigator Gregory G. Taylor, CFE.

Attorney General Jason Miyares is committed to combating all government fraud and protecting the interests of the taxpayers of Virginia. The Office of the Attorney General encourages tips and complaints from all citizens about potential government fraud, waste, abuse, and mismanagement, which can be reported to the Office of the Attorney General or submitted by whistleblowers under the Virginia Fraud Against Taxpayers Act.

The lawsuit is captioned Commonwealth of Virginia ex rel. Lawrence McShane v. Frank A. Reichl, et al., (Case No. CL 17-944). The claims subject to the settlement agreement are allegations, and there has been no determination or admission of liability.

[1] The full list of the defendants that are parties to the settlement agreement include: General Chemical Corporation, General Chemical LLC, General Chemical Performance Products LLC, GenTek, Inc., Chemtrade Chemicals Corporation, Chemtrade Chemicals US LLC, Chemtrade Solutions LLC, Chemtrade Logistics Income Fund, Chemtrade Logistics, Inc., GEO Specialty Chemicals, Inc., C&S Chemicals, Inc., USALCO, LLC, Delta Chemical Corporation, and American Securities, LLC