Kickbacks

A kickback is effectively a quid-pro-quo bribe — a collusive agreement —designed to help or influence an individual, company, or government entity. When a contractor promises to “kick back” some of the proceeds from a contract to the hiring decision-makers, a kickback has been offered. If the official suggests such an arrangement, a kickback has been solicited. Kickbacks can be in the form of money, credits, gifts, gratuity, offering of services, or anything of value. Kickbacks can take place in a variety of settings, such as politics, government, games, and the health care industry. Kickbacks are often referred to colloquially as “under the table” payments.

Federal rules against kickbacks deal primarily with federal issues such as public works that receive financing from the US government. Health care-related kickbacks (drug companies kicking back to doctors, for example) are also gaining the attention of authorities.

Issuing and accepting kickbacks are both serious crimes. The Anti-Kickback Act of 1986 prohibits government contractors and subcontractors from issuing or accepting kickbacks, as well as forcing an employee to kick back part of his or her compensation. Violators may face a $5000 fine and/or five years in prison.

The US Code’s Title 18, section 874, focuses on public works employees. The law essentially states that whoever induces any person employed in the repair of any public building, for example, to give up any part of the compensation, the person doing the inducing (soliciting the kickback) shall be imprisoned for up to five years, fined, or both. Beyond building repair, the law applies to anyone employed in any work financed in whole or in part by loans or grants from the United States.

Title 12, section 2607of the US Code explicitly prohibits kickbacks and unearned fees “incident to or a part of a real estate settlement service involving a federally related mortgage loan.” The law prohibits fees and kickbacks for referrals and the splitting of charges made or received for the rendering of a real estate settlement service (other than fees earned for services actually performed).

Prosecution of kickback crimes can come from many agencies, depending on the specific territory in which the crime takes place. The General Services Administration, the Department of Defense’s Federal Procurement Fraud Unit, the Office of Inspector General, and Antitrust Division of the US Department of Justice are just a few federal examples. The Attorney General or the insurance commissioner of any state may also bring an action for violations of anti-kickback laws.

Facing a felony charge is a very serious offense. Criminal charges can be brought either at the state or federal level. If you are under investigation for kickbacks, served with a Grand Jury subpoena or a search warrant, or are facing a team of government lawyers, contact a skilled criminal defense attorney as soon as possible to protect your rights during this difficult time. It is never a good idea to go it alone.

Analyzing Kickback Case Studies: Illustrative Scenarios for Examination

Case Study 1: Construction Project Kickbacks

A contractor engaged in a kickback scheme with government officials responsible for awarding public works contracts. The contractor promised to kick back a percentage of the contract proceeds to the decision-makers in exchange for securing the contracts.

The scheme was discovered during an investigation by the General Services Administration, leading to criminal charges. The contractor and the government officials involved faced fines and potential imprisonment under the Anti-Kickback Act of 1986.

Case Study 2: Healthcare Industry Kickbacks

A pharmaceutical company offered kickbacks to doctors for prescribing their drugs. The kickbacks took the form of money and other incentives. The scheme violated anti-kickback laws related to healthcare.

The Office of Inspector General and the Antitrust Division of the US Department of Justice conducted an investigation, leading to criminal charges against the pharmaceutical company and participating doctors. If convicted, they could face significant fines and imprisonment.

Case Study 3: Real Estate Settlement Service Kickbacks

A real estate company engaged in a kickback scheme involving federally related mortgage loans. The company offered referral fees and split charges for real estate settlement services, which violated Title 12, section 2607 of the US Code.

The scheme was uncovered during an investigation by the insurance commissioner of the state. The company and individuals involved may face legal action and penalties.