Shredding Companies Settle Contract Fraud Claims for $1.1M
Two of the country’s largest commercial shredding services companies, Shred-It Incorporated and Iron Mountain, recently agreed to pay $1.1 million between them to settle allegations that the companies knowingly submitted or caused the submission of false claims to the federal government, related to contracts for secure shredding services, the U.S. Department of Justice announced this month.
According to the complaint (see below), Iron Mountain and Shred-It obtained government contracts to provide document-shredding services under certain terms, including that documents be shredded to a very secure size not exceeding 1/32 inch in width with a 1/64-inch tolerance by 1/2 inch in length. (The smaller the shred size, the more secure the shredded document is against unauthorized attempts to reconstruct it.) However, the defendants allegedly did not even possess equipment that could shred documents to the secure shred size that was agreed to in the contract. Furthermore, the defendants allegedly obtained additional revenue by reselling the improperly shredded documents to paper recyclers.
The lawsuit was originally filed by Douglas Knisely, the owner and operator of a small, family-owned secure shredding business, under the whistleblower provisions of the False Claims Act. The False Claims Act allows private citizens with knowledge of fraud against the government to sue on behalf of the government and claim a share in the recovery. Knisely’s share of the settlement has yet to be determined.
A third defendant, Cintas Corporation, continues to contest the allegations.
The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments. We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud. Read more about our expertise in False Claims Act cases and how you can take action.