USA v. Kane: False claims lawsuit raises Qs
At issue is a 12-count complaint alleging The Kane Company failed to pay workers fair wages, doubled billed and inflated prices on government contracts. The Maryland Democratic Party has jumped on the issue, sending out a series of emails questioning Kane’s fitness for office given the details of the complaint.
Asked about the suit during a joint interview with Ehrlich Friday on WUSA9-TV, Kane said: "That is something that I'm not involved in and needs to be decided through the court system.”
The TV reporter pointed out that Kane served on the company's board of directors from 1997 to 2003, a time when the fraud is alleged to have occurred. Kane stammered.
"That is something you have to direct that question to. I am not privy to that information. I get up every day an ..."
Pressed again she said: "It is a privately held concern. When we bought the company at first, yes, I was. But I did not do any of the day to day running of the company. It was just … I did not. I went to work every day."
The Kane Company put out a statement Saturday explaining that she sat on the Board of Directors because John Kane wanted his wife to “be aware of the strategic activities” in case he died.
According to the press release, her position was unpaid, did not involve daily management of the firm, and the job ended when she was appointed to work in the Secretary of State’s office.
Ehrlich said in the WUSA9 TV interview that he is not worried about the federal suit and hinted that he would not have picked Kane had he thought it would be a distraction.
"If this was going to be a big issue she may not be sitting here,” he said. “But we're certainly satisfied with it."
The former Republican governor blamed the Maryland Democratic Party for pushing the issue, saying they have "throw up everything they can possibly think of."
According to a Kane Company’s press release, the federal suit stems from a 5-year-old complaint by a "disgruntled former employee" who was fired for "unsatisfactory performance" and "would stand to gain" financially if the company has to pay damages. The complaint was filed under the False Claims Act, a statute designed to encourage whistle-blowers by allowing citizens to join in federal civil actions.
The Kane news release provided a detailed defense to the charge that the company underpaid workers on some federal contracts, saying the federal government failed to include wage schedules on some task orders.
“They did not establish a wage determination schedule, so we followed our normal pay procedures,” according to the release.
The release continued: "The Kane Company is completely confident that there will be no discovery of intent to underpay our employees. That's just not the way we treat our staff."
In an interview, Kane Company Chief Operating Officer Ron Meliker said the company has conducted an internal review and uncovered no instances of double billing. The federal prosecutors are alleging that workers signed in at one job site, worked at a different place, then collected double pay.
Meliker also denied that the company inflated prices when negotiating with the federal government.
Meanwhile, John Kane Thursday emailed Attorney General Douglas Gansler promising that his company would not bid on any state contracts if Ehrlich and his wife win the election