Samsung Electronics, an electronics distributor, agreed this week to pay $2.3 million to the Department of Justice to resolve a False Claims Act whistleblower case.

Robert Simmons, a former Samsung employee, filed the lawsuit, United States ex rel. Simmons v. Samsung Electronics America, under the False Claims Act’s whistleblower provisions, which permit private parties to sue for false claims on behalf of the United States and to share in any recovery.  Simmons’ share of the settlement has not yet been determined.

According to the allegations, Samsung caused the submission of false claims for products sold on General Service Administration (GSA) Multiple Award Schedule (MAS) contracts in violation of the Trade Agreements Act (TAA).  MAS contracts are contracts awarded by GSA to multiple companies supplying comparable products and services. Once GSA negotiates and awards the contract, any federal agency may purchase under it. 

Like many other federal procurement contracts, GSA MAS contracts require the vendor to certify that all products it offers for sale comply with the TAA. The TAA generally requires the United States to purchase products made in the United States, or another designated country with which the United States has a trade agreement. 

“It is unacceptable to sell unauthorized foreign electronics to the United States,” GSA Acting Inspector General Robert Erickson said in a prepared statement. “We expect all companies doing business with the federal government to comply with contracting laws.”

The settlement, announced Aug. 19, resolves allegations that, from January 2005 through August 2013, Samsung caused resellers of its products to sell items on their GSA MAS contracts in violation of the TAA by knowingly providing inaccurate information to the resellers regarding the country of origin of the goods.

According to the Justice Department’s allegations, Samsung represented to the resellers, who in turn represented to federal agencies, that the specified products were made in TAA-designated countries—generally, Korea or Mexico—when the specified products were, in fact, manufactured in China, which is not a TAA-designated country.