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United States v. Odyssey Marketing Group, Inc.

United States District Court, E.D. North Carolina, Western Division

June 7, 2017

UNITED STATES OF AMERICA, Plaintiff,
v.
ODYSSEY MARKETING GROUP, INC., RODERICK JAMES MACKENZIE, TERRT A. MACKENZIE, XZONDRIA DENISE BROWN, AND SONIA IVELISSE WRIGLESWORTH, Defendants.

          ORDER

          TERRENCE W. BOYLE UNITED STATES DISTRICT JUDGE

         This cause comes before the Court on cross-motions for summary judgment and multiple discovery motions.[1] The appropriate responses and replies have been filed and the motions are ripe for ruling. A hearing was held in the matter before the undersigned on April 26, 2017, at Raleigh, North Carolina. For the reasons discussed below, summary judgment in favor of the Odyssey defendants and Wriglesworth is appropriate, the government's motion for partial summary judgment is denied, and the various discovery motions are either denied, denied as moot, or granted.

         BACKGROUND

         Plaintiff, the government, filed this action against defendants under the False Claims Act, 31 U.S.C. §§ 3729-33, for claims arising out of the knowing submission of false claims and related false records and statements to the United States. The government further alleges common law claims for unjust enrichment and payment under mistake of fact against Odyssey Marketing. At the times relevant to the complaint, defendants Roderick and Terri Mackenzie owned and managed Odyssey Marketing (Odyssey), a Georgia corporation.[2] Odyssey was an approved women-owned small, disadvantaged business contractor under the Small Business Administration's 8(a) program. 15 U.S.C. § 637(a). Defendant Brown was a Contracting Officer Representative with the Army Reserves Family Program (ARFP) and served as Family Programs Manager at Fort McPherson in Georgia. Defendant Wriglesworth is the former director of ARFP. The ARFP provides "relevant and responsive programs and services to Soldiers, Family members, command teams and Civilians throughout the geographically dispersed Army Reserve Community." https://www.arfp.org/about/ (last visited June 6, 2017). These programs and services include training opportunities, survivor outreach services, and financial readiness programs. Id.

         Odyssey was made aware of the ARFP when it performed work for a separate Army Reserve Directorate, the Warrior Family Assistance Center. In the fall of 2008, Odyssey submitted an unsolicited proposal to ARFP in which it outlined a proposed integrated marketing strategy which included literature development, web strategies, and branding work. Primary to Odyssey's proposal was the creation of a central point of distribution for all promotional items, in support of which Odyssey would perform a master inventory report and generate a web-based ordering system that would allow for tracking of distribution patterns and consumption trends. Following a meeting with Odyssey and the Family Program directors on September 22, 2008, defendant Brown, who was present at the meeting, directed that ARFP personnel send materials to Odyssey to move forward with the central point of distribution piece of Odyssey's proposal. Although at the time there was no contract in place, defendant Brown told the regional Family Programs offices that there was a contract in place with Odyssey, a "done deal, " and to send all family-related program materials to the Odyssey warehouse in Georgia. [DE 96-7; Odyssey def s Ex. 7]. The Family Program offices complied and materials were shipped to Odyssey's warehouse beginning in approximately November 2008. Further, because they had been told a contract was in place, ARFP directors and managers began requesting services from Odyssey which Odyssey provided. In addition to the warehousing services, Odyssey also provided event management services, including management of the ARFP Army Family Action Plan Conference in Florida in June 2009.

         On September 30, 2009, Odyssey was awarded Delivery Order No. W911SE-09-F-0208 (the 0208 contract), issued by Mission & Installation Contracting Command Center - McPherson. Cmp. Ex. 21. The contract was a firm fixed-price contract for a period of one-year and named Brown as the Contracting Officer Representative (COR) and task monitor. The contract included a continuation of Odyssey's point of delivery services, and further tasked Odyssey with the development and implementation of a comprehensive web portal. The Deputy Director of the Contracting Administration Support Office (CASO) has stated that she is "personally aware that Fort McPherson contracting personnel understood the 0208 Contract to be a vehicle for permitting Odyssey to continue to provide on a going forward basis the services" then being provided during the unauthorized commitment (UAC) period, or period prior to entry into the 0208 contract. [DE 95-5, Shelton Decl. ¶13].

         During the course of the 0208 contract, Odyssey submitted invoices to ARFP which were approved and submitted for payment by Brown from October through December 2009 and thereafter by Brown's successor, Ms. Douglas. The Contracting Officer (CO), K. Jan Stowell, designated Brown as the COR on the 0208 contract and authorized Brown to verify that Odyssey performed the requirements of the contract and to accept services performed under the contract by invoice review and Wide Area Work Flow[3] access. Odyssey further submitted monthly activity summary reports while performing the 0208 contract.

         Because there was no contract in place during the UAC period, Odyssey could not submit invoices by the normal course, the Wide Area Work Flow, and thus provided, at the request of Brown and Wriglesworth, open invoice reports which included copies of their invoices from the UAC period. These reports were provided in October 2009 and April 2010. It April 2010, the Army Reserve Command (US ARC) determined that the best way to handle payment for the work performed by Odyssey during the UAC was to pursue a ratification of the unauthorized commitment. Notwithstanding the decision to pursue the ratification process, Brown issued a onetime utility payment to Odyssey in July 2010 for work performed during the UAC in the amount of $715, 509.14. Upon receipt of these funds, Ms. MacKenzie initiated action to return the utility payment to the government as the payment notification did not have a contract number and the invoice number listed did not match an invoice within Odyssey's accounting system; the funds were in fact retrieved from Odyssey's account by the Defense Finance and Accounting Service.

         The circumstances surrounding the unauthorized commitment and issuance of the utility payment by ARFP were investigated by Col. Rafael Torres at the appointment of the Chief of Staff, USARC from August 2010 to November 2010. The circumstances are described in Col. Torres' report as follows:

The Army Reserve Family Programs Directorate (ARFPD) entered into an unauthorized procurement of services from Odyssey Marketing, Inc. from June 2008-June 2009. Odyssey provided services to the Warrior Assistance and Family Center (WFAC) under a valid contract from September 2007-October 2010, but a new contract was never written/approved to include new and expanded services once WFAC transitioned into ARFPD in May 2008. The then Interim Director of ARFPD clearly failed to oversee the contract process and the assigned COR encouraged Odyssey to provide services while mistakenly informing them that contract approval was a fait accompli. Odyssey performed the services; returned payment after it was deemed unauthorized; and to date has not been paid for the services it rendered from June 2008-June 2009. ARFPD and Odyssey now have a valid contract in place since September 2009.

[DE 97-14, Torres 15-6 Investigation Rpt. at 1]. In his conclusions, Col. Torres recommended that:

USARC conduct a contract ratification action to enable the Command to pay Odyssey for the services rendered. Although a valid written contract was not in place, a USARC COR (Ms. Brown-Edwards) under the implicit or explicit authorization of a USARC Program Director (COL Grigsby) entered a verbal contract with Odyssey by mischaracterizing the status of the presumed contract and encouraging that services be rendered/continued to be rendered. Odyssey, in good faith, provided all required services. Furthermore, no one in ARFPD complained about the quality of the services provided to the point that follow-on contracts were awarded to Odyssey for FY10 and FY11.

Id. at 12.

         On September 15, 2011, a request for approval of unauthorized commitment, prepared by Wriglesworth, was entered recommending approval from Mission Installation Contracting Command (MICC). Reviewing specialists determined in March 2012 that the unauthorized commitment amount of $937, 702.99 was fair and reasonable. [DE 97-20 at 9]. Upon the departure of Contracting Officer Faith Shelton in March 2012, Odyssey's UAC file was transferred to Gail Williams, another Contracting Officer, who began additional review of the UAC request. In November 2013, Odyssey requested a decision from the Contracting Officer on the UAC request. In January 2014, a former Odyssey advisor made a Department of Defense hotline complaint stating that Odyssey had not yet been paid for services rendered in 2009 during the UAC period.

         The hotline complaint led to an investigation of the non-payment of the UAC invoices. An internal Army audit completed in June 2014 concluded that the UAC was not "sufficiently supported to show that government officials requested and received most of the supplies and services" due to a failure to implement proper management controls by ARFP and that some "supplies and services [] potentially resulted in some overlap from 2007 through 2012" but there was "no evidence of duplicate payments". [DE 96-16 at 45-46].

         Although the government has alleged false claims in relation to a number of actions and invoices[4] submitted by Odyssey, it currently seeks summary judgment in its favor as to two invoices - Invoice 29071 and 29073. Invoices 29071 (71) and 29073 (73) were submitted by Odyssey in October 2009, after the start of the 0208 contract. Invoice 71 was dated October 5, 2009, and was for inbound freight with a stated ship date of September 17, 2009. The invoice amount was for $49, 999.74 and the supporting freight documents reflected shipping expenses based upon deliveries which were made in June 2009, prior to the start of the 0208 contract. Invoice 73 was dated October 6, 2009, and was for $500, 000 for a hosting platform provided by a subcontractor, Horizon, with a stated ship date of October 6, 2009. A hosting platform created by Horizon was operational by June 2009; Horizon did not complete additional work for Odyssey after September 2009.

         On September 28, 2015, the government filed this civil complaint against Odyssey, the MacKenzies, Brown, and Wriglesworth to recover statutory damages and civil penalties under the False Claims Act (FCA), 31 U.S.C. §§ 3729-33, [5] as well as to recover all available damages for unjust enrichment and payment under mistake of fact. The gravamen of the government's complaint is that the Odyssey defendants submitted false claims as a part of a fraudulent scheme to obtain payment for work performed outside an authorized contract and prior to the execution and period of performance of the 0208 contract. The government alleges that Odyssey submitted claims for unauthorized work at the instruction of Wriglesworth, that Brown, inter alia, substituted false supporting documents in order to gain approval for a "utility payment" which would reimburse Odyssey for work performed outside the contract period, and that Wriglesworth and Brown allowed Odyssey to define its own contract requirements, receive advance procurement information, and provide unauthorized commitments. The government further alleges that the 0208 contract was awarded based upon false records and false statements, as were subsequent contracts which were awarded to Odyssey in 2010 and 2012.

         In addition to a number of discovery motions filed by the parties, before the Court are a motion for partial summary judgment by the government regarding two specific invoices it argues indisputably represent false claims, a motion for summary judgment on all claims by the Odyssey and MacKenzie defendants, and a motion for summary by Wriglesworth. Brown, although she has answered the complaint, has not filed any discovery-related or dispositive motions.

         DISCUSSION

         I. Discovery motions

         A. Motion filed by ...


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