Federal prosecutors on Friday announced a $545,000 False Claims Act settlement with Silicon Valley network security company Fortinet Inc.
The terms of the settlement are relatively routine: The Sunnyvale-based company agreed to pay $400,000 and to provide the U.S. Marine Corps with $145,000 in equipment to resolve False Claims Act allegations. The case’s route to settlement, however, appears to have been anything but normal thanks to former DOJ lawyer and Akin Gump Strauss Hauer & Feld partner Jeffrey Wertkin.
Wertkin was sentenced to 30 months in prison last year after federal agents arrested him for reaching out to an in-house lawyer at a Silicon Valley company offering to sell a copy of an underseal qui tam complaint. Federal agents nabbed Wertkin in a Cupertino hotel lobby in January 2017 wearing a wig and sunglasses and posing as someone named “Dan” as he waited with a copy of the complaint. Wertkin had been expecting a $310,000 “consulting fee” from the company, which was cooperating with authorities.
The details of the qui tam suit against Fortinet line up with the complaint that Wertkin was hawking. The target company described in the criminal complaint against Wertkin is one that “provides technology security and is headquartered in Sunnyvale, California,” a description that fits Fortinet. According to court filings in Wertkin’s case, the complaint he was attempting to sell was filed in January 2016 and was pending before U.S. Magistrate Judge Jacqueline Scott Corley. The suit that Fortinet settled, likewise, was originally filed in January 2016 and was pending before Corley.
Neither federal prosecutors, nor Fortinet, nor Wertkin’s former criminal defense attorney would confirm that the case that Fortinet settled with the government was the one wrapped up in the Wertkin arrest. But lawyers at Sanford Heisler Sharp who represent the whistleblower in the case, former Fortinet employee Yuxin “Jay” Fang, say that it is.
“On the one hand, Fortinet engaged in a brazen and fraudulent scheme that included creating phony labels, but on the other hand, the company did the right thing when Wertkin offered to sell it sealed government documents,” said Vincent McKnight, Washington, D.C., managing partner in a prepared statement. “I am certain its cooperation influenced the amount of the final settlement agreement on the mislabeling charges.”
The press release from federal authorities announcing the deal Friday said that the settlement “reflects Fortinet’s cooperation with the government in this and other matters.” A spokesman for the U.S. Attorney’s Office for the Northern District of California, which handled both the Wertkin and Fortinet case, said that he could not say specifically on what matters Fortinet cooperated.
Fortinet’s settlement stems from allegations that an employee inappropriately altered labels to obscure the fact that products made in China were ending up in government hands—an alleged violation of the Trade Agreements Act, which prohibits some government contractors from buying goods that aren’t from or “substantially transformed” in the U.S. or other designated countries.
A spokesperson for Fortinet said that settlement was the result of an isolated incident involving a “rogue former employee.”
“When we were made aware of the incident, we took immediate action, including thoroughly investigating the matter, terminating the employee and implementing additional safeguards to prevent an issue like this from happening again,” said Fortinet’s Sandra Wheatley in an email statement. “The nominal settlement amount of $545,000 reflects in part our cooperation to promptly and thoroughly address this matter.“
Wheatley did not respond to a follow-up question asking whether the company cooperated in Wertkin’s case.
Wertkin pleaded guilty in late 2017 to two charges of obstruction of justice and one count of transporting stolen goods across state lines related to stealing and trying to sell sealed whistleblower complaints acquired while he was still a lawyer at the Justice Department. U.S. District Judge Maxine Chesney sentenced Wertkin to 30 months of prison time in March 2018. According to the Federal Bureau of Prison inmate locator, Wertkin is currently housed at the federal correctional institute in Talladega, Alabama, and is set for release Jan. 24, 2020.