Balfour Beatty Communities to pay millions in fines after pleading guilty to defrauding military

After years of problems with mice, mold, lead paint and other issues in privatized military homes, one company is paying more than $65 million for defrauding the armed forces.

Balfour Beatty Communities (BBC) pleaded guilty to one count of major fraud worth $33.6 million in criminal fines and entered into a $31.8 million restitution civil settlement on Wednesday, according to the Justice Department.

BBC is one of the largest private housing providers to service members, working in private-public partnership with military installations, it holds a portfolio of more than 50,000 units and $6 billion in managed real estate assets on 45 bases.

“Instead of promptly repairing housing for U.S. service members as required, BBC lied about the repairs to pocket millions of dollars in performance bonuses,” said Deputy Attorney General Lisa O. Monaco in a statement. “This pervasive fraud was a consequence of BBC’s broken corporate culture, which valued profit over the welfare of service members. Today’s global resolution sends a clear message to companies that if they do not maintain adequate compliance programs, voluntarily self-disclose misconduct, and fully cooperate with the government, they will pay a price that outweighs the profits they once reaped.”

BBC’s actions are part of a larger congressional, military and legal investigation into multiple housing companies that manage and own houses that service members say are unlivable.

BBC had two former managers plead guilty earlier this year to falsifying information so the company could meet its performance objectives and get incentive fees from the military between 2013 and 2019.

“In reality, BBC did not meet those objectives in many of the quarters during that time. These objectives primarily related to maintenance and resident satisfaction at various military housing projects,” the Justice Department said. “Specifically, BBC employees altered or manipulated data in property management software and destroyed and falsified resident comment cards to falsely inflate these metrics and, ultimately, to fraudulently induce the service branches to pay performance incentive fees which BBC had not earned.”

BBC released a statement late Thursday:

“Balfour Beatty is committed to the highest standards of ethical conduct. The wrongdoing that took place is completely contrary to the way the company expects its people to behave. The company apologizes for the actions of BBC to all its stakeholders,” the statement reads. “It has been made clear to all employees that breaches of policies, procedures, or law will not be tolerated. BBC welcomes the appointment of the independent compliance monitor and looks forward to a constructive engagement.”

Balfour Beatty said it undertook an in-depth review of operations at its BBC division that involved restructuring the department and enhancing ethics protocols.

Military families said there is still work to be done.

“$65 million is a drop in the bucket; that’s about two years’ worth of profits,” Sarah Lynne Kline, co-founder and director of community outreach at Armed Forces Housing Advocates, told Federal News Network. “Additionally, the military housing officials are also supposed to be providing oversight in these matters, and we have not heard or seen any type of investigation or settlement. We’d like to [see] some kind of resolution there.”

She added that companies are still continuing to ignore military families in dire housing situations.

“Since the tenant bill of rights has been implemented, we’ve seen the same level of fraud just implemented differently,” Kline said.

BBC’s plea is not the end of the story. Military families are still seeking restitution from BBC and other companies like Lincoln Military Housing.

Congress has implemented some measures to try to alleviate the issue, including the tenant bill of rights, new funding and additional oversight staff.

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