VIRGINIA BEACH, Va. (WRIC) — A company from Virginia Beach that administered a $265 million contract under the ‘Wounded Warrior’ program was forced to pay a $1 million fine by a federal court this week over kickbacks paid by a sub-contractor.

The sub-contractor, Armed Forces Services Corporation, that solicited and arranged the kickbacks was already forced to pay a $4.3 million fine in 2021. But the so-called ‘prime contractor’ that oversaw the larger program, Management Consulting Incorporated, is now being held liable as well.

A kickback scheme is one in which someone distributing a contract — in this case, a company that was itself a federal sub-contractor — agrees to grant it to a particular contractor, often paying more to the contractor than would otherwise be expected in exchange for cash or something else of value. In other words, the recipient ‘kicks back’ part of the overvalued contract to the grantor.

Now, Management Consulting Inc. is being held liable despite the fact that the company claims to have had no knowledge of or participation in the kickback scheme by its sub-contractors.

A federal judge on October 24 ruled that it didn’t matter whether they knew or not, because under a federal anti-kickback law, the government can seek to recoup “the total amount of the kickbacks at issue” from the contractor at the top of the pyramid — the one that works directly with the government.

As a result, the issue didn’t even go to trial. Because Management Consulting Inc. stipulated early in the case that the kickbacks had taken place, and had been in exchange for contracts under their aegis, the judge found there were no facts at dispute, and ordered the company to pay up.