A Boston-based consulting firm has agreed to pay $1 million to resolve allegations that it overbilled the U.S. Agency for International Development (USAID) in connection with a government-funded project in Sri Lanka, the U.S. Attorney’s Office for the District of Columbia announced Friday.
Stax Inc. was accused of inflating employee salary costs and embedding hidden profits in claims submitted under a cooperative agreement for the Sri Lanka@100 project. The firm’s actions led to more than $850,000 in overcharges to USAID, in violation of contractual terms that explicitly prohibited profit-taking under the agreement.
The case originated with an administrative audit by the USAID Office of the Inspector General, which flagged the improper billing practices. Investigators found that Stax misrepresented salary structures in its submissions and disregarded instructions from USAID that no profit was to be included.
The firm was later acquired by another company, which cooperated with federal investigators, terminated the employee responsible for the overbilling scheme, and implemented internal compliance reforms. In recognition of this cooperation, the government settled the case for 1.2 times the single damages amount.
“This resolution ensures that taxpayer funds dedicated to international development efforts are protected from abuse,” said officials involved in the case.
Fraud detected during audit of Sri Lanka development project
The cooperative agreement under which Stax operated explicitly barred any form of profit, a condition that was allegedly bypassed by embedding hidden gains within employee compensation figures. According to the U.S. Attorney’s Office, the firm’s conduct not only breached contract terms but also contradicted written instructions from USAID officials.
The successor company’s remedial efforts included hiring new leadership with a background in regulatory compliance and updating internal control procedures. These steps were credited in the government’s decision to resolve the matter without litigation.
The case was handled by Assistant U.S. Attorney Darrell Valdez in coordination with Special Agents Michael Pak and Kristopher Nordeen of the USAID Office of the Inspector General.
Stax did not admit liability as part of the civil settlement, which was reached under the False Claims Act’s civil remedies provisions.
A hidden-profit scheme in a U.S.-funded aid project ended in a seven-figure settlement after auditors uncovered overbilling fraud.
