A privatized military housing company settled a criminal investigation and a civil lawsuit on Wednesday by pleading guilty to one count of major fraud and agreeing to pay $33.6 million in fines and $31.8 million in restitution to the military services, according to a Justice Department release.
Balfour Beatty Communities LLC had been the subject of civil action by military families, as well as a DoJ criminal inquiry, for alleged mismanagement of private military housing that included pests, delayed repairs and mold.
“Instead of promptly repairing housing for U.S. servicemembers as required, BBC lied about the repairs to pocket millions of dollars in performance bonuses,” Deputy Attorney General Lisa O. Monaco said in the release. “This pervasive fraud was a consequence of BBC’s broken corporate culture, which valued profit over the welfare of servicemembers. 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.”
DoJ described the housing management company as defrauding the Army, Navy and Air Force by failing to record service requests, thereby increasing their performance rating and earning bonuses for good service.
“According to court documents, from around 2013 to around 2019, BBC employees, including former community manager Stacy Cabrera (who pleaded guilty to related charges on April 21) and former regional manager Rick Cunefare (who pleaded guilty to related charges on June 9), and others, falsified information so that BBC’s incentive fee requests falsely reflected that BBC had met performance objectives,” according to the release.
Balfour Beatty also agreed to three years of probation and three years of compliance monitoring.
The company’s vice president did not respond to phone and email requests for comment Thursday.
The settlement brings to a close a multi-year saga for military families throughout the services.
A civil lawsuit included 10 families at Fort Bliss, Lackland Air Force Base and Sheppard Air Force Base, Texas, who alleged their housing units were beset by mold, cockroaches, leaks and more.
One Fort Bliss family scrambled out of bed in the middle of the night to find a ruptured hot water pipe in the concrete foundation of their children’s bedroom, which “woke the children by burning them with [scalding] hot water,” according to the lawsuit.
Housing conditions were so bad that the services’ criminal investigative commands got involved.
“We take all service requests from our residents very seriously, and have comprehensive protocols in place to address any potential life, health or safety concerns,” Balfour Beatty said in a statement after the lawsuit’s filing in June. “We are committed to the continuous improvement of our military housing, and are laser-focused on ensuring we provide the highest quality living experience.”
The rampant mismanagement of privatized military housing caught the attention of Congress and pushed the services to create tenants’ rights policies that include a formal dispute process, as well as the right to withhold rent when service requests are not resolved.
Meghann Myers is the Pentagon bureau chief at Military Times. She covers operations, policy, personnel, leadership and other issues affecting service members. Follow on Twitter @Meghann_MT