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U.S. Says It Had to Pay for Ripped Off Charities

HOUSTON (CN) - A cargo-handling firm that loaded more than 50,000 tons of food aid meant for overseas crisis areas overcharged for its services, federal prosecutors say.

The United States sued Jacintoport International under the False Claims Act over a 2007 contract it entered with the U.S. Agency for International Development to store and redeliver emergency food aid.

Jacintoport is a cargo-handling and stevedoring, or ship-loading, company.

"This contract, among other things, contained explicit caps on the rates Jacintoport could charge to load humanitarian food aid onto ships ... bound for crisis areas around the world," federal prosecutors said in a statement. "The complaint alleges that beginning around January 2008 and continuing through at least October 2009, Jacintoport regularly exceeded these caps, resulting in inflated charges to the United States in connection with the delivery of more than 50 thousand tons of humanitarian food aid."

Jacintoport stored and loaded processed rice, soybeans and vegetable oil donated by charitable organizations that participate in the United States' food aid programs, according to the complaint

"The Warehouse Contract's rate for stevedoring 50 kg bags of food was $21.50 per metric ton," the complaint states. "Despite the applicable rate, Jacintoport routinely charged $34.50 per metric ton for 50 kg bags with conventional handling and $29.50 per metric ton for 50 kg bags with automated handling-taking an improper and unlawful mark-up of $13.00 and $8.00, respectively, per metric ton for massive quantities of cargo that moved through its warehouse since at least as early as 2008."

Prosecutors say Jacintoport overcharged steamship lines transporting the cargo, which passed the fees on to the charities that donated the food and are initially responsible for paying the shipping fees.

"Ultimately, the United States reimbursed the charitable organizations for their transportation expenses that included Jacintoport's inflated stevedoring charges," the complaint states.

John Raggio, who got an invoice from Jacintoport that included excessive stevedoring fees, sued the company in Washington, D.C., nearly two years ago.

The whistle-blower complaint remained under seal until U.S. District Judge Barbara Jacobs Rothstein opened it up on Aug. 21, a day after the United States filed a notice of intervention in the case.

Prosecutors filed their complaint in intervention on Friday. The complaint also names Jacintoport's corporate parents Seaboard Marine, of Miami, and Seaboard Corporation, of Merriam, Kan., as defendants.

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