Former BOP Employee Pays $50k in Anti-Kickback Settlement

A former BOP employee has agreed to a settlement payment to resolve allegations that he violated the Anti-Kickback Act.

A former federal employee from the Bureau of Prisons has agreed to pay the United States $50,000 to resolve allegations that he violated the Anti-Kickback Act by accepting improper payments in exchange for his assistance in obtaining BOP contracts. The terms of the agreement were announced today by the Justice Department.

The Anti-Kickback Act prohibits any payment or gratuity made for the purpose of inducing award of a subcontract or prime contract with the federal government.

Cary Hudson is a former financial administrator for the U.S. Bureau of Prisons (BOP) in Carswell, Texas. The settlement agreement resolves allegations that he accepted payments from Mansfield, Texas-based Integrated Medical Solutions Inc. (IMS) in exchange for providing favorable treatment in connection with BOP contracts to manage healthcare networks that provided medical care to federal inmates.

Hudson’s assistance to IMS allegedly included the provision of certain confidential, non-public information that gave IMS an unfair competitive advantage in the bidding process. The government also alleged that, after IMS obtained the contracts with BOP, Hudson improperly assisted IMS in its performance of the contracts while simultaneously serving as a BOP financial administrator.

In May 2017, IMS and its former president, Jerry Heftler, agreed to pay more than $2.4 million to resolve their civil liability arising from the alleged scheme.

In October 2014, Hudson pleaded guilty to a felony violation of 18 U.S.C. § 1001 for failing to disclose the payments he received from IMS as part of his annual obligation as a federal government employee to report any potential conflicts of interests.

Except to the extent of the admissions in Hudson’s guilty plea, the claims resolved by the civil settlement are allegations only, and there has been no determination of liability.

“This settlement demonstrates that the Department of Justice is committed to protecting the integrity of the federal contracting process from unscrupulous contractors,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.  “Improper financial arrangements between government officials and private contractors corrupt taxpayer-funded contracts.”

The matter was handled by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the Northern District of Texas, with assistance from the Department of Justice Office of Inspector General.

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Ian Smith is one of the co-founders of He has over 20 years of combined experience in media and government services, having worked at two government contracting firms and an online news and web development company prior to his current role at FedSmith.