State College Tech Company Agrees to $1.2 Million Settlement with U.S. Justice Department

State College-based KCF Technologies has agreed to pay $1.2 million to the United States government to resolve civil liability for alleged violations of the federal False Claims Act, U.S. Attorney for the Middle District of Pennsylvania John Gurganus said on Friday.

Federal investigators had alleged that KCF improperly billed labor time spent on commercial contracts to contracts with the U.S. Navy and Army departments between 2016 and 2019

KCF does not admit wrongdoing by agreeing to the settlement.

“Companies settle civil disputes regularly for a variety of reasons, the mere cost of the litigation frequently being a primary one,” a statement from KCF said.

Department of Defense agents were seen in May 2019 at two KCF Technologies offices in downtown State College. The company acknowledged at the time that the agents were there to review records related to defense contracts.

“Investigating procurement fraud allegations is a top priority for the DoD Office of the Inspector General’s Defense Criminal Investigative Service (DCIS),” Patrick Hegarty, special agent in charge for the DCIS Northeast Field Office, said in a statement on Friday. “This settlement reflects our commitment to working with our law enforcement partners and the U.S. Attorney’s Office for the Middle District of Pennsylvania to ensure contractors who misuse taxpayer funds are held accountable.”

In addition to the DCIS, the case was investigated by the Naval Criminal Investigative Service and the Major Procurement Fraud Field Office of the U.S. Army Criminal Investigation Division.

KCF cooperated with the investigation, Gurganus said.

“KCF technologies is extremely proud and grateful about the work we have done over several decades for the Department of Defense, Department of Energy, Natural Science Foundation and other federally funded programs under the Small Business Innovation Research and Small Business Technology Transfer programs,” Jeremy Frank, CEO and co-founder of KCF Technologies, said in a statement.

“We specifically are proud of our work promoting excellence and technological innovation to support critical American priorities to build a stronger national economy. Our work to transform industry has positively saved American Industry $2.6 billion and counting. KCF Technologies is glad to have this matter resolved and to continue our focus on making the industry stronger than ever.”

KCF, which develops and commercializes products and optimization solutions for industry and the military, was founded in 2000 and has multiple offices in State College.