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Two Shredding Companies Settle Whistleblower Suit

The Department of Justice announced that it has settled a pending qui tam suit with commercial shredding companies Shred-It, Inc. and Iron Mountain, Inc. Ohio-based Cintas Corporation, a third company also named in the suit, continues to contest the allegations.

A whistleblower suit was brought under the qui tam provisions of the False Claims Act by Pennsylvania resident Douglas Knisely, the owner of a family run document shredding business. Knisely claimed the three companies were in violation of the terms of their contracts with the U.S. General Services Administration, since at least 2006.

According to the Complaint, the shredding companies were under contract to shred sensitive government documents for several agencies including the Department of Defense, Department of Homeland Security, Department of Justice, Department of the Treasury, and Department of Veterans Affairs. The Complaint alleges that the contracts specified the maximum allowable size of the shredded paper, but Shred-It, Iron Mountain, and Cintas failed to cut the government’s documents to the size required.

According to Knisely, the companies were required to submit detailed certifications of destruction upon completion of each shredding job. The government claimed that, because the documents were not destroyed according to contract specifications, the certifications of destruction and the companies’ claims for payment for the services were false.

Iron Mountain has agreed to pay $800,000, plus attorney’s fees and Shred-It has agreed to pay $300,000, plus attorney’s fees to settle the False Claims allegations. The whistleblower will receive a percentage of the settlement amounts as his reward under the qui tam provisions of the False Claims Act. The lawsuit against Cintas remains pending.

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