Net App antes up $128 million to feds

April 14, 2009

Late yesterday, NetApp (NTAP) announced that it had agreed to pay the U.S. government $128 million as part of a settlement agreement over claims that it had overcharged the government. According to the law firm that represented the whistle blower who brought the issue to light, this is the largest corporate fraud settlement involving the Government Services Administration’s Federal Supply Service procurement program so far.

NetApp, formerly known as Network Appliances, first disclosed the issue back in this 10-Q filed a little over two years ago. And, as we noted in a FootnotedPro post back in early December, the company continued to drip details out in subsequent filings. But it wasn’t until the 10-Q it filed on Dec. 3, that the company disclosed that “could be liable for overcharges in the amount of up to $131.2 million.”

Since that first disclosure in March 2007, NetApp’s stock has fallen nearly 60% — much worse than the general market. And, perhaps more importantly, it was costing them a lot of money in legal fees — $6 million in the last quarter alone.

As for the whistle blower, Igor Kapuscinski, he stands to collect around 15%, or just shy of $20 million.

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