Fortinet Qui Tam Settlement

Case Type: Whistleblower/Qui Tam

Company: Fortinet, Inc.

According to settlement documents released Friday in a qui tam case against California-based network security company Fortinet, Inc., the relator represented by Sanford Heisler Sharp, was awarded 19% of the $545,000 the company was fined for selling equipment made in China to the U.S. Government.

Realtor Yuxin “Jay” Fang was represented in the matter by Sanford Heisler Sharp's Washington, DC, Managing Partner Vincent McKnight and its Washington, DC Senior Litigation Counsel John McKnight.

While working at a Fortinet facility in Canada preparing electronic products for sale to the U.S. government and other customers, Fang noticed “Made in China” product labels were being removed and replaced with labels that either did not state or misrepresented the country of origin. He collected the discarded labels and later discovered the company’s practice was a violation of the U.S. Trade Agreements Act (TAA), which does not allow the U.S. Government to purchase products made in China except under limited circumstances.

Fang filed a qui tam action in the U.S. District Court for Northern California in January 2016, alleging Fortinet labeled or omitted labels of products in a way that falsely represented them as compliant with the TAA. While the matter was under investigation by U.S. officials, former Akin Gump partner Jeffrey Wertkin hatched a scheme to sell copies of sealed government complaints he had collected when he worked for the US Attorney, including Fang’s qui tam complaint.

When Wertkin approached Fortinet for a deal, the company notified federal authorities, which led to a sting operation that culminated in Wertkin’s arrest and conviction.

“On the one hand, Fortinet engaged in a brazen and fraudulent scheme that included creating phony labels, but on the other hand, the company did the right thing when Wertkin offered to sell it sealed government documents,” said Vincent McKnight. “I am certain its cooperation influenced the amount of the final settlement agreement on the mislabeling charges.”

At the end of the day, Fortinet paid a $545,000 fine for mislabeling its products between 2009 and 2016; Fang was awarded 19% of the fine; and Wertkin is serving time for his crime.

“Jay is an honest, courageous man, whose willingness to act when he discovered wrongdoing by his employer put a stop to practices contrary to U.S. trade law. He was very deserving of a substantial share of Fortinet’s settlement,” said John McKnight.

[Case citation: In U.S. District Court for the Northern District of California captioned United States ex rel. Yuxin “Jay” Fang v.Fortinet, Inc., et al., Case No. l6-31]