Lawsuit alleging foreign aid fraud dismissed, ‘whistleblower’ undeterred

Despite losing what is likely the last lawsuit he can file over the more than $51 million his former employer lost doing work on half of the U.S. government, Murray Farmer says he’s not going away.

Farmer was the subject of a Lagniappe story last month on a whistleblower lawsuit he filed in hopes of exposing the fraudulent distribution of millions of dollars in U.S. foreign aid, and possibly recovering some of money he lost when his former employer, DRC Inc., went bankrupt working for the government.

DRC Inc. won a multimillion-dollar contract through the U.S. Agency for International Development (USAID) to construct water and sewer systems in Honduras following Hurricane Mitch in 1998. The contract was technically with the Honduran Social Investment Fund (FHIS) — an agency DRC and other U.S. officials believed was an arm of the Honduran government at the time.

To make a long and complicated story short, payments to DRC eventually halted, and as a result, the company lost millions and eventually filed for bankruptcy. After a series of lawsuits that spanned a decade, a company Farmer created won a $51 million arbitration award against FHIS in court.

However, the Honduran government argued FHIS wasn’t technically one of its agencies and, therefore, it wasn’t liable for the $51 million. The Honduran Supreme Court and a judge in the U.S. ultimately agreed.

In 2017, Farmer filed a “whistleblower” lawsuit against the Republic of Honduras, FHIS and multiple USAID employees that accused them of fraud for knowingly allowing and continuing to allow FHIS to receive U.S. foreign aid funding when it isn’t technically a foreign government.

The co-plaintiffs in the case included John McAvoy, a retired USAID contracting specialist who supervised DRC’s work in Honduras, and Marco Zavala, a retired USAID liaison who worked directly with FHIS during the time that work was performed.

The U.S. Department of Justice (DOJ), which can opt to take over and lead whistleblower cases, has argued that Farmer’s allegations lack merit because the funds were appropriated for work that was performed. Last month, government attorneys said USAID maintains it hasn’t suffered any loss from its work in Honduras, and argued, if there’s no loss to taxpayers, there’s no reason for the DOJ to be involved.

The DOJ has since asked that the case be dismissed, and on Jan. 30, it was.

In her order, Presiding U.S. District Judge Kristi DuBose said the U.S. government essentially has an “unfettered right to dismiss” whistleblower lawsuits like Farmer’s that are supposed to be filed on its behalf.

Moreover, she said those types of “prosecutorial decisions” fall to the executive branch and are “generally un-reviewable” by the judiciary. She also articulated previous concerns she’s raised about whether a whistleblower suit is the appropriate vehicle for what seems to be a disagreement about USAID’s decision to recognize FHIS is a proper recipient of foreign aid.

“A qui tam False Claims Act case is not an appropriate vehicle to challenge official actions of a government agency,” DuBose wrote. “The U.S. is adamant that it has not been defrauded, and the Court finds that because the U.S. does not believe [Farmer’s] suit has merit, the decision to dismiss is rational.”

DuBose also noted there was legitimate government interest in “avoiding a negative impact on its diplomatic relationship” with Honduras and interference with USAID’s mission if the litigation were allowed to continue. She said Honduras could also claim immunity as a sovereign government, which could result in the defendants falling beyond this court’s jurisdiction in the U.S.

Farmer, who has publicly chronicled his efforts to expose alleged corruption within USAID and recover any of what he lost to Honduras as a battle against “the deep state,” was critical of the court’s decision — claiming it would “hurt America and Americans” in the long run. 

He told Lagniappe the ruling came down before the government could respond to a brief his attorneys filed explaining why they believed the case should be allowed to move forward with or without the DOJ. 

“I have been fighting the deep state swamp for a long time, and I never dreamed I would encounter a deep state, truth-eating alligator right here in Mobile,” he said. “A case like this comes once every hundred years, so I have a responsibility to all Americans to take it all the way up. This was never about money. I don’t need their money; I am very blessed. This is about the truth, and I will never just give up or go away.”