Business owner agrees to $20 million settlement in False Claims Act lawsuit filed by local businessman – San Diego Union-Tribune
A San Diego entrepreneur who identified anomalies in government records submitted by one of the nation’s largest business owners has won a $20 million settlement in a lawsuit filed under the California False Claims Act.
Neil Senturia, who developed a machine-learning program that scanned thousands of building permit files from dozens of cities across the state, will share the profits with the municipalities involved.
Senturia’s company, Blackbird Special Project LLC, filed what’s known as a qui tam lawsuit against Invitation Homes in 2020.
Qui Tam lawsuits allow individuals or third parties to file lawsuits against entities that violate rules or cost government agencies revenue. If they prevail, they are entitled to 50% of the judgment or settlement amount.
San Diego attorney Leonard Simon, one of the lawyers who represented Senturia and who also writes a business column for the San Diego Union-Tribune, said he and his client were pleased with the outcome.
“We are very pleased,” Simon said via email.
If the disbursement is approved as proposed, the City of San Diego will receive $70,971, or just under 1 percent of the city’s collective share of damages.
City Attorney Mara Elliott said she has not had time to review the agreement.
“We are reviewing the agreement, so it is premature to comment at this stage,” his office said in a statement.
Although the false claims case was filed in 2020, it didn’t become public until two years later, after San Diego and other entities declined to pursue the case themselves.
At the same time the complaint became public, the Union-Tribune obtained documents showing that Elliott referred the case to criminal investigators because Senturia is married to former San Diego City Councilwoman Barbara Bry.
The documents — a series of emails — showed that lawyers for the city attorney’s office had requested an outside investigation by criminal investigators into an unspecified potential crime. The office later confirmed that a complaint had been filed but declined to elaborate. No charges have been filed against Bry or Senturia.
On Friday, the city attorney’s office defended the criminal referral to outside investigators.
“No one is above the law, including elected officials,” the office said in a statement. “We carefully review cases before making prosecutorial decisions to determine whether we can do our job.”
None of the cities affected by Invitation Homes’ practices have joined the litigation, so Blackbird Special Project is seeking the largest possible share of the damages recovered.
Blackbird Special Project, known as the rapporteur in the qui tam lawsuit, accused Invitation Homes of systematically avoiding obtaining required building permits when renovating newly acquired properties.
According to the Qui Tam case, the practice has cost nearly three dozen cities thousands of dollars in uncollected permit fees.
This saved Invitation Homes money by not paying permit fees, and it shaved weeks or months off renovation schedules, allowing the company to put properties on the rental market sooner than its competitors, the lawsuit says.
“The vast majority of IH’s renovations required permits — including for the demolition and construction of sections of single-family homes, the installation and demolition of swimming pools, and significant alteration of electrical work — but permits were not obtained,” the lawsuit alleges.
Invitation Homes said the claim was unfounded, but accepted the payment as a way to end the legal dispute.
“The company believes that reaching this agreement is in the best interests of all its stakeholders and allows it to better focus on its core businesses,” the company’s owner said in a statement.
The agreement, which still requires federal court approval, calls for Invitation Homes to pay a total of $19,992,900.
Lawyers representing Blackbird Special Project are seeking $4 million of the award in fees, with the remainder to be split between the rapporteur and the 35 cities affected by the owner’s actions.
According to a list of recipient cities included in court documents, Los Angeles will receive the most money, just over $1.5 million, or 19 percent of the cities’ share.
Sacramento is second, with 12 percent of the settlement amount, or about $966,000. Moreno Valley and Riverside are each in line to collect about 5 percent of the proceeds, or more than $400,000 each.
Originally published:
California Daily Newspapers
