Firm cites ‘unjust enrichment’ among other relevant factors as grounds for appeal

CHANTILLY, Va. – Cambridge Global Services, Inc. (CGS), a leading provider of medical and laboratory products to the Federal Government, announced today that it is appealing a recent verdict in its case against Concentric Methods, LLC of Alexandria, VA. On December 17, a Virginia court ruled in favor of Concentric Methods on their counter-claim against CGS—alleging fraud and multiple torts. CGS’ decision to appeal is based on multiple grounds—including unjust enrichment by Concentric Methods for receiving government funds for products and withholding payment to CGS and the vendors that supplied those products.

CGS sued Concentric Methods for $5.5 million in damages based on Concentric Methods’ breach of subcontractor agreements signed in 2008. Concentric Methods, a prime contractor with the government, did not fulfill its obligations to pay CGS for the products and services that it delivered, as its subcontractor to the government, and for which Concentric Methods received payment. As a result of this breach of contract, CGS was forced to pay vendors with corporate funds and eventually default on numerous vendor payments—subsequently losing many business relationships.

After a 5 day jury trial, a 7 person jury deliberated for over a day about the issues presented in the case. Although the jury did not return a verdict in favor of CGS, they prepared a statement for the parties as part of its verdict. In that statement, the jury claimed that they believed that Concentric Methods had been paid by the government on contracts awarded to them by CGS’ efforts.

“The jury’s statement makes a clear case for unjust enrichment,” stated Katherine Martell, Esquire, an attorney working on the case. Only days before the trial did a Judge in Alexandria, Virginia, rule that CGS could not proceed with its claim for unjust enrichment. “I believe that if we would have been allowed to proceed on our unjust enrichment claim, the jury would have awarded CGS the money it is rightfully owed,” opined Ms. Martell. Unjust enrichment is appropriate in instances when one party has gained a windfall at the expense of another party.

“The predicament forced us to pay our trusted vendors from corporate funds because Concentric Methods withheld payment to CGS—even though they were paid by the government on products and services we procured for them,” says former CGS Chief Executive Officer, Suresh Doki. “It is unfortunate there is no recourse available to subcontractors through the Small Business Administration (SBA), GSA or the government buyer in situations where prime vendors do not pay subcontractors for services or products delivered. This issue impacts not only CGS but all subcontractors across the country,” added Doki.

Concentric Methods’ parent company, Cape Fox Corporation has also been investigated by the SBA and Air Force. The USA Today reported one of the company’s executives was found to be involved in “self-dealings” by an independent auditor; and an Air Force investigation in 2009 found another Cape Fox subsidiary, APM to have improperly bypassed SBA rules to win $700 million in contracts intended for fledgling construction firms. The Air Force subsequently suspended the APM from contracting in 2009—along with another Cape Fox subsidiary based on their investigation.

About Cambridge Global Services

Cambridge Global Services, Inc. provides medical and laboratory products to the Federal Government through various contracting vehicles, including GSA Schedules and DAPA.