United States Ex Rel. Bunk v. Government Logistics N.V.

PUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 15-1088

UNITED STATES EX REL. KURT BUNK AND RAY AMMONS,

Plaintiffs – Appellants,

and

UNITED STATES EX REL. DANIEL HEUSER,

Plaintiff,

v.

GOVERNMENT LOGISTICS N.V.,

Defendant – Appellee,

and

BIRKART GLOBISTICS GMBH & CO. LOGISTIK UND SERVICE KG; THE
PASHA GROUP; ANDREAS CHRIST SPEDITION & MOBELTRANSPORT
GMBH; JOHN DOE, 1-100; AMERICAN MOPAC INTERNATIONAL,
INCORPORATED; DOE DEFENDANTS; GATEWAYS INTERNATIONAL;
ALLIED FREIGHT FORWARDERS; NORTH AMERICAN VAN LINES, INC.;
GLOBAL WORLDWIDE INCORPORATED; AIR LAND FORWARDERS SUDDATH;
COVAN INTERNATIONAL; JET FORWARDING INCORPORATED; ARPIN
INTERNATIONAL; BIRKART GLOBISTICS AG; THIEL LOGISTIK AG;
VIKTORIA SCHAFER INTERNATIONALE SPEDITION GMBH; VIKTORIA-
SKS KURT SCHAFER INTERNATIONALE GMBH & CO., KG; GILLEN &
GARCON GMBH & CO. INTERNATIONALE SPEDITION KG; GILLEN &
GARCON GMBH & CO. KG; M.T.S. HOLDING & VERWALTUNGS GMBH,
d/b/a M.T.S. Gruppe; ANDREAS CHRIST GMBH; MICHAEL
VILLINGER; ERWIN WEYAND; NICODEMUS GOSSELIN; DIETER
SCHMEKEL; JURGEN GRAF; HORST BAUR; KURT SCHAFER; MARTINA
SCHAFER; BIRKART VERMOGENSVERWALTUNG GMBH; LOGWIN AIR +
OCEAN DEUTSCHLAND GMBH; LOGWIN HOLDING DEUTSCHLAND GMBH;
MISSY DONNELLY; GEORGE PASHA; AMERICAN SHIPPING
INCORPORATED; CARTWRIGHT INTERNATIONAL VAN LINES
INCORPORATED; JIM HAHN; INTERNATIONAL SHIPPERS ASSOCIATION
INCORPORATED; GOSSELIN WORLDWIDE MOVING, N.V.; GOSSELIN
GROUP N.V.; MARC SMET; GOSSELIN WORLD WIDE MOVING, N.V.;
VIKTORIA INTERNATIONAL SPEDITION; JEFFREY CARLL COFFMAN;
ITO MOBEL TRANSPORT GMBH,

Defendants.

------------------------------

UNITED STATES ATTORNEY GENERAL,

Amicus Curiae.

Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Anthony John Trenga,
District Judge. (1:02-cv-01168-AJT-TRJ; 1:07-cv-01198-AJT-TRJ)

Argued: September 21, 2016 Decided: November 15, 2016

Before KING, SHEDD, and THACKER, Circuit Judges.

Vacated and remanded by published opinion. Judge King wrote the
opinion, in which Judge Shedd and Judge Thacker joined.

ARGUED: John Edgar Petite, GREENSFELDER, HEMKER & GALE, PC, St.
Louis, Missouri, for Appellant. William Francis Coffield, IV,
Laina Catherine Wilk Lopez, BERLINER CORCORAN & ROWE LLP,
Washington, D.C., for Appellee. Michael Shih, UNITED STATES
DEPARTMENT OF JUSTICE, Washington, D.C., for Amicus United
States of America. ON BRIEF: Ann Lugbill, Mark Hanna, Lauren
Hoff-Downing, MURPHY ANDERSON PLLC, Washington, D.C.; Richard E.
Greenberg, GREENSFELDER, HEMKER & GALE, PC, St. Louis, Missouri,
for Appellant. Benjamin C. Mizer, Principal Deputy Assistant
Attorney General, Michael S. Raab, Civil Division, UNITED STATES
DEPARTMENT OF JUSTICE, Washington, D.C.; Dana J. Boente, United
States Attorney, OFFICE OF THE UNITED STATES ATTORNEY,
Alexandria, Virginia, for Amicus United States of America.

2
KING, Circuit Judge:

We are for the third time entertaining this complex matter,

which began more than fifteen years ago as a bid-rigging scheme

conjured up by shipping businesses to defraud the United States.

In 2004, Gosselin Group N.V. (then known as Gosselin World Wide

Moving, N.V.) and another business entity entered conditional

guilty pleas in the Eastern District of Virginia to a pair of

criminal conspiracy offenses. The district court thereafter

dismissed one of those charges, and cross-appeals ensued. We

determined in those appeals that the defendants were criminally

liable for both conspiracies and remanded for resentencing. See

United States v. Gosselin World Wide Moving, N.V., 411 F.3d 502

(4th Cir. 2005).

More recently, in the qui tam proceedings at issue herein,

a jury returned a verdict in 2011 against three defendants that

we collectively refer to as the “Gosselin defendants”: Gosselin

Group; Gosselin Worldwide Moving, N.V.; and Marc Smet, Gosselin

Group’s Chief Executive Officer and former Managing Director.

Appeals were pursued by the United States and by relators Kurt

Bunk and Ray Ammons (together, the “Relators”), who contested

the district court’s refusal to award civil penalties. We

granted relief, directing the court to enter judgment on a claim

pursued by Bunk in the sum of $24,000,000 — to be levied against

the Gosselin defendants — and remanding for further proceedings.

3
See United States ex rel. Bunk v. Gosselin World Wide Moving,

N.V., 741 F.3d 390 (4th Cir. 2013).

On remand, the district court was called upon to resolve

the issue of whether Bunk was entitled to recover his judgment

from another defendant, Government Logistics N.V. (“GovLog”),

which was alleged to be a successor corporation to Gosselin

Group. In disposing of the successor corporation liability

issue, the court ruled against Bunk on two bases. See United

States ex rel. Bunk v. Birkart Globistics GmbH & Co., No. 1:02-

cv-01168 (E.D. Va. Dec. 23, 2014), ECF No. 1362 (the

“Decision”). First, the court decided that the successor

corporation liability claims against GovLog should be dismissed

because they had been inadequately pleaded. In the alternative,

the Decision rejected those claims on the merits and awarded

summary judgment, ruling that there was insufficient evidence to

justify a trial. The Relators have appealed from the judgment,

and as explained below, we are satisfied that the court erred.

We therefore vacate and remand.

I.

Two government programs that facilitate the shipment of

household goods belonging to military and domestic personnel to

4
and from Europe have been at the center of this litigation. 1 The

first, known as the International Through Government Bill of

Lading (“ITGBL”) program, involves the solicitation of bids by

the Department of Defense (the “DOD”) from domestic freight

forwarders who then subcontract their foreign operations to

overseas businesses. The second, known as the Direct

Procurement Method (“DPM”) program, involves the solicitation of

bids by the DOD directly from foreign businesses. Both programs

were, as relevant to the bid-rigging conspiracy, administered by

the Army’s Military Transport Management Command (the “MTMC”). 2

Beginning in about 2001, the Gosselin defendants and at

least one other entity, The Pasha Group, agreed to and

implemented the bid-rigging scheme. Their scheme substantially

increased the prices that the DOD paid to the culprits for

shipping household goods belonging to military and diplomatic

personnel to and from Europe under the ITGBL and DPM programs.

As a result of what we characterized in the 2005 criminal

appeals as “naked bid rigging,” the DOD paid millions of dollars

more to the conspirators than it should have paid. See

1
Because we are assessing the award of summary judgment, we
recite the facts in the light most favorable to the Relators.
See Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir. 2003).
2
The MTMC is now the Army’s Surface Deployment and
Distribution Command.

5
Gosselin, 411 F.3d at 508. The bid-rigging scheme did not go

undetected, as it resulted in these qui tam proceedings and the

successful criminal prosecutions.

A.

In 2002, the Relators instituted these qui tam proceedings

under the False Claims Act (the “FCA”). 3 The Relators operated

businesses that provided to the DOD services much like those

performed by Gosselin Group and Pasha. Bunk filed his qui tam

action in the Eastern District of Virginia on August 2, 2002,

alleging an FCA claim related to the DPM program (the “DPM

claim”). 4 Ammons filed his qui tam action in the Eastern

District of Missouri on September 17, 2002, alleging FCA claims

related to the ITGBL program (the “ITGBL claim”) and to Gosselin

Group’s exertion of pressure on Covan International (the “Covan

claim”) and Cartwright International Van Lines (the “Cartwright

claim”) to submit higher ITGBL bids. Both qui tam actions were

3 The FCA, codified at 31 U.S.C. §§ 3729-3733, imposes
liability on individuals and entities who defraud government
programs. A claim under the FCA can be instituted by the United
States or by a private individual (i.e., a relator) via a qui
tam action. See 31 U.S.C. § 3730(a)-(b). The government may
intervene in a qui tam action. Id. § 3730(b)(2). If a qui tam
action is successful, the relators are entitled to share with
the government in the award. Id. § 3730(d).
4 Bunk initially filed his qui tam action with another
relator, Daniel Heuser, who has since withdrawn from the
litigation.

6
commenced under seal, pursuant to 31 U.S.C. § 3730, and remained

sealed and pending in the district courts during the criminal

proceedings.

B.

On November 13, 2003, a grand jury in the Eastern District

of Virginia returned a two-count indictment against Gosselin

Group and Smet, charging them with conspiracy to restrain trade,

in violation of 15 U.S.C. § 1, and conspiracy to defraud the

United States, in contravention of 18 U.S.C. § 371. Describing

the manner and means of the conspiracy to restrain trade, the

two-count indictment specified that Gosselin Group, Smet, and

their co-conspirators “participat[ed] in meetings and

conversations to discuss and agree upon a strategy to eliminate

the prime rates” in specific transportation routes, or channels,

“from Germany to the United States for the transportation of

military household goods.” See Indictment, United States v.

Gosselin World Wide Moving, N.V., No. 1:03-cr-00551, at ¶ 16

(E.D. Va. Nov. 13, 2003), ECF No. 19. The indictment further

alleged that Gosselin Group and Smet engaged in “written

exchanges and other communications” to ensure other freight

forwarders would not match the rates set by “a certain co-

conspirator U.S. freight forwarder” and would cancel any rates

lower than the second highest rate in channels from Germany to

the United States. Id. The indictment charged the same with

7
respect to the conspiracy to defraud the United States. Id.

¶ 25 (alleging that Gosselin Group and Smet “discussed and

agreed upon a strategy to eliminate the prime rates”); see also

id. ¶¶ 26-27.

In February 2004, Gosselin Group and Pasha agreed to be

charged and prosecuted by criminal information in the Eastern

District of Virginia for those same conspiracy offenses. By

plea agreements with the United States Attorney, Gosselin Group

and Pasha also agreed to plead guilty to the two charges alleged

in the information. Smet, who signed Gosselin Group’s plea

agreement individually and on behalf of Gosselin Group, thereby

escaped further criminal prosecution. That is, as a result of

Gosselin Group’s plea agreement being consummated, the

prosecutors dismissed the indictment theretofore lodged against

Gosselin Group and Smet.

Pursuant to its plea agreement, Gosselin Group admitted

that, at Smet’s urging, Gosselin Group and Pasha had conspired

to undermine the ITGBL program’s competitive bidding process by

preventing “me-too bids,” or matching bids, from converging to

the prime through rate (i.e., the low bid for a particular

route). 5 To accomplish that objective in particular channels,

5
A through rate “is a payment encompassing all the costs
involved in a door-to-door move of DOD personnel’s household
effects.” See Gosselin, 411 F.3d at 505.

8
“[i]n early January 2002, [Smet] agreed in writing to pay twelve

of the largest German moving agents a specified fee,” and “[t]he

German agents . . . agreed not to handle business from freight

forwarders in those channels unless the forwarders submitted me-

too bids at the second lowest level . . . or above.” See

Gosselin, 411 F.3d at 507. Even more, as Smet acknowledged in a

writing filed with the district court, Gosselin Group, Pasha,

and their co-conspirators had “provided misleading information

to DOD personnel in Germany.” See Statement of Facts, United

States v. Gosselin World Wide Moving, N.V., No. 1:03-cr-00551,

at ¶ 31 (E.D. Va. Feb. 19, 2004), ECF No. 93 (the “Statement of

Facts”). 6 In the end, the scheme to defraud the DOD was

successful and “Gosselin was awarded a contract, effective May

1, 2001, after colluding with its fellow bidders to artificially

inflate the packing and loading component of the submitted

bids.” See Bunk, 741 F.3d at 396. In turn, “Gosselin

subcontracted much of the work, in predetermined allocations, to

its supposed competitors.” Id. As a result of the bid-rigging

scheme, “DOD’s costs to transport military household goods were

6 Pursuant to Gosselin Group’s plea agreement, Smet and
Gosselin Group “admit[ted] the facts set forth in the [Statement
of Facts] and agree[d] that those facts establish[ed] guilt for
the [two conspiracy] offenses charged beyond a reasonable
doubt.” See Plea Agreement, United States v. Gosselin World
Wide Moving, N.V., No. 1:03-cr-00551, at 4 (E.D. Va. Feb. 18,
2004), ECF No. 92.

9
greater than they would have been had the shipments moved at the

prime through rates.” See Statement of Facts ¶ 32.

The guilty pleas of Gosselin Group and Pasha were tendered

to and accepted by the district court in Alexandria on February

18, 2004. Pursuant to a separate agreement between Smet and the

Army, Smet was barred from doing business with the United States

for three years, from March 2004 to March 2007. Soon after that

agreement was executed, a so-called United States Management

Team was created within Gosselin Group to handle its business —

in Smet’s absence — with the DOD. That team consisted of four

Gosselin Group employees: Chief Operating Officer Stephan

Geurts Sr., his son Stephan Geurts Jr., plus Timotheus Noppen

and Ludi Bokken.

Meanwhile, Gosselin Group and Pasha exercised a reservation

under their plea agreements to pursue an immunity claim in the

district court, seeking dismissal of both the charges lodged in

the information. In that regard, they asserted that their bid-

rigging scheme was entirely immune from federal prosecution. In

August 2004, the district court determined that certain

provisions of the Shipping Act immunized Gosselin Group and

Pasha from federal prosecution on the antitrust conspiracy

10
offense alleged in the information. 7 The court also ruled,

however, that those defendants possessed no immunity from

prosecution on the other charge, the conspiracy to defraud the

United States. Gosselin Group and Pasha were therefore

sentenced on the conspiracy to defraud offense only.

In 2005, the government successfully appealed to this Court

the district court’s immunity ruling on the antitrust conspiracy

offense. Our decision rejected the proposition that Gosselin

Group and Pasha were somehow immune from prosecution on that

offense. See Gosselin, 411 F.3d at 505. Concomitantly, we

rejected Gosselin Group’s and Pasha’s cross-appeals seeking

immunity from prosecution on the conspiracy to defraud offense.

Id. As Judge Wilkinson succinctly explained, “the Shipping

Act’s immunity provisions afford [the conspirators] no relief

from liability for the antitrust violation and conspiracy to

defraud they have admitted.” Id. Concluding that Gosselin

Group and Pasha were not entitled to immunity on either offense,

we remanded to the district court for resentencing. Those

proceedings were conducted in 2006.

7
The immunity provisions of the Shipping Act invoked by
Gosselin Group and Pasha were, at the time, 46 U.S.C. app.
§ 1706(a)(2), 46 U.S.C. app. § 1706(a)(4), and 46 U.S.C. app.
§ 1706(c)(1). Currently, those provisions of the Shipping Act
are codified at 46 U.S.C. § 40307.

11
 In the resentencing proceedings, the district court imposed

a $6,000,000 fine on Gosselin Group for its offenses. It

imposed two separate $4,600,000 fines on Pasha — one for each

count — for an aggregate fine of $9,200,000. The court also

ordered both Gosselin Group and Pasha to make restitution to the

DOD for losses suffered by the MTMC, in the sum of $865,000.

C.

In September 2006, with the criminal proceedings concluded,

the Department of Justice (the “DOJ”) gave the Gosselin

defendants notice of the two pending qui tam actions. The DOJ

lawyers detailed the false claims and bid-rigging evidence

underlying the qui tam actions to the lawyers for the Gosselin

defendants and advised them that the United States might

intervene. Shortly thereafter, in January 2007, the DOJ

communicated a settlement demand to the Gosselin defendants.

After completion of the criminal proceedings and with the

civil qui tam proceedings just beginning, Smet was completely

“fed up” with the DOJ and the DOD — a sentiment he expressed to

Geurts Jr. See J.A. 637. 8 As Smet further explained to Noppen,

his frustration arose from the “whole criminal case and

everything around it.” Id. at 675; see also, e.g., id. at 427

8Citations herein to “J.A. ___” refer to the contents of
the Joint Appendix filed by the parties in this appeal.

12
(“[Smet] was really fed up with all those chasings towards his

person . . . .”). Smet thus approached Jan Lefebure, who worked

as Managing Director of International Freight Forwarding Service

(which handled Gosselin Group’s commercial exports), with a

proposal to move Gosselin Group’s business with the United

States into the hands of another business entity.

Lefebure owned a corporation called Brabiver, which was

described by Geurts Jr. as a “company doing nothing.” See J.A.

640. Notably, however, and helpful to Smet, Brabiver owned “a

license for transportation or freight forwarding.” Id. Smet

proposed to Lefebure a scheme “to reopen [Brabiver], and to put

his [i.e., Gosselin Group’s] . . . government contracts into

it.” Id. at 426.

Joining Lefebure as principals in the Brabiver venture, as

orchestrated by Smet, were Noppen, Geurts Jr., and Rene Beckers

— all of whom were employed by Gosselin Group or one of its

subsidiaries. On June 27, 2007, in order to carry out Smet’s

scheme and to capitalize Brabiver, Smet made several interest-

free loans to the four principals, totalling approximately

€100,000. 9 Noppen, Geurts Jr., and Beckers each received loans

from Smet of more than €24,000. Lefebure received an initial

9
As of June 27, 2007, €100,000 was equal to approximately
$134,000. See Foreign Exchange, N.Y. Times, June 27, 2007, at
C12.

13
loan of more than €16,000, which was later increased to more

than €27,000. Notably, those interest-free loans were not

secured in any way. Each loan was repayable on Smet’s demand,

but no demands were ever made.

On June 28, 2007, at their first and only shareholder

meeting, Smet’s hand-picked principals used the foregoing loans

to purchase shares in and to formalize Brabiver’s resurgence as

GovLog — a new name selected by Smet himself. The next day,

June 29, 2007, GovLog and Gosselin Group entered into a series

of agreements, memorialized by contracts prepared by Smet’s

attorneys and presented by Smet to the GovLog principals. Two

of the agreements transferred Gosselin Group’s business with the

DOD to GovLog, and three other agreements committed GovLog to

exclusively use the services of Gosselin Group and its related

entities to perform the DOD contracts.

In exchange for Gosselin Group’s business with the DOD,

GovLog paid nothing at the time. Instead, GovLog promised

Gosselin Group a percentage of its future net revenues. The

agreements transferring Gosselin Group’s business with the DOD

to GovLog defined those net revenues as “all of those revenues

received by GovLog . . . minus the amount of the [services]

invoiced by [Gosselin Group] to GovLog in connection with” the

services provided to GovLog by Gosselin Group and its

subsidiaries. See J.A. 832 (emphasis omitted) (regarding

14
facility services); see also id. at 839 (regarding support

services). The terms of the various agreements were not even

negotiated; rather, they were all dictated by Smet. After

Smet’s lawyers prepared the agreements, Smet simply handed them

to Lefebure, who signed each on behalf of GovLog.

At no point during the implementation of the GovLog scheme

did Gosselin Group consider selling or seek to sell its business

interests to any entity other than GovLog. Manned with only

about twenty employees — all but one of whom joined GovLog from

Gosselin Group — GovLog began its DOD shipping operations on

behalf of Gosselin Group on July 1, 2007.

Thereafter, the sole business of GovLog was signing

contracts with the DOD and arranging shipping services for the

DOD. It did not, as Lefebure said, actually do any shipping.

As Lefebure testified:

Q. . . . . Other than making the arrangements for
these movements of household goods, does [GovLog]
provide any other services?

A. For the time being, no.

See J.A. 751. Although GovLog contracted with the DOD and

GovLog’s carriers to perform shipping services, Gosselin Group

continued to perform nearly all those services. GovLog did not

have its own warehousing facilities; it leased warehousing

facilities from Gosselin Group. GovLog owned nothing except a

couple of automobiles, a chair, and a table.

15
 GovLog earned no net revenues, as defined by its agreements

with Gosselin Group, during the 2007 or 2008 fiscal years. As a

result, GovLog was not obligated to pay any funds to Gosselin

Group in exchange for Gosselin Group’s business with the DOD.

GovLog, however, paid Gosselin Group for the leased warehouse

facilities and other Gosselin Group services. In other words,

as a representative of GovLog succinctly explained, “the money

that’s going to GovLog is actually ending up being paid to

Gosselin.” See J.A. 1322.

D.

Meanwhile, on November 7, 2007, Ammons’s qui tam action was

transferred from the Eastern District of Missouri to the Eastern

District of Virginia, where Bunk’s qui tam action remained

pending. The two qui tam suits were thereafter consolidated.

In 2008, after GovLog was formed, the district court ordered the

Relators’ complaints unsealed. On July 18, 2008, Ammons’s qui

tam complaint was superseded by the government’s Complaint in

Intervention. See 31 U.S.C. § 3730(b)(2) (“The Government may

elect to intervene and proceed with the action . . . .”). The

government did not, however, intervene in Bunk’s qui tam suit. 10

10 Although Relator Ammons became a subordinated party upon
the government’s intervention in his qui tam action, he
nevertheless maintained his status as a plaintiff. See 31
U.S.C. § 3730(c)(1) (“[The person bringing the action] shall
have the right to continue as a party to the action . . . .”).
(Continued)
16
 In its Complaint in Intervention, the government named

GovLog as a defendant, alleging that GovLog was “a

successor/transferee in interest of Gosselin [Group].” See

Compl. Int. ¶ 15. On October 2, 2008, Bunk filed his Second

Amended Complaint, which also included GovLog as a named

defendant and alleged a successor corporation liability claim

against GovLog. In December 2009, Bunk amended his complaint

again, filing his operative Third Amended Complaint (the “Bunk

Complaint”).

The Bunk Complaint “pleaded various FCA theories of

liability against [the Gosselin defendants] and others. Suing

in his individual capacity, Bunk joined several additional

claims, including a 42 U.S.C. § 1985 claim . . . and state law

claims.” See Bunk, 741 F.3d at 398-99 (citations omitted). As

we observed in Bunk, however, only his DPM claim was not

superseded by the government’s Complaint in Intervention:

Although the government did not intervene in the Bunk
proceeding, the district court determined that all of
Bunk’s claims had nonetheless been effectively
superseded by the [government’s Complaint in
Intervention], except for Count II of the Bunk

Bunk’s status did not change as a result of the government’s
intervention in Ammons’s action. See id. § 3730(c)(3) (“If the
Government elects not to proceed with the action, the person who
initiated the action shall have the right to conduct the
action.”).

17
 Complaint, which sought recovery under the FCA for
Gosselin’s actions in connection with the DPM scheme.

Id. at 399 n.8; see also Bunk Compl. ¶ 148 (alleging that the

Gosselin defendants “knowingly made, used, or caused to be used

a false record or statement to get a false claim paid or

approved by the United States Government”). By incorporating

and realleging a substantial portion of the Bunk Complaint, see

Bunk Compl. ¶ 147, Count II of the Bunk Complaint alleged the

successor corporation liability contention in the following

terms:

The transaction between [GovLog] and [Gosselin Group]
is, knowingly, a sham transaction for inadequate
consideration through which Gosselin Group . . .
and/or its operating subsidiaries still profit through
their business interests in shipping related to U.S.
Government markets and that transaction is designed to
hinder, delay and/or defraud Relators as a potential
judgment creditor.

Id. ¶ 30.

On May 11, 2011, after the government and the Relators had

moved for summary judgment on the issue of whether GovLog was

liable as a successor corporation of Gosselin Group, the

district court severed the claims against GovLog from those

against the Gosselin defendants. The court then proceeded to

conduct a trial, seeking to first resolve the claims against the

Gosselin defendants.

18
 The jury trial on the DPM, ITGBL, and Covan claims against

the Gosselin defendants began in Alexandria on July 18, 2011. 11

At the close of the government’s case, on July 28, 2011, the

district court awarded judgment as a matter of law to the

Gosselin defendants on the ITGBL claim. The DPM and Covan

claims were submitted to the jury, and on August 4, 2011, the

jury returned a verdict against the Gosselin defendants on the

DPM claim and in favor of the Gosselin defendants on the Covan

claim.

With respect to the DPM scheme, the trial evidence

established that the Gosselin defendants had submitted 9,136

false invoices to the DOD. Each of those false claims

authorized the imposition of a minimum civil penalty of $5,500.

As we explained in our Bunk decision, the “imposition of no more

than the statutory minimum . . . would have resulted in a

cumulative penalty just in excess of $50 million.” See 741 F.3d

at 401. Nevertheless, the district court did not impose any

civil penalties, ruling that such an award would be

unconstitutionally punitive in violation of the Excessive Fines

Clause of the Eighth Amendment. Id.

11
Before the 2011 jury trial began, the district court
granted partial summary judgment to the government on the
Cartwright claim against the Gosselin defendants. See Bunk, 741
F.3d at 399-400.

19
 Both the government and the Relators appealed, and the

Gosselin defendants cross-appealed. Bunk challenged the

district court’s denial of civil penalties in relation to the

DMP claim; the government challenged the court’s award of

judgment to the Gosselin defendants on the ITGBL claim; and the

Gosselin defendants argued that Bunk lacked standing to sue.

After rejecting the Gosselin defendants’ standing argument, we

directed the court to amend its civil penalties judgment and to

award $24,000,000 in civil penalties to Bunk on the DPM claim.

See Bunk, 741 F.3d at 404-05, 411. We explained that such an

award was not unconstitutionally excessive under the Eighth

Amendment, and specified that the award “appropriately reflects

the gravity of Gosselin’s offenses and provides the necessary

and appropriate deterrent effect going forward.” Id. at 409.

Finally, we vacated the court’s entry of judgment in favor of

the Gosselin defendants on the ITGBL claim. Id. at 411. We

thus remanded the matter for further proceedings. 12

E.

In additional Bunk remand proceedings, with the claims

against the Gosselin defendants having been resolved, the

12On August 1, 2014, during the remand proceedings in the
district court, a jury in Alexandria returned a verdict in favor
of the government on the ITGBL claim. On December 24, 2014,
however, the district court granted the Gosselin defendants’
renewed motion for judgment on that claim.

20
district court turned to the successor corporation liability

claims that were pending against GovLog. In that regard, the

court initially focused on identifying the applicable legal test

for a successor corporation liability claim. The Relators

requested that the court apply the substantial continuity test

enunciated by this Court in United States v. Carolina

Transformer Co., 978 F.2d 832 (4th Cir. 1992), as an expansion

of traditional common law principles. GovLog contended,

however, that use of the substantial continuity test was

foreclosed by the Supreme Court’s 1998 decision in United States

v. Bestfoods, 524 U.S. 51 (1998). On September 12, 2014, the

district court agreed with GovLog and ruled that application of

Carolina Transformer’s substantial continuity test in the

context of the FCA would be inconsistent with Bestfoods. As a

result, the court decided that only traditional common law

principles would govern the issue of GovLog’s liability as a

successor corporation. The court then invited the parties to

renew and litigate their motions for summary judgment.

Relying on a fraudulent transaction theory of successor

corporation liability under the common law, the Relators and the

government, on November 3, 2014, sought summary judgment with

respect to the successor corporation liability claims. GovLog

then cross-moved for summary judgment, also asking for judgment

on the pleadings. In support of its request for judgment on the

21
pleadings, GovLog maintained that the government’s Complaint in

Intervention and Count II of the Bunk Complaint failed to

properly allege that GovLog was liable as a successor

corporation to Gosselin Group. In its summary judgment request,

GovLog cast the fraudulent transaction theory posited by the

government and the Relators as entirely speculative, arguing

that the evidence was insufficient to create any material issues

of fact, thereby entitling GovLog to summary judgment.

On December 23, 2014, the district court granted judgment

to GovLog, utilizing two theories. See Decision 2-3. The

Decision first concluded that neither complaint had properly

alleged that GovLog was liable as a successor corporation to

Gosselin Group under any recognized legal theory.

Alternatively, the court concluded that GovLog was entitled to

summary judgment for want of a genuine dispute of material fact.

Indeed, the court ruled that the various transactions between

Gosselin Group and GovLog were not shown to have been pursued

with a fraudulent intention. In the court’s view, there was

simply “no evidence sufficient to establish any of the

recognized ‘badges of fraud’” with respect to the creation and

operation of GovLog. Id. at 9.

The district court observed that Gosselin Group “had an

absolute right to end its direct contractual relationship with

the American carriers and there was nothing that could be deemed

22
fraudulent based on that decision alone,” and that Gosselin

Group “was not under any obligation to stay in any particular

line of business in order to generate revenue to pay the

judgment.” See Decision 10. The Decision swept aside the

government’s and the Relators’ contentions that the transfer

lacked consideration, explaining, inter alia, that Gosselin

Group “did not transfer or assign any ITGBL contracts to

GovLog,” and “[t]here is likewise no evidence, expert or

otherwise, that the [various agreements between Gosselin Group

and GovLog failed to] provide commercially reasonable terms or

adequate consideration.” Id. at 11-12. Accordingly, on

December 29, 2014, the court entered judgment in favor of

GovLog.

The Relators timely noted this appeal from the judgment.

We possess jurisdiction pursuant to 28 U.S.C. § 1291. 13

II.

At the outset, we must address GovLog’s contention that the

district court lacked subject matter jurisdiction over Bunk’s

13
The government initially appealed from the judgment in
favor of GovLog, but dismissed its appeal. We thereafter
requested the Attorney General to make an amicus curiae
submission in the Relators’ appeal. The United States has
submitted a brief in support of the Relators, and government
counsel participated in the oral argument of this appeal.

23
successor corporation liability claim against GovLog and that

the claim thus must be dismissed. The question is whether the

court possessed supplemental jurisdiction over Bunk’s claim.

If a district court possesses original jurisdiction in a

civil proceeding, it “shall have supplemental jurisdiction over

all other claims that are so related to claims in the action

within such original jurisdiction that they form part of the

same case or controversy.” See 28 U.S.C. § 1367(a).

Supplemental jurisdiction “is not limited to restatements of the

same basic ground for recovery.” White v. Cty. of Newberry,

S.C., 985 F.2d 168, 172 (4th Cir. 1993). Indeed, the related

claims “need only revolve around a central fact pattern.” Id.

We review de novo an issue of whether subject matter

jurisdiction was possessed by a district court. See Taylor v.

Kellogg Brown & Root Servs., Inc., 658 F.3d 402, 408 (4th Cir.

2011).

Original jurisdiction is supplied in these qui tam

proceedings by Bunk’s FCA claim (i.e., the DPM claim). See 28

U.S.C. § 1331. Supplemental jurisdiction thus turns on whether

the inquiry into the successor corporation liability claim

against GovLog involves the same facts as the FCA claim. Here,

GovLog’s liability as a successor corporate entity is wholly

dependent on the Gosselin defendants’ liability under the FCA;

that is, the facts upon which the $24,000,000 judgment against

24
the Gosselin defendants was predicated also serve as the

foundation for GovLog’s liability as a successor corporate

entity. Simply put, those two issues “revolve around a central

fact pattern.” See White, 985 F.2d at 172; see also, e.g., Bd.

of Trs., Sheet Metal Workers’ Nat’l Pension Fund v. Elite

Erectors, Inc., 212 F.3d 1031, 1037 (7th Cir. 2000) (observing

that “federal courts may entertain vicarious-liability theories

in a single suit” by way of supplemental jurisdiction).

Nevertheless, GovLog maintains that the district court

lacked supplemental jurisdiction with respect to Bunk’s

successor corporation liability claim under the Supreme Court’s

decision in Peacock v. Thomas, 516 U.S. 349 (1996). The Peacock

Court was concerned with a district court’s exercise of

ancillary jurisdiction over subsequent proceedings, concluding

that “ancillary jurisdiction is not justified over a new lawsuit

to impose liability for a judgment on a third party.” Id. at

359 (emphasis added). 14 This matter is readily distinguishable

from Peacock. Bunk’s successor corporation liability claim

against GovLog, as alleged in Count II of the Bunk Complaint, is

not part of a new lawsuit; indeed, the successor corporation

14
In Peacock, the Supreme Court recognized that “Congress
codified much of the common-law doctrine of ancillary
jurisdiction as part of ‘supplemental jurisdiction’ in 28 U.S.C.
§ 1367.” See 516 U.S. at 354 n.5.

25
liability question is part and parcel of Bunk’s original qui tam

action. Accordingly, the Peacock principle is inapplicable

here, and the district court’s exercise of supplemental

jurisdiction over the successor corporation liability claim

against GovLog was entirely appropriate.

III.

Turning to the heart of this appeal, we must assess and

decide whether the district court erred by entering judgment in

favor of GovLog on the successor corporation liability issue.

In the district court, Bunk pressed two theories of successor

corporation liability against GovLog: (1) the substantial

continuity theory, and (2) the fraudulent transaction theory.

After an opening round of briefing, the court rejected the

substantial continuity test, deeming it inconsistent with

Supreme Court precedent. Additional briefing ensued, and the

court’s Decision ruled that Bunk had not adequately pleaded the

fraudulent transaction theory. In the alternative, the Decision

determined that the fraudulent transaction theory of successor

corporation liability was without evidentiary support, leaving

no genuine issue of material fact and entitling GovLog to

summary judgment. On appeal, Bunk challenges each of those

rulings.

26
 A.

As a general rule, a corporation that acquires the assets

of another corporation does not also acquire its liabilities.

See United States v. Carolina Transformer Co., 978 F.2d 832, 838

(4th Cir. 1992). The traditional rule against successor

corporation liability, however, is subject to four exceptions

under the federal common law. That is, a successor corporation

takes on the liabilities of its predecessor if

(1) the successor expressly or impliedly agrees to
assume the liabilities of the predecessor; (2) the
transaction may be considered a de facto merger;
(3) the successor may be considered a “mere
continuation” of the predecessor; or (4) the
transaction is fraudulent.

Id. 15

15
That federal common law principles apply in this matter
is not undisputed. GovLog argued in its brief for the
application of Belgian law, premised on choice-of-law provisions
in contractual agreements it had with Gosselin Group. See,
e.g., J.A. 314 (providing that any disputes arising under
agreement between GovLog and Gosselin Group shall be determined
by Belgian law); id. at 321 (same). We are satisfied that
Belgian law does not apply because GovLog cannot foist upon Bunk
a choice-of-law provision contained in an agreement between
GovLog and Gosselin Group. See Berg Chilling Sys., Inc. v. Hull
Corp., 435 F.3d 455, 466 (3d Cir. 2006) (“In general, while it
makes sense to allow the parties to a contract to control which
law applies to their agreement, it does not follow that the
contract provisions should control an inquiry that, by its
nature, looks beyond the contract.”). Although there yet may be
some question of whether principles of federal common law or
Virginia law apply here, the parties have not argued that point.
In any event, Virginia law does not meaningfully diverge from
federal common law concerning successor corporation liability.
Notably, federal common law and Virginia law both recognize the
(Continued)
27
 The mere continuation theory authorizes the imposition of

liability if, “after the transfer of assets, only one

corporation remains, and there is an identity of stock,

stockholders, and directors between the two corporations.”

Carolina Transformer, 978 F.2d at 838. Bunk is unable to rely

on the mere continuation theory because the two corporations —

GovLog and Gosselin Group — were both viable after the transfer.

Bunk therefore relies on the more lax substantial

continuity theory conceived in Carolina Transformer.

Substantial continuity expands on the mere continuation theory,

allowing a court to look at an ensemble of at least eight

factors to determine whether successor corporation liability

should be imposed. See Carolina Transformer, 987 F.2d at 838

(identifying relevant factors as “(1) retention of the same

employees; (2) retention of the same supervisory personnel;

(3) retention of the same production facilities in the same

location; (4) production of the same product; (5) retention of

the same name; (6) continuity of assets; (7) continuity of

traditional exceptions to the rule against successor corporation
liability. Compare, e.g., Carolina Transformer, 978 F.2d at
838, with Harris v. T.I., Inc., 413 S.E.2d 605, 609 (Va. 1992).
Both bodies of law also look to and apply what are called
“badges of fraud” to determine whether a conveyance was
fraudulent. Compare BFP v. Resolution Tr. Corp., 511 U.S. 531,
540-41 (1994), with Fox Rest Assocs., L.P. v. Little, 717 S.E.2d
126, 131-32 (Va. 2011). In the circumstances, we are satisfied
to apply federal common law.

28
general business operations; and (8) whether the successor holds

itself out as the continuation of the previous enterprise”).

As the Supreme Court instructed in United States v.

Bestfoods, however, “the failure of [a] statute to speak to a

matter as fundamental as the liability implications of corporate

ownership demands application of the rule that ‘[i]n order to

abrogate a common-law principle, the statute must speak directly

to the question addressed by the common law.’” See 524 U.S. 51,

63 (1998) (second alteration in original) (quoting United States

v. Texas, 507 U.S. 529, 534 (1993)). Put simply, the FCA does

not speak to successor corporation liability and thus has no

impact on the traditional common law principles governing

successor corporation liability. It follows that Carolina

Transformer’s substantial continuity theory — a theory that

alters the common law mere continuation rule — is not a viable

theory for Bunk to pursue. Accordingly, we are satisfied that

the district court properly declined to apply the substantial

continuity test here.

B.

Without the substantial continuity theory, Bunk must rely

on the fourth exception identified in our Carolina Transformer

decision — the fraudulent transaction theory of successor

corporation liability. The district court, however, rejected

Bunk’s allegations as insufficient with respect to that theory.

29
See Decision 2 n.3 (“The Court concludes that the plaintiffs had

not, prior to the current round of summary judgment proceedings,

adequately placed GovLog on notice of . . . their fraudulent

transaction theory.”). We must therefore initially assess de

novo whether the relevant pleading was legally sufficient. See

Teachers’ Retirement Sys. of La. v. Hunter, 477 F.3d 162, 170

(4th Cir. 2007).

In general, to survive dismissal, a complaint must “state a

claim to relief that is plausible on its face” by alleging

factual matter to support the claims asserted. See Ashcroft v.

Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 570 (2007)). More may be required,

however, when a successor corporation liability claim is being

pursued under the fraudulent transaction theory. In that

circumstance, the complaint may need to satisfy the heightened

pleading requirements of Rule 9(b) of the Federal Rules of Civil

Procedure. Compare, e.g., Ricciardello v. J.W. Gant & Co., 717

F. Supp. 56, 59 (D. Conn. 1989) (“If plaintiff purports to rely

on fraud to impose successor liability . . . , he must plead

with particularity facts from which fraud may be inferred.”

(citing Fed. R. Civ. P. 9(b))), with Old Republic Ins. Co. v.

Hansa World Cargo Serv., Inc., 170 F.R.D. 361, 376 (S.D.N.Y.

1997) (“[P]leadings of successor liability are subject to the

lenient pleading requirements of Rule 8(a), not the more

30
rigorous standards of Rule 9(b).”). In this proceeding,

however, we need not either assess or decide whether Rule 9(b)’s

pleading requirements apply to a fraud-based successor liability

claim. That is because, assuming those standards are

applicable, they are readily satisfied here.

Pursuant to Rule 9(b), the plaintiff must “state with

particularity the circumstances constituting fraud or mistake.

Malice, intent, knowledge, and other conditions of a person’s

mind may be alleged generally.” See Fed. R. Civ. P. 9(b).

Although we must view the facts alleged in the operative

complaint in the light most favorable to the plaintiff, “we will

not accept ‘legal conclusions couched as facts or unwarranted

inferences, unreasonable conclusions, or arguments.’” See

Nathan, 707 F.3d at 455 (quoting Wag More Dogs, LLC v. Cozart,

680 F.3d 359, 365 (4th Cir. 2012)). In simple terms, a

plaintiff complies with Rule 9(b) by, “at a minimum,

describ[ing] the time, place, and contents of the false

representations, as well as the identity of the person making

the misrepresentation and what he obtained thereby.” See Smith

v. Clark/Smoot/Russell, 796 F.3d 424, 432 (4th Cir. 2015)

(quoting United States v. Triple Canopy, Inc., 775 F.3d 628, 634

(4th Cir. 2015)). As a general rule, as we have recognized, a

court “should hesitate to dismiss a complaint under Rule 9(b) if

the court is satisfied (1) that the defendant has been made

31
aware of the particular circumstances for which she will have to

prepare a defense at trial, and (2) that plaintiff has

substantial prediscovery evidence of those facts.” Id. (quoting

Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 784

(4th Cir. 1999)).

By incorporating and realleging a substantial portion of

the Bunk Complaint, see Bunk Compl. ¶ 147, Count II of the Bunk

Complaint alleges that, “in or about June 2007, two former

employees of [Gosselin Group] formed [GovLog], hired over twenty

(20) employees of [Gosselin Group] and . . . entered into

agreements with [Gosselin Group] to purchase all of [its]

business interests in shipping related to U.S. Government

markets.” Id. ¶ 30. Gosselin Group and GovLog, as Count II

further alleges, then entered into various service agreements

“to enable [GovLog] to be able to provide services related to

the U.S. Government markets.” Id. Count II also alleges that

GovLog “hold[s] itself out as a continuation of [Gosselin

Group]” and that Gosselin Group continues to reap profits from

its former contracts, all the while avoiding any liabilities for

its past misdeeds. Id.

It is thus apparent that the allegations of Count II

sufficiently outline the dealings between GovLog and Gosselin

Group that form a solid foundation for the fraudulent

transaction theory. As a result, those allegations satisfy the

32
mandate of Rule 9(b). In dismissing Bunk’s successor

corporation liability claim as insufficiently pleaded, the

district court erred.

C.

Finally, as an alternative to its ruling that the successor

corporation liability claim was insufficiently pleaded, the

district court awarded summary judgment to GovLog on the merits.

In the court’s view, “there [was] an absence of evidence

sufficient” to support Bunk’s fraudulent transaction theory.

See Decision 3. Bunk challenges that ruling and requests that

we remand for trial and further proceedings, or for entry of

summary judgment in Bunk’s favor. We review de novo whether a

district court’s summary judgment award was warranted. See

Bauer v. Lynch, 812 F.3d 340, 347 (4th Cir. 2016).

1.

The fraudulent transaction theory turns on the intention

underlying the transfer of assets to GovLog, i.e., whether it

was made with an actual intention to hinder, delay, or defraud

creditors. See, e.g., BFP, 511 U.S. at 540; see also, e.g., 15A

William Meade Fletcher et al., Fletcher Cyclopedia of the Law of

Corporations § 7403, Westlaw (database updated Sept. 2016)

(“Many jurisdictions provide that a transfer is fraudulent if

made with actual intent to hinder, delay or defraud

creditors.”). Because direct evidence of such an intention is a

33
rarity, courts generally look to indirect and circumstantial

evidence for “badges of fraud”:

Since . . . fraudulent intent is found by facts
and circumstances, it is subject to indirect proof,
with the following recognized as “badges of
fraud”: (1) a conveyance to a spouse or near
relative; (2) inadequacy of consideration . . . ;
(3) transactions that are different from the usual
method of transacting business; (4) transfers in
anticipation of suit or execution; (5) retention of
possession by the debtor; (6) the transfer of all or
nearly all of the debtor’s property; (7) insolvency
caused by the transfer; or (8) failure to produce
rebutting evidence when circumstances surrounding the
transfer are suspicious.

Fletcher et al., supra, § 7403 (footnotes omitted); see also,

e.g., Aiken v. United States, 108 F.2d 182, 183 (4th Cir. 1939)

(“Fraudulent intent, as a mental element of crime . . . is too

often difficult to prove by direct and convincing evidence. In

many cases it must be inferred from a series of seemingly

isolated acts and instances which have been rather aptly

designated as badges of fraud.”); Fox Rest Assocs., 717 S.E.2d

at 131-32 (enumerating badges of fraud). Also among the badges

of fraud are “transactions whereby the debtor retains benefits.”

See 37 Am. Jur. 2d Fraudulent Conveyances & Transfers § 14,

Westlaw (database updated Sept. 2016).

Of importance, the issue of fraudulent intention is

generally not amenable to resolution on summary judgment. See

Morrison v. Nissan Motor Co., 601 F.2d 139, 141 (4th Cir. 1979)

(“[W]hen the disposition of a case turns on a determination of

34
intent, courts must be especially cautious in granting summary

judgment, since the resolution of that issue depends so much on

the credibility of the witnesses, which can best be determined

by the trier of facts after observation of the demeanor of the

witnesses during direct and cross-examination.”). Moreover,

when evidence of intention is ambiguous, summary judgment simply

cannot be awarded. See Gen. Analytics Corp. v. CNA Ins. Cos.,

86 F.3d 51, 55 (4th Cir. 1996).

2.

In this situation, the evidence not only fails to dispel

the requisite fraudulent intention, but could easily be found to

establish it. Indeed, Smet’s own words provide substantial

insight into — and direct evidence of — his fraudulent and

iniquitous intention. Before hatching his scheme to move

Gosselin Group’s business with the United States into the hands

of GovLog, Smet had been indicted by the federal grand jury for

his involvement in the bid-rigging scheme. Although that

indictment was later dismissed, Smet admitted to strikingly

incriminating facts and was prohibited from doing business with

the United States for three years.

After the criminal proceedings against Gosselin Group were

concluded, the DOJ informed Smet of these qui tam proceedings,

in which the government subsequently intervened. At the cusp of

the qui tam proceedings, as others testified, Smet loudly voiced

35
his frustration with the “whole criminal case [against Gosselin]

and everything around it” and that he was “really fed up with

all those chasings towards his person.” See J.A. 675, 703. Any

reasonable juror could readily conclude that those sentiments —

expressed on the eve of GovLog’s creation — demonstrate Smet’s

fraudulent intention to escape liability for any potential

judgment and to dodge “those chasings” being pursued by the

United States.

The transaction between Gosselin Group and GovLog is also

adorned with several of the badges of fraud. Those badges

readily support Bunk’s position concerning the fraudulent

intention underlying the GovLog transaction. At least four of

the badges of fraud are readily apparent on the evidence as

forecast:

• Inadequacy of consideration. See 15A Fletcher et
al. supra, § 7403; see also, e.g., In re
Woodfield, 978 F.2d 516, 518 (9th Cir. 1992),
cited by In re Sandoval, 153 F.3d 722 (4th Cir.
1998) (unpublished table decision); Fox Rest
Assocs., 717 S.E.2d at 132.

• Transactions that are different from the usual
method of transacting business. See 15A Fletcher
et al., supra, § 7403; see also, e.g., Aiken, 108
F.2d at 183.

• Transactions in anticipation of suit or
execution. See 15A Fletcher et al., supra, §
7403; see also, e.g., In re Woodfield, 978 F.2d
at 518, cited by In re Sandoval, 153 F.3d 722;
Fox Rest Assocs., 717 S.E.2d at 132.

36
 • Transactions through which the debtor retains
benefits. See 37 Am. Jur. 2d Fraudulent
Conveyances & Transfers § 14, Westlaw (database
updated Sept. 2016); see also, e.g., In re
Kaiser, 722 F.2d 1574, 1582 (2d Cir. 1983).

First, the consideration that GovLog paid to acquire

Gosselin Group’s business interests could be found to be grossly

inadequate. GovLog did not pay for Gosselin Group’s business

with the United States upon transfer. Instead, GovLog agreed to

pay Gosselin Group a percentage of GovLog’s future net revenues,

which their agreements defined as “all of those revenues

received by GovLog . . . minus the amount of the [services]

invoiced by [Gosselin Group] to GovLog in connection with” the

services provided to GovLog by Gosselin Group and its

subsidiaries. See J.A. 832 (emphasis omitted) (regarding

facility services); see also id. at 839 (regarding support

services). GovLog did not, however, net any revenues. In

effect, therefore, GovLog paid nothing for the business

interests it received pursuant to the GovLog transaction.

Next, the GovLog transaction could be found to have been

conducted in a manner different from the usual method of

transacting business. After approaching Lefebure with his

scheme to resurrect the then-defunct Brabiver as a business

entity flush with Gosselin Group’s government contracts, the

plan unfolded quickly and suspiciously. At the outset, Smet

made interest-free loans, totalling approximately €100,000, to

37
four hand-picked GovLog principals — each of whom worked for

Gosselin Group or one of its subsidiaries. The very next day,

Smet’s cronies used those loans to purchase Brabiver and to

formalize its recasting as GovLog, a name selected by Smet. The

following day, without conducting any financial analysis of the

transaction, GovLog consummated the transaction by entering into

a series of agreements with Gosselin Group. Those agreements

were prepared by Smet’s attorneys and presented to GovLog’s

principals for execution without any negotiations. The GovLog

transaction was thus made in haste and with little input from

GovLog or its purported owners, with Smet in control of every

facet.

Even more suspicious is the timing of the Gosselin Group-

GovLog transaction, which could be found to have been made in

anticipation of suit or execution. In 2003, Smet and Gosselin

Group were indicted for their bid-rigging scheme. In 2004,

Gosselin Group pleaded guilty and was convicted. In exchange,

the government agreed to dismiss Smet’s indictment. Although he

escaped criminal liability, Smet was prohibited from doing

business with the United States for three years. At the

conclusion of the criminal proceedings against Gosselin Group

and Pasha, Gosselin Group was fined $6,000,000 and ordered to

make nearly $1,000,000 in restitution to the DOD.

38
 After the successful criminal prosecution of Gosselin

Group, the Gosselin defendants first learned in September 2006

of these qui tam proceedings seeking to impose civil liability

for the bid-rigging conspiracy. By December 2006, the Gosselin

defendants knew that the government might well intervene in the

qui tam proceedings; by January 2007, the Gosselin defendants

had received a settlement demand from the DOJ. Facing civil

liability for the bid-rigging conspiracy — and just a month

after receiving the government’s settlement demand — Smet

approached Lefebure with his GovLog scheme to move Gosselin

Group’s business with the United States into the new business

entity. By July 1, 2007, Smet had orchestrated the creation and

funding of GovLog and its acquisition of Gosselin Group’s

business with the United States. In sum, the temporal proximity

of the Gosselin defendants’ being advised of the qui tam actions

and the GovLog transaction being consummated suggests that the

transaction was made to defraud Bunk and the United States out

of civil penalties.

Finally, a reasonable juror could find that Gosselin Group,

despite having moved its business with the United States into

the hands of GovLog, continued to reap the benefits of that

business. GovLog did not provide shipping services; instead, it

signed contracts with the DOD and arranged for shipping

services. Gosselin Group actually performed those shipping

39
services, and it also leased warehousing facilities to GovLog.

At bottom, all the monies paid to GovLog for its “shipping

services” ended up in Gosselin Group’s coffers. As a result,

Gosselin Group retained all the benefits of the business

interest it purported to have sold to GovLog. See J.A. 1322

(“[T]he money that’s going to GovLog is actually ending up being

paid to Gosselin.”).

Seeking to dispel the impact of all this compelling

evidence, GovLog offers an alternative basis for the GovLog

transaction. According to GovLog, Smet was merely selling

Gosselin Group’s business with the United States for practical

business reasons. As Smet testified during his deposition,

I thought it was beneficial to the company to be able
to give this business to another company and still to
some degree allow the Gosselin companies to continue
to provide some logistical support service to the new
company that took over these contracts and continue to
handle that business so we could still make some money
off this business and not get stuck with high
severance pays on all the employees.

J.A. 927. Although Smet’s explanation for the GovLog

transaction could counter the evidence of fraud forecast by

Bunk, this explanation could well be rejected by a reasonable

juror. In sum, the various factual disputes presented here are

simply incapable of resolution except by a factfinder.

Importantly, there is a great deal of evidence — when viewed in

40
the proper light — to prove fraudulent intention and that

evidence is both direct and circumstantial.

Accordingly, the district court erred in making the summary

judgment award to GovLog. We are therefore satisfied to remand

this matter for further proceedings.

IV.

Pursuant to the foregoing, we vacate the judgment and

remand for such other and further proceedings as may be

appropriate.

VACATED AND REMANDED

41