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Justice Department sues Oracle, alleging fraud

Lawsuit claims government agencies, under a contract that involved "hundreds of millions of dollars in sales," got deals "far inferior" to those Oracle gave its commercial clients.

The U.S. Department of Justice is adding its heft to a whistleblower lawsuit charging that Oracle committed fraud in conjunction with a multimillion-dollar government contract.

In a nutshell, the lawsuit argues that Oracle's government customers--a wide array of agencies, including the State Department, the Energy Department, and the Justice Department itself--got deals "far inferior" to those the enterprise software giant gave to its commercial clients.

The allegations stem from a software deal between Oracle and the federal General Services Administration that the Justice Department says involved "hundreds of millions of dollars in sales" and that ran from 1998 to 2006. Under the contract, Oracle was required to inform the GSA when commercial discounts improved and to offer those same discounts to government buyers.

Oracle misrepresented its true commercial sales practices and thus defrauded the U.S., the lawsuit contends.

"We take seriously allegations that a government contractor has dealt dishonestly with the United States," said Tony West, assistant attorney general for the civil division of the Department of Justice, in a statement. "When contractors misrepresent their business practices to the government, taxpayers suffer."

The lawsuit was initially filed by Paul Frascella, who was senior director of contract services at Oracle, under the False Claims Act. Frascella worked at Oracle from fall 1997 to late 2008, according to the lawsuit.

The Justice Department filed the complaint--United States ex rel. Frascella v. Oracle Corp. et al.--on Thursday in the U.S. District Court for the District of Eastern Virginia.

Oracle was not immediately available for comment.