Sysco Unit FreshPoint to Pay $4.2 Million to Settle Government Lawsuit -- Update

(Update includes quote from Sysco and updated share price.)

 
   By Everdeen Mason 
 

A Sysco Corp. (SYY) unit has agreed to pay a $4.2 million settlement for allegedly overcharging the Department of Defense on several fruit and vegetable contracts over three years.

FreshPoint Inc., a food distribution company, is accused of inflating its prices to the government based on its market estimates, violating the terms of 15 separate contracts from December 2007 through September 2011.

"While settling with the U.S. Attorney General does not constitute an admission of liability, in the spirit of cooperation and the desire to bring the matter to a conclusion, FreshPoint agreed to settle the matter and move forward," the company said.

A former FreshPoint employee, Charles Hall, filed the lawsuit on behalf of the government through the whistleblower provisions of the False Claims Act and will receive $798,000.

"This settlement demonstrates one of the many types of fraud inflicted upon the American taxpayers," said Edward Tarver, U.S. attorney for the Southern District of Georgia.

Sysco's shares were down 11 cents to $33.52 in late trading, and up 5.9% year-to-date.

Write to Everdeen Mason at [e-mail]

Subscribe to WSJ: http://online.wsj.com?mod=djnwires