Jacobs Agrees to Settle Whistle-Blower Suit

Pasadena-based Jacobs Engineering Group Inc. has agreed to pay $35 million to settle a whistle-blower lawsuit that alleged the company had overcharged the military and other federal agencies as much as $12 million for environmental cleanup projects. A preliminary agreement on the settlement was reached between the company and local representatives of the Justice Department earlier this month and must be approved by Justice officials in Washington before it can be finalized, said Thom Mrozek, spokesman for the U.S. attorney’s office in Los Angeles. The suit, filed by a former Jacobs employee in 1997, alleged that the company had billed “unallowable” overhead costs to government agencies such as the Air Force, NASA and the Environmental Protection Agency to cover the cost of leasing its former Lake Avenue corporate headquarters in Pasadena. In the company’s fiscal first-quarter earnings report released this week, Jacobs officials denied any wrongdoing but said they agreed to settle the suit to avoid the “cost and risk of future litigation.” Company spokesman John Prosser said he hopes the agreement can be finalized within the next few weeks. Jacobs reported a fiscal first-quarter net loss of $5.7 million, or 22 cents per share, because of the settlement charge. That compared with net income of $15.5 million, or 58 cents, a year ago. Jacobs shares rose 13 cents to close at $31.75 on the New York Stock Exchange.