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Stencel arrived at the $750,000 figure by doubling the amount
that they believed represented the Government's actual losses.
On December 24, 1985, Walter T. Skallerup, Jr., General
Counsel of the Navy, responded as follows to Ms. Branda's request
for a recommendation of the minimum settlement value of the
Government's claims against Talley and Stencel:
The investigation leading to the guilty plea
focused primarily on evidence of mischarging during
1984. There is reason to believe, however, that
mischarging began in 1979 and continued throughout the
period from 1979 to 1984. The amount of such
mischarging cannot now be quantified. Nevertheless, we
believe that any settlement offer should include an
amount for the full False Claims Act liability for the
provable losses in 1984 and a substantial amount for
the possible liability for losses in prior years, or a
total of $2.5 million.
On January 7, 1986, Ms. Branda submitted a memorandum to the
Assistant Attorney General, Civil Division, in which she proposed
to reject the pending $750,000 settlement offer and suggested
that the case should be settled in the range of $2 million to
$2.5 million. Ms. Branda summarized her position as follows:
Thus, we think that the singles figure of $1.56
million adequately compensates the government for its
losses based upon a fair and defensible projection. We
also believe that here, where Stencel has pled guilty
to related criminal charges and where civil proceedings
have not begun, it is premature to accept only an
estimate of our single losses and that assessment of a
"penalty" (as a portion of our double damages and/or
forfeitures) is appropriate. A settlement of $2 - 2.5
million represents compensation for an estimate of
losses, plus assessment of a penalty.
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