U.S. Sues Oracle Alleging Software Contract Fraud

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The U.S. Justice Department has sued Oracle over alleged software contract fraud worth hundreds of millions of dollars over the course of eight years.

WASHINGTON, July 29 (Reuters) - The U.S. Justice Department said on Thursday it sued Oracle Corp (NASDAQ:ORCL), alleging it defrauded the federal government on a software contract in effect from 1998 to 2006 that involved hundreds of millions of dollars in sales.

The lawsuit alleged Oracle misrepresented its true commercial sales practices, ultimately leading to government customers receiving deals inferior to those Oracle gave its commercial customers, the department said.

Under the contract, the General Services Administration (GSA) used Oracle's disclosures about its commercial sales practices to negotiate minimum discounts for government agencies that bought Oracle's software.

The contract required Oracle to update GSA when commercial discounts improved and extend the same improved discounts to government customers.

The lawsuit was initially filed in federal court in Virginia by Paul Frascella, Oracle's senior director of contract services, the department said, adding it then decided to intervene in the case and to file a complaint under the False Claims Act. (Reporting by James Vicini; editing by Andre Grenon)