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W.R. GRACE AND BAKER & TAYLOR PAY $15.5 MILLION TO

WASHINGTON, D.C. -- W.R. Grace & Co. and a former subsidiary, Baker & Taylor, Inc., a national book distributor, have agreed to pay $15.5 million to settle allegations that they overcharged schools, libraries and government agencies on book sales for more than a decade, starting in the early 1980s. The suit against the two companies alleges that the United States was defrauded in direct book purchases as well as those through local schools and libraries using federal grant funds.

W.R. Grace has agreed to pay the federal government $3 million to resolve the claims against the company. In addition, W.R. Grace and Baker & Taylor jointly agreed to pay $12.5 million to 18 states that were co-plaintiffs in the lawsuit. Last year, Baker & Taylor paid the federal government $3 million to resolve claims the government had against the Charlotte, North Carolina-based company in that same lawsuit.

"This settlement demonstrates the United States' commitment to protecting federal funds from fraud and abuse," said Acting Assistant Attorney General David Ogden, in charge of the Justice Department's Civil Division.

The lawsuit under the federal False Claims Act seeks damages and penalties based on Baker & Taylor's contracts with "institutional" customers, in which the company agreed to provide trade discounts of approximately 40% on trade books, but then failed to provide the full discounts by misclassifying trade titles into non-trade categories. Meanwhile, Baker & Taylor, which was a division of W.R. Grace until 1993, provided full trade discounts on the same books to retailers.

The States of California, Arkansas, Connecticut, Florida, Hawaii, Idaho, Kentucky, Massachusetts, Minnesota, Missouri, Nevada, New Mexico, North Carolina, Oklahoma, Tennessee, Texas, Vermont and Wisconsin are co-plaintiffs in the suit claiming damages on behalf of their own schools and libraries. The suit was originally brought by two whistleblowers, Robert Costa, head librarian for the city of Richmond, Virginia, and Ronald Thornburg, a former Baker & Taylor sales representative.

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