The Justice Department announced a $7.5 million settlement with Ascend Elements Inc. over allegations that a subcontractor building the battery recycler's Kentucky plant inflated labor, equipment, and crane costs charged against a Department of Energy grant. The deal resolves False Claims Act, Program Fraud Civil Remedies Act, and Contract Disputes Act allegations without any cash payment, since Ascend filed for Chapter 11 bankruptcy protection before the case was finalized.

Background

Ascend Elements, a Massachusetts-based lithium-ion battery recycling startup, used DOE grant funding to build its Apex 1 recycling facility in Kentucky. The company hired Turner-Kokosing Joint Venture (TKJV) as prime contractor, which in turn brought on RMF Nooter LLC as a subcontractor for construction work at the site. Between September 2023 and February 2025, DOE paid out $5.3 million against invoices later found to contain inflated costs, funneled through TKJV's billing to the department.

Ascend halted construction at the Apex 1 site on November 1, 2024. According to Bloomberg Law's reporting on the case, the company voluntarily disclosed the billing problems to the Department of Justice and DOE in February 2025 after a former RMF Nooter employee alerted Ascend to the overbilling. That self-disclosure came before any government investigation forced the issue, a distinction that likely shaped the terms of the eventual settlement.

The case was filed as a settlement motion in the U.S. Bankruptcy Court for the Southern District of Texas on June 18, 2026, reflecting Ascend's Chapter 11 status. The Justice Department's Western District of Kentucky U.S. Attorney's Office publicized the resolution on July 30, 2026.

Key Details

RMF Nooter allegedly overbilled the project by at least $16 million in total. Nearly $6 million of that figure came from excessive or duplicative labor costs, according to bankruptcy court filings reported by CriticalMB. Those filings identified 2,377.5 hours billed at double-time rates and 251 hours billed as holiday pay, on top of substantial excessive or duplicative equipment and tool charges, questionable crane-related costs, and large tool purchases and transfers that were never properly credited back to the Apex 1 project.

DOE had already disbursed $5.3 million against these inflated invoices by the time the issue surfaced. Of the $7.5 million settlement, $5.3 million is straight restitution matching what DOE paid out, with the remaining roughly $2.2 million layered on as a penalty. That total is well short of the treble damages the False Claims Act technically permits and far below the full $16 million in alleged overbilling — a gap that reflects the credit Ascend received for voluntarily disclosing the problem rather than waiting to be caught. Court filings note that if the settlement were to fall through, the government's claim would revert to the full $16 million in original exposure plus penalties.

Because Ascend is in bankruptcy, no cash changes hands under the settlement. Instead, the $7.5 million is applied as an offset against DOE grant funds still owed to the company, reducing what Ascend can draw down going forward. The settlement resolves the government's civil claims against Ascend related to the invoicing, but it explicitly does not cover individual liability for anyone involved in the alleged overbilling scheme, leaving open the possibility of separate action against individuals at RMF Nooter or elsewhere. Equipment purchased with DOE grant funds also remains subject to the department's reversionary claims, meaning DOE retains the right to reclaim or redirect that equipment regardless of the settlement's resolution of the billing dispute.

The settlement covers claims arising under three separate legal frameworks: the False Claims Act, which addresses fraudulent billing to the federal government; the Program Fraud Civil Remedies Act, an administrative remedy for false claims below the threshold typically pursued through full FCA litigation; and the Contract Disputes Act, which governs disputes arising from federal contract performance. Combining all three in a single settlement motion reflects the overlapping nature of the alleged misconduct, which touched both the grant relationship between DOE and Ascend and the construction contract chain running through TKJV to RMF Nooter.

What It Means for Contractors

The case underscores that federal grant recipients remain on the hook for subcontractor billing practices even when the recipient itself did not originate the fraud. Ascend received the DOE grant and bore responsibility for the settlement despite the alleged overbilling originating with a second-tier subcontractor. Prime contractors and grant recipients that rely on multi-tier subcontracting chains for federally funded construction need billing oversight that extends past their direct contractual relationships, because liability under the False Claims Act does not stop at the first tier.

The voluntary disclosure timeline is instructive for any contractor facing an internal tip about billing irregularities. Ascend reported the issue to DOJ and DOE in February 2025, after a former RMF Nooter employee alerted the company to the overbilling and after construction had already been halted. Court filings do not specify exactly how much time elapsed between the tip and the disclosure, but the sequence — an internal review followed by a voluntary report, rather than waiting for a whistleblower complaint or a government audit to force the issue — is the pattern the Justice Department has repeatedly said it rewards with more favorable settlement terms and less appetite for pursuing individual accountability alongside a corporate resolution.

The bankruptcy overlay adds another layer relevant to contractors working with financially distressed partners on federally funded projects. A settlement offset against grant funds, rather than a cash payment, shows how the government adapts FCA enforcement when normal recovery mechanisms are unavailable because a company is in Chapter 11. Contractors extending credit or supplying materials to grant recipients facing financial trouble should recognize that DOE's reversionary claims on grant-funded equipment survive a bankruptcy filing and a related settlement, meaning equipment believed to be an asset in a restructuring may still be subject to federal clawback.

Finally, the explicit carve-out preserving individual liability signals that corporate settlements do not close the book on billing fraud investigations. Employees or managers at RMF Nooter or elsewhere in the subcontracting chain who directed or approved the inflated labor and equipment charges could still face separate civil or criminal exposure, even though the corporate-level dispute between DOE and Ascend has been resolved. Contractors should treat a company-level settlement as a floor, not a ceiling, on the consequences flowing from a billing fraud finding.

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