In a settlement with the federal government to resolve criminal liability related to a bribe scheme involving a former executive, other employees and an ex-Dept. of Veterans' Affairs manager, architect-engineer CannonDesign will pay $12 million in penalties and take additional compliance steps, the firm and U.S. Justice Dept. have confirmed.

Under the Aug. 17 agreement, the Grand Island, N.Y., firm will expand its ethics compliance program and exit design involvement in a large VA hospital project in West Los Angeles, Calif., that was allegedly won through inside information illegally obtained. That work is now being handled by CannonDesign's former joint venture partner, Leo A Daly, which is not involved in the Justtice enforcement.

While CannonDesign was suspended for three months last year as a federal contractor, it is continuing professional services work for the VA.

The firm says it "cooperated with the government and participated in the investigation, including preserving and providing evidence for the case against" the former executive and "promptly engaged in significant and ongoing remediation efforts.”

The leading health care sector designer hired former Buffalo-based FBI division counsel Paul M. Moskal as a principal and director of compliance in 2014.

CannonDesign is ranked at No. 62 on ENR's list of the Top 500 Design Firms, with about $228.4 million in revenue, and also ranks 19th among the Top 300 architects ranked by Architectural Record, a sister publication, with about 63% of revenue in architecture. The firm has more than 950 employees in 16 offices in the U.S., Canada and abroad.

According to the Justice Dept., William D. Montague, former director of the VA Medical Center in Cleveland and in Dayton, Ohio, arranged payments with former CannonDesign executive Mark Farmer under a so-called consulting deal between 2010 and 2012 to gain insider information on VA projects and bids. According to sources, Montague had similar deals with other firms.

Montague also "gave false and misleading information to VA employees about his reasons for requesting VA documents and information," says Justice. He was sentenced in June to nearly five years in prison after being found guilty of 64 counts, including conspiracy, and mail and wire fraud.

CannonDesign former associate principal Farmer was sentenced in February to nearly three years. He apparently also involved as many as a dozen other employees in the scheme with Montague, but they remain at the firm and were not prosecuted, according to sources. He is set for release next year.

In a statement, CannonDesign says that the firm has "delivered extensive employee training; appointed compliance champions in every office; expanded our Code of Conduct; and made significant financial investments into new technologies and people to ensure absolute compliance in everything we do."

Moskal says employees have taken about 9,000 hours of ethics-related training.

Brad Lukanic, who took over Aug. 1 as CEO, said CannonDesign "is unequivocally focused on ensuring our firm goes beyond standard compliance protocols and never finds itself in this position again." Added the 45-year executive: “I am thankful we have reached an agreement and can put this matter behind us. We are fully committed to ... acting as a model for doing business ethically.”