July 7, 2011 — -- The private contracting company whose employees were accused of sexual hazing and throwing wild, drunken parties in Afghanistan settled a lawsuit with the U.S. government by agreeing to pay a $7.5 million fine, the Department of Justice said today.
Along with its affiliates, ArmorGroup North America, which was contracted in part to guard the U.S. Embassy in Kabul, agreed to pay the fine to "resolve allegations" that the company lied in State Department contracts and allowed its employees, with their managers' knowledge, to frequent brothels in Kabul. The suit against ArmorGroup was originally brought by one of their own -- former ArmorGroup Director of Operations James Gordon -- who will reap $1.35 million of the settlement under the government's False Claims Act.
Click Here to Sign Up for Breaking News and Investigation Alerts From The Brian Ross Investigative Unit
"Americans deserve to know that their tax dollars are being spent wisely and consistent with our values," U.S. Attorney Ronald C. Machen Jr. said in a press release by the Department of Justice. "Our office has targeted government contractors who fail to meet their obligations to the American people."
WATCH: U.S. Embassy Guard's 'Animal House' Antics
Allegations that ArmorGroup had misled the U.S. government emerged as early as April 2008 when two other former employees claimed they were fired after raising concerns about the embassy's safety and ArmorGroup's misrepresentations to the State Department.
But it wasn't until September 2009 that photos and videos emerged from one of what appeared to be many lewd, debaucherous parties thrown in Kabul.
PICTURES: Kabul Embassy Guards Seeking Promotion Pressured Into Lewd Hazing
At the time, one of the guards told ABC News said the drunken parties had been held regularly for at least a year before and a half and guards were pressured to participate, as well as perform sexual acts, in order to gain promotions or assignment to preferable shifts.
"They were not gay but they knew what it took to get promoted," the guard said.
Three months later, ArmorGroup lost its contract with the U.S. government amidst a flurry of federal investigations.
READ: Naked Pool Parties, Alleged Sex Acts at Kabul U.S. Embassy Force Out 10 Guards