By Everdeen Mason 
 

A Sysco Corp. (SYY) unit has agreed to pay a $4.2 million settlement for allegedly overcharging the Department of Defense on several fruit and vegetable contracts over three years.

FreshPoint Inc., a food distribution company, is accused of inflating its prices to the government based on its market estimates, violating the terms of 15 separate contracts from December 2007 through September 2011. A former FreshPoint employee, Charles Hall, filed the lawsuit on behalf of the government through the whistleblower provisions of the False Claims Act and will receive $798,000.

"This settlement demonstrates one of the many types of fraud inflicted upon the American taxpayers," said Edward Tarver, U.S. attorney for the Southern District of Georgia.

A representative from the company wasn't immediately available for comment.

Sysco's shares were down two cents to $33.60 in early trading, but up 6.2% year-to-date.

Write to Everdeen Mason at everdeen.mason@wsj.com

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