FEMA funds were supposed to be used to rebuild structures that were occupied or only temporarily vacant at the time of the disaster, court records said.
The tower building had been abandoned as uninhabitable three years before the quake.
Meeting minutes show that Cal State officials decided before the earthquake that repairing the building would be too costly and decided to leave it vacant indefinitely.
The suit claims that DMJM officials knew of that decision but misrepresented the status of the building to get FEMA money to fix it up.
A FEMA official has testified in the case that he would not have approved the payments if he had known the building's true status.
Ali brought the case under the federal False Claims Act, through which a private citizen can sue on behalf of the federal government and collect a share of the damages if the case wins in court.
The case was dismissed by a district judge who ruled that Cal State and DMJM were covered by "sovereign immunity," which protects state agencies from false claims actions that stem from the performance of official government duties.
However, the 9th U.S. Circuit Court of Appeals overruled the lower court and reinstated the case against DMJM.
The appellate court agreed that Cal State and its officials were protected from the litigation but ruled that DMJM, a private company, was not.
"Although the district court noted there is no evidence that DMJM employees acted for their own benefit, presumably DMJM received compensation for the $21 million reconstruction... that it would not have received if FEMA had not funded the project," the appellate court opinion said.
Cal State spokeswoman Carmen Ramos-Chandler said the building has been torn down and the site is now a parking lot.
In Washington, DMJM's name was prominent in the congressional ethics investigation of Rep. Shuster.
One of the main findings against Shuster was that he improperly accepted payment from DMJM and the Outdoor Advertising Association of America for expenses from a 1995-96 Christmas-week trip to Puerto Rico.
At the time, Shuster was chairman of the House Transportation Committee and one of DMJM's largest projects was an urban train system for the Puerto Rican government.
"The record establishes that the primary purpose of this trip was recreational," the congressional report said.
"Your sponsors paid for not just a single hotel room but for lodgings that included both a four-bedroom villa and a two-bedroom villa."
DMJM and its agents paid about $5,000 for lodging, meals and other expenses for the trip, congressional records show.
Exhibits attached to the investigative record show that Holdsworth, then the president of DMJM, helped arrange the trip.
Shuster also was found in violation of House ethics rules for allowing his former chief of staff -- whom DMJM was paying $5,000 a month in consulting fees -- to lobby him less than 12 months after leaving government service.
Shuster's answer to the charges was one sentence: "I, E.G. 'Bud' Shuster, admit to the statement of alleged violations dated July 26, 2000."
He resigned from Congress in January, 2001.
In December of last year, the New York State Ethics Commission fined the construction manager of New York's Second Avenue subway for accepting expensive gifts from AECOM's DMJM+Harris division.
Commission documents show that the company gave the manager, Anil Parikh, a $2,500 ticket to the 2002 New York Transit Museum Gala.
"You knew that the ticket you had received was provided by DMJM, a company doing business with MTA New York City Transit and for which you had official responsibilities," said an ethics commission notice to Parikh.
The company also treated Parikh to $200 worth of golf at a private country club and a $150 dinner, the records show.
Officials of DMJM Aviation, the company selected for a $4.6 million contract to manage the building of a new $150 million terminal at Wichita Airport, went before the City Council to defend themselves...
Wichita City Council members voted Tuesday to hire DMJM Aviation to oversee the development of a new $150 million terminal at Wichita Mid-Continent Airport.
The FAA has sent Wichita a letter pointing out shortcomings in a draft contract with DMJM Aviation, the company selected to manage the building of a new terminal at Mid-Continent Airport.