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Defense Contract Fraud

This archive displays posts tagged as relevant to fraud in defense and military contracts. You may also be interested in the following pages:

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July 6, 2021

Defense contractor AAR Corp. and its subsidiary, AAR Airlift Group Inc., have agreed to pay $11 million to resolve allegations of knowingly failing to maintain U.S. military aircrafts in accordance with U.S. Transportation Command (TRANSCOM) contracts.  The alleged False Claims Act violations involved nine helicopters that were deemed not airworthy and not mission capable as a result of the failures.  A former Airlift employee who filed the underlying qui tam complaint, Christopher Harvey, will receive over $2 million as part of the settlement.  USAO SDIL

May 27, 2021

Navistar Defense LLC, a manufacturer of military vehicles, will pay $50 million to resolve False Claims Act allegations that it fraudulently induced the U.S. Marine Corps to enter into a contract modification at inflated prices for a suspension system for armored vehicles known as Mine-Resistant Ambush Protected (MRAP) vehicles.  During negotiations for the modification, Navistar was asked to provide certain sales information to assess the reasonableness of Navistar’s proposed prices.  The U.S. alleged that Navistar provided the government with fraudulent sales invoices to justify the company’s prices, and that the government relied on these invoices during negotiations.  The investigation was initiated by a qui tam complaint filed by whistleblower Duquoin Burgess, a former Government Contracts Manager for Navistar, who will receive $11,060,000 from the settlement.  DOJ

April 29, 2021

California-based Tungsten Heavy Powder, Inc. (THP) has agreed to pay over $5.6 million to resolve a qui tam lawsuit by former employee Gregory Caputo and Global Tungsten & Powders Corporation.  In violation of the False Claims Act, THP allegedly falsely certified that certain defense articles procured by the Israeli government and financed by U.S. grant funds were sourced from and manufactured in the United States, when instead they were sourced from China and manufactured in Mexico.  For bringing the lawsuit, Caputo will receive a 17% share of the settlement proceeds.  USAO SDCA

Whistleblower Champion Chuck Grassley Pushes for Further Strengthening of False Claims Act (Again)

Posted  03/26/21
female standing proud with her silhouette as a superhero
Senator Chuck Grassley (R-Iowa) already is celebrated as the modern-day champion of the False Claims Act.  This is the government's main fraud-fighting tool, which empowers whistleblowers to act as private attorneys general and sue on the government's behalf over fraud in government contracts and programs.  In successful cases, it rewards these whistleblowers with between 15% and 30% of the government's...

Catches of the Week: Contractors Abroad Face Liability for Fraud in U.S. Government Contracts

Posted  02/19/21
fleet of navy ships
This week, we double up on the Catch of the Week, and highlight two actions involving foreign contractors doing business with the U.S. Navy.

French Concrete Contractor Pays $14.5 Million to Resolve Claims of Delivering Substandard Concrete for U.S. Navy Bases in Africa

In the first case, Colas Djibouti, a subsidiary of French contractor Colas, agreed to pay $12.5m to the U.S. government to settle criminal charges,...

February 17, 2021

French contractor COLAS Djibouti SARL will pay a total of $14.5 million to resolve claims that it supplied substandard concrete under a contract with the U.S. Navy for construction of Navy airfields in the Republic of Djibouti.  Colas Djibouti was required to certify that concrete supplied met contractual specifications for composition and characteristics, but made fraudulent misrepresentations and created fictitious testing results regarding the concrete’s composition and characteristics.  Defendant entered into a deferred prosecution agreement on criminal claims, paying $12.5 million ($10 million in forfeiture and restitution, and $2.5 million as a criminal penalty).  Defendant also entered into a civil settlement for  $3.9 million, receiving a credit of $1.96 million for its payment under the DPA.  DOJ; USAO SD Cal

DOJ Reports Decline in Total Fraud Recoveries in 2020, but Whistleblower Efforts and Rewards Continue

Posted  01/14/21
Department of Justice building entrance
In its annual report of recoveries in fraud and False Claims Act cases, the Department of Justice reported total recoveries of $2.2 billion for the fiscal year ending September 2020.  These recoveries represent the lowest reported DOJ recoveries since 2008. While it is the decline in recoveries that stands out, the 2020 DOJ fraud statistics do share some things in common with prior years.  First, whistleblowers...

January 12, 2021

Boeing-owned drone maker Insitu Inc. has agreed to pay $25 million to resolve a whistleblower-brought suit alleging violations of the False Claims Act.  According to D.R. O’Hara, a former executive at Insitu, the company knowingly submitted cost and pricing data for new parts, but used recycled parts to build drones being supplied to the U.S. Navy and U.S. Special Operations Command on seven contracts.  The alleged misconduct ran from 2009 to 2017.  For exposing the fraudulent scheme, Mr. O’Hara will receive $4.6 million of the settlement proceeds.  USAO WDWA

January 11, 2021

Defense contractor Raytheon Technologies Corporation and its subsidiary, Hamilton Sundstrand Corporation, have agreed to pay over $515,000 to settle allegations of submitting false claims for payment.  Between 2006 and 2015, Raytheon and Hamilton improperly certified that goods it sold either directly to the government or to suppliers selling to the government were of domestic origin, when in fact they were manufactured in Romania.  The false certifications violated the contracts’ domestic-preference requirements, the Buy American Act of 1933, and the False Claims Act.  USAO CT

December 21, 2020

Government contractor Schneider Electric Buildings Americas Inc. will pay a total of $11 million to resolve criminal and civil claims that it overcharged the government on eight separate energy savings performance contracts under which the company was to install energy upgrades including solar panels, LED lighting, and insulation, in federal buildings.  The company admitted to wrongdoing including the disguising of unauthorized design costs by charging them to unrelated contract components and the receipt of kickbacks from subcontractors on the ESPCs. $9.3 million of the settlement resolves civil liability under the False Claims Act and Anti-Kickback Act; $1.7 million is denominated as criminal forfeiture.  DOJ
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