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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:

Page 4 of 15

Three South Korean Companies to Pay $236 Million, Resolving Civil and Criminal Liability for Bid Rigging Alleged in Constantine Cannon Whistleblower Suit

Posted  11/14/18
Bid Rigging Fuel South Korea
The Justice Department announced that SK Energy Co. Ltd., GS Caltex Corporation, and Hanjin Transportation Co. Ltd. collectively agreed to pay $236 million for their respective roles in a decade-long conspiracy to rig bids and fix prices, thereby overcharging the U.S. Government on contracts to supply fuel to U.S. military bases throughout South Korea. The deal resolves False Claims Act allegations against the three...

November 14, 2018

The United States and three South Korea-based companies, SK Energy Co. Ltd., GS Caltex Corporation, and Hanjin Transportation Co. Ltd., have reached an agreement to resolve criminal and civil claims arising from the defendants' alleged bid-rigging and price-fixing in contracts to supply fuel to U.S. military bases in South Korea.  As a result of this conduct, the Department of Defense paid substantially inflated prices for fuel supply services in South Korea. Defendants agreed to plead guilty to criminal charges and pay a total of $236 million -- $82 million in criminal fines and $154 million for civil antitrust and False Claims Act violations related to the bid-rigging conspiracy.  The False Claims Act civil investigation resulted from a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act.  The settlement is part of an ongoing federal investigation into bid rigging, price fixing and other anticompetitive conduct targeting U.S. Department of Defense fuel supply contracts in South Korea; the defendants have have agreed to cooperate with that investigation.  DOJ

November 8, 2018

The United States charged two South Korean nationals, Hyeong-won Lee and Dong-guel Lee, of defrauding the federal government in connection with two multimillion dollar construction contracts their employer, South Korea-based SK Engineering & Construction Co., Ltd., (SK), had with the U.S. Army. From 2008 to 2017, acting on behalf of SK, the two allegedly submitted fraudulent subcontracts that were based on millions of dollars of kickbacks that SK paid to a U.S. official in exchange for being awarded the contracts. While the fraud was being investigated, the two also took pains to disguise the kickbacks and fraud even further by ordering employees to burn boxes of evidence and persuading them not to testify. DOJ; USAO WDTN

Catch of the Week – Northrop Grumman Systems

Posted  11/8/18
Northrop Grumman Systems Corporation agreed to a $31.65 million settlement to resolve allegations that it overstated employee hours on two government contracts related to battlefield communications services for the United States Air Force.  Of the total settlement, $27.45 million was paid to resolve civil allegations that NGSC violated the False Claims Act, and $4.2 million was forfeited by the company to resolve...

November 2, 2018

Northrop Grumman Systems Corporation (NGSC), a subsidiary of Northrop Grumman Corporation, has agreed to pay a total of $31.65 million to settle False Claims Act-based civil and criminal allegations concerning fraudulent billing of the U.S. Air Force. NGSC allegedly overbilled for time that its Middle East-based employees spent working on the Battlefield Airborne Communications Node (BACN) and Dynamic Re-tasking Capability (DRC) contracts. According to NGSC timesheets, employees were putting in exactly 12-13.5 hours a day, seven days a week, for multiple years. At one location alone, the overbilling resulted in a loss of more than $5 million. DOJ; USAO SDCA

October 15, 2018

Indal Technologies Inc. has agreed to pay $3.5 million to settle claims that it violated the False Claims Act by knowingly selling the U.S. Navy helicopter landing systems that used substandard steel. The alleged fraud by Indal Technologies involved the substitution of a stronger steel for a weaker, less inexpensive steel in a component that helps secure a landing helicopter onto certain Navy destroyers. Due to the possibility of rough winds and seas during landing, it is crucial for this component to be made of high strength steel. DOJ; USAO NJ

October 15, 2018

Alpha Research & Technology, Inc. (ART) has agreed to pay $1 million to settle False Claims Act-based allegations of defense contract fraud. From 2006 to 2011, the command and control systems provider allegedly submitted inflated subcontractor pricing proposals to contractors who then unknowingly included the false claims in proposals submitted to the Department of Defense. Among the expenses claimed by ART were the personal expenses of co-owners Donne and DeAnne Smith for designing and constructing a luxury home, luxury cars, and luxury getaways. USAO EDCA

October 9, 2018

A defense contractor has agreed to pay $7.8 million to settle allegations that it violated the False Claims Act by fraudulently obtaining Department of Defense contracts meant for small businesses. Arena Event Services, Inc., dba Arena Americas, allegedly paid kickbacks to the smaller Military Training Solutions, LLC (MTS) in order to obtain millions of dollars worth of contracts. The work was then performed by the larger Arena Americas in a setup explicitly prohibited by government contract rules. MTA has previously settled with the government for its role in the fraud. USAO SDGA

September 6, 2018

The owner of New Jersey-based defense contracting firm, Bright Machinery Manufacturing Group Inc (BMM), has been charged with defrauding the Department of Defense and violating the Arms Export Control Act. From 2010 to 2015, Ferdi Gul—currently at large in Turkey—submitted bids and was awarded 346 contracts worth $7 million to manufacture military parts within the U.S., including torpedoes, firearms, and mine clearance systems. Instead, Gul had the parts made in Turkey, submitted false quality control paperwork, and sent the parts back to the U.S. to DoD customers. In subsequent testing by the DoD, some of the parts were shown to be essentially unusable. If found and convicted, Gul could be imprisoned for a maximum of 160 years and be ordered to pay up to $3.5 million. USAO NJ

August 8, 2018

The former CEO of Wellco Enterprises, Inc., Vincent Lee Ferguson, was sentenced to 41 months in federal prison for his role in a scheme to sell boots to the Department of the Defense and others as "Made in the U.S.A.," when the boots were, in fact, made in China.  The company instructed its Chinese manufacturing facility to include tear-away "Made in China" labels on the boot uppers, and then instructed employees at Wellco's New Jersey facility to remove the labels.  The company sold over $8 million in fraudulently-marked boots.  USAO E.D.Tenn.
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