Defense Contractor to Pay $6.6 Million After Whistleblower Claims Fraud in Navy and Army Contracts

Yesterday the Department of Justice announced that a federal district court in Ohio has accepted a settlement agreement to resolve claims that General Electric Aviation Systems submitted false claims to the federal government relating to work in did on aircraft for the Army and Navy between 2005 and 2011. According to the agreement, GEAS will pay the government $6.58 million, a portion of which will go to the whistleblower who initially filed suit against the company.

GEAS is an engineering subsidiary of the General Electric conglomerate that manufactures various electronic devices and systems for use in the aviation industry. One of GEAS’s major customers is the United States Armed Forces. The company works with several other major defense contractors on military projects developing fighter and transport aircraft.

The first set of allegations against GEAS relates to a contract with the Navy to manufacture external fuel tanks for use on Hornet strike fighter jets. After GEAS-manufactured fuel tanks failed inspections by the government in 2008, federal criminal investigations were launched, which resulted in findings that GEAS had knowingly diverged from the specifications and quality control procedures required by their Navy contracts. The government alleged that between June 2005 and February 2008, GEAS delivered a total of 641 external fuel tanks that had not been manufactured in compliance with federal requirements.

The settlement also resolves a second set of allegations that GEAS falsely represented to a second government contractor that it had completed inspections of 228 drag beams for use in Army helicopters in accordance with the requirements of its contract. Although these false statements were not made directly to the federal government, they could nonetheless provide a basis for liability under the False Claims Act, being made in connection to a claim for payment by the federal government.

Whenever GEAS or any other private company does business with the federal government, it is required not only to deliver goods or perform services meeting certain technical requirements, but must also certify that certain procedures have been used in the manufacture of those goods or in training the individuals who perform the services. Because the federal government cannot conveniently inspect all the goods it purchases or oversee the work done by its contractors across the globe, it requires contractors to certify that they have complied with various requirements designed to ensure that taxpayer money will be well spent and that U.S. personnel and interests will not be placed at risk by shoddy goods or services. When GEAS or another contractor submits a claim for payment by the U.S. government and falsely certifies that it has delivered goods or services that conform to federal requirements, it can be held accountable for those false claims. The False Claims Act provides exceptionally harsh penalties for companies that knowingly take advantage of taxpayers and place federal interests in jeopardy.

In this case, as in many others, the whistleblower who brought a False Claims Act lawsuit against GEAS—Jeffrey Adler—was an insider, a former employee who had knowledge of the company’s illegal practice. By filing suit against GEAS on behalf of the U.S. government, Mr. Adler will receive a substantial portion of the federal government’s $6.6 million recovery. In most cases whistleblowers, or “relators,” receive around 15% of the total recovered. In some cases, where a whistleblower provides exceptional assistance or conducts the lawsuit without the government’s participation, he may recover up to 30%.

If you believe you have evidence of false claims, our experienced whistleblower lawyers are available for a confidential evaluation and to help you build the strongest possible case to bring on behalf of the federal government to recover wrongfully obtained taxpayer funds.

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