On March 23, 2012, the Department of Justice announced a $15.85 million settlement with Lockheed Martin Corporation, one of the world’s largest defense contractors. The settlement was reached as a result of False Claims Act lawsuit alleging that the company mischarged and overcharged the government for perishable tools in numerous contracts thereby engaging in contract fraud.
According to the claims made in the case, Tools & Metals Inc. (TMI), a subcontractor that sold perishable tools to Lockheed Martin, engaged in a seven year pricing scheme with Lockheed Martin that overcharged the government for their equipment. The perishable tools sold were used on military aircrafts including numerous fighter jets. The government accused Lockheed Martin of acting recklessly by failing to properly oversee TMI’s charging practices and by failing to look into information that revealed TMI’s pricing schemes. As a result of the company’s negligence, the government allegedly overpaid millions of dollars for TMI’s tools.
As the result of a separate lawsuit, TMI’s former president, Todd B. Loftis, plead guilty to conspiracy and was sentenced to seven years in prison for participating in TMI’s fraudulent schemes.
The government discovered both companies’ alleged fraud as a result of two qui tam cases. For the purposes of this settlement the cases were consolidated. The whistleblowers, Robert Spencer and John Becker, will split a $2 million share of the government’s recovery from the cases. Alerting the government to fraud in connection with defense contracts can be a daunting and challenging process. Both individuals were incredibly courageous and we commend their actions.
If you are aware of fraud, you may need help to begin your case and help recover money for the government. Contact the experienced attorneys at Tycko & Zavareei LLP today to get more information on your options.