DEPARTMENT OF JUSTICE
|
CIV |
| FOR IMMEDIATE RELEASE |
202-514-2007 |
| TUESDAY, JULY 10, 1990 |
(TDD) 202-524-1888 |
The Department of Justice announced today a $17.9 million settlement,
the largest ever of a whistleblower lawsuit.
This settlement concludes a lawsuit against the Avco Corporation's Textron Lycoming Division, which makes engines for the United States Coast Guard's primary drug interdiction and air-sea rescue helicopter. As part of the settlement, Robert C. Ballew will receive 15 percent of the total amount, or $2.7 million. Ballew, a former procuremant official for the helicopter's primary manufacturer, filed suit under qui tam provision of the False Claims Act in May 1988. The Act provides for whistleblowers to receive a percentage of any eventual settlement in return for bringing the allegations of misconduct to the government's attention.
"This settlement sends a clear message that the government will simply not tolerate fraud perpetrated against the American taxpayer," said Stuart M. Gerson, Assistant Attorney General for the Civil Division. "By providing us with information and assistance, Mr. Ballew helped to insure that the Coast Guard's search and rescue operations and drug interdiction efforts will be performed with equipment that is operating at peak efficiency."
The settlement will enable the Coast Guard to avoid as much as $60 million in costs because it requires Textron Lycoming to maintain the engines and supply replacement parts for as long as six years. The Coast Guard will pay a maintenance fee based on the number of hours the engines are flown.
"This arrangement will increase Textron Lycoming's incentive to improve the engines' longevity, since Textron Lycoming will now bear the costs of the
replacement parts," Gerson said.
Textron Lycoming, a subcontractor on the helicopter project, was supposed to
produce the LTS 101 engine for use in the HH65A Dauphin helicopter that would last 2,400 hours of flight time between overhauls. Howover, according to Coast Guard officials, the engines usually lasted less than 600 hours of flight time before extensive repairs were required. Textron Lycoming has offices in Williamsport, Penn.; and Stratford, Conn.
A two-year investigation by the Justice Department, the Department of Transportation's Office of Inspector General and the Coast Guard revealed that the engines were operating at higher temperatures than they were initially designed for and consequently were deteriorating faster than expected. As a result, the Coast Guard had to spend far more money than initially planned for the procurement of additional replacement parts.
The government also found evidence that, during a program to modify the engines to make them capable of flying in snow, Textron Lycoming charged the Coast Guard for items that were unrelated to the snow-modification but were necessary to eliminate other engine defects, despite instructions by the Coast Guard that it would not pay such charges.
Ballew also named Aerospatiale Helicopter Corporation, the helicopter's manufacturer, as a defendant. However, no evidence was discovered to suggest that Aerospatiale participated in Textron Lycoming's misconduct.
A suit filed under the qui tam provisions of the False Claims Act allows private citizens to file suits on behalf of the United States against companies or individuals who have defrauded the government and to share in the proceeds of any recovery that is obtained in the case. The False Claims Act provides that if a suit is brought by private parties, it is brought in the name of the United States and the government then has the right to enter its appearance and assume control of the litigation.
Whistleblowers generally receive 15 to 25 percent of any award that is recovered. It the government had not entered the case, the whistleblower would have been free to pursue the case and allowed to collect 25 to 30 percent of any eventual award. The precise amount is subject to negotiation.
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90-276
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