US defence contractor to pay $50m to settle fraud allegations

“The settlement evidences our commitment to go after any contractor who treats America’s dedication to our troops as a get-rich-quick scheme at the expense of the taxpayer and the safety of our military personnel,” said acting District of Columbia attorney Channing Phillips.

During negotiations for the modification, Illinois-based Navistar was asked to provide sales information on the contract parts to assess the reasonableness of Navistar’s proposed prices, according to the US.

The United States alleged the company, a subsidiary of truck and engine manufacturer Navistar International, created fraudulent commercial sales invoices and submitted them to the government to justify the company’s prices.

“The sales reflected in the commercial sales invoices never occurred. The government relied on the fraudulent sales invoices in agreeing to Navistar’s inflated prices,” the DoJ said.

Its acting assistant attorney general Brian Boynton added: “We expect those doing business with the government to be truthful and transparent. [The] settlement demonstrates our commitment to pursue those who knowingly provide false information to government procurement officials for their personal gain.”

Phillips also said: “Money overcharged to the United States is money that should go to providing the very protection and security that we contracted to provide to our troops.” 

“Fraud is not a victimless crime,” commented Thomas Cannizzo, special-agent-in-charge of the Naval Criminal Investigative Service. “It steals money from American taxpayers, damages the integrity of the Department of the Navy procurement process, degrades the readiness of the services by compromising the quality of goods and services used to protect the nation, and squanders more money through the funding of criminal investigations which could have been avoided simply by individuals doing the right thing.”

Whistle blower Duquoin Burgess, a former government contracts manager for Navistar, will receive $11,060,000 of the settlement under provisions in US law.

The DoJ stressed the resolved claims are allegations only and there has been no determination of liability