FUSE MAKER OF BUNKER BUSTER BOMBS TO PAY $4.75 MILLION IN DOJ SETTLEMENT

December 21, 2011
“WASHINGTON - Kaman Precision Products Inc., an Orlando, Fla., defense contractor, will pay the United States $4.75 million to resolve allegations that the company   submitted false claims for non-conforming fuzes sold to the U.S. Army for use in “bunkerbuster” bombs, the Justice Department announced today.  In addition, the settlement requires Kaman to adhere to a compliance program and to dismiss administrative claims that it had made against the Army after the termination of its contract.

The lawsuit, filed in the Middle District of Florida by the United States under the False Claims Act for breach of contract, alleged that the company knowingly substituted a component in four lots of fuzes that made them unsafe for use in military operations.  Specifically, the United States’ allegations relate to FMU-143 fuzes for use in hard target penetration warheads, colloquially referred to as “bunkerbuster” bombs.
         
The government alleged that Kaman knowingly substituted non-conforming bellows motors for the specified motors in four lots of fuzes supplied to the military, and that the non-conforming parts could cause the fuzes to fire prematurely, creating a hazard for military personnel and causing misfires of the warheads.   The military discovered the parts substitution and quarantined the defective fuzes.
         
Today’s settlement resolved those claims, as well as other administrative claims that the Army brought after it terminated Kaman’s contract for the company’s violation of its contractual obligations.

“The Department has zero tolerance for defense contractors who put the lives of our military personnel in danger,” said Tony West, Assistant Attorney General for the Civil Division.  “When this type of misconduct is alleged, we will actively pursue legal remedies to reclaim taxpayer dollars as well as ensure the safety of our men and women in uniform.”

“Integrity in the procurement process is fundamental to our nation’s security and the safety of our military personnel,” said Robert E. O’Neill, U.S. Attorney for the Middle District of Florida.  “This settlement represents a significant achievement in our long standing commitment to the enforcement of civil laws in the area of defense contracting.”

This settlement resulted from the efforts of the U.S. Attorney’s Office for the Middle District of Florida; the Commercial Litigation Branch of the Justice Department’s Civil Division; the Defense Criminal Investigative Service; the Army Criminal Investigation Command; and the U.S. Army Legal Services Agency Contract and Fiscal Law Division.”

U.S. MILITARY CONTRACTOR BODY ARMOR CORPORATE DIRECTORS ORDERED TO PAY $1.6 MILLION IN FRAUD CASE

The following excerpt is from the SEC website:
November 15, 2011
“The Securities and Exchange Commission announced that the U.S. District Court for the Southern District of Florida ordered three former directors to pay more than $1.6 million in monetary sanctions to settle charges that they were involved in an accounting fraud at a major supplier of body armor to the U.S. military and law enforcement agencies. The settlements by Cary Chasin, Jerome Krantz and Gary Nadelman - former members of the board of directors at Pompano Beach, Fla.-based DHB Industries - impose permanent officer-and-director bars in addition to monetary sanctions.
The final judgments entered on November 10, 2011, find Chasin liable for disgorgement of $100,000 plus prejudgment interest of $5,723 and a penalty of $100,000; Krantz liable for disgorgement of $375,000 plus prejudgment interest of $21,464 and a penalty of $100,000, and Nadelman liable for disgorgement of $820,000 plus prejudgment interest of $46,935 and a penalty of $100,000.
The final judgments also bar Chasin, Krantz and Nadelman from acting as officers or directors of any issuer that has a class of securities registered pursuant to Section 12 and 15(d) of the Securities Exchange Act of 1934. In addition, the final judgments enjoin Chasin, Krantz and Nadelman from violating Sections 10(b) and 14(a) and Rules 10b-5 and 14a-9 of the Exchange Act and from aiding and abetting violations of Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) and Rules 10b-5, 12b-20, 13a-1, 13a-11, and 13a-13 of the Exchange Act, and enjoins Nadelman from violating Section 13(b)(5) and Rules 13b2-1 and 13b2-2 of the Exchange Act. Chasin, Krantz and Nadelman agreed to settle the SEC's charges without admitting or denying the allegations.”