U.S. Joins Whistle-Blower’s Lawsuit Against McDonnell

The Justice Department said Wednesday that it will join forces with a whistle-blower who has sued McDonnell Douglas in U.S. District Court in Los Angeles, alleging that the aerospace firm’s helicopter unit overcharged the Army by at least $1.1 million on defense contracts.

The suit was filed in March but was sealed until Wednesday under provisions of the federal False Claims Act, which permits individuals to sue a defense contractor on behalf of the government. U.S. Atty. Robert Bonner on Wednesday invoked the government’s option of intervening in the case.

The suit was filed by Roderick A. Stillwell, whose allegations were first detailed in The Times in 1985. In addition to the civil suit, a federal grand jury in Los Angeles is investigating accounting irregularities at the helicopter company.

“We are confident there has been no wrongdoing,” said Rob Mack, a spokesman for McDonnell Douglas Helicopter Co., “and do not believe the government has suffered any injury in this matter. We will review the allegations in the complaint and respond accordingly.”

Assistant U.S. Atty. Stephen D. Petersen said in a statement Wednesday that Stillwell’s assertions, coupled with the resulting government investigation, “corroborated the allegations of the complaint sufficiently to cause the United States to intervene.”

In addition to McDonnell Douglas, the suit names Hughes Helicopters Inc., Parker Hannifin Corp. and two former McDonnell Douglas supervisors--Edward E. Vukonich, Stillwell’s immediate supervisor, and James P. Coyne, a former director of procurement.

Stillwell was a subcontracts administrator at the helicopter company in 1983, when it was known as Hughes Helicopter. Stillwell discovered a budgeting discrepancy of more than $1.1 million on the Army’s AH-64 Apache helicopter program. The discrepancy involved two “memorandums of agreement” on a subcontract to Parker Hannifin’s Bertea unit in Irvine.

According to the suit, when Stillwell first discovered the discrepancies, he was told that the price on the subcontract to Parker Hannifin had been agreed to by Vukonich and Steve Hays, a Parker Hannifin official, at a “ball game” one week before the date of the formal negotiation.

Stillwell eventually discovered that McDonnell had submitted to the Army a memorandum of agreement with Parker Hannifin, listing a value of $11,604,712 for helicopter parts. But another version of the memorandum in McDonnell’s files showed a value of $12,728,037, a difference of about $1.1 million.

After raising questions about the discrepancies, Stillwell was forced to resign in February, 1984.

William R. Ramsey, Stillwell’s attorney, said in an interview Wednesday that the $1.1-million difference was eventually charged improperly to the government, an action known as a “mischarging.”

Under the False Claims Act, the government can seek recovery of triple the $1.1-million overcharge. In addition, Stillwell is seeking recovery of attorney expenses and lost wages for the period he was out of work after being forced to resign.

In addition, the suit also raises the potential for far greater damages than the $1.1 million. Interpreted broadly, the suit could include subcontracts other than the Parker Hannifin agreement.

The Justice Department action culminates three years of frustration, Stillwell said in an interview Wednesday. Unlike many whistle-blowers whose careers have been destroyed by their efforts, Stillwell has landed solidly on his feet with a job at a major defense contractor.

Nonetheless, the effort consumed an enormous investment of time and energy, he said. He wrote countless letters to Sen. Pete Wilson (R-Calif.), the Defense Department’s inspector general, the Army and many others.

“In December, 1983, I went to the FBI,” he recalled. “They referred me to the Contract Compliance Office. They sent me to the Defense Contract Administration Service over by the airport. They didn’t know what to do, but one guy suggested I call the defense fraud hot line. I called them and they told me to send some information.

“Two weeks later, they contacted me and asked if I would meet with their agents. They referred me to the Defense Criminal Investigation Service in Laguna Beach. Eventually, they turned the case over to the U.S. Army Criminal Investigation Division.”

After all of that, the investigative work had just begun. The Army and the Defense Contract Audit Agency spent several years investigating the case, eventually accumulating documents that filled up filing cabinets in an entire office, Stillwell said.

“Would I blow the whistle again? Probably,” he said.

Under the False Claims Act, Stillwell stands to receive 15% to 25% of any recovery in the case.