U.S. Intervenes : Suit Alleges Fairchild Unit Defrauded Government

A Claremont attorney announced Tuesday that the Justice Department has intervened in a federal lawsuit in Los Angeles that alleges that a California subsidiary of Fairchild Industries defrauded the government on contracts to provide backup fuel tank devices for fighter planes and other equipment to the Air Force.

The suit, filed by attorney Philip Benson, asserts that Fairchild Control Systems Co., based in Manhattan Beach, fraudulently represented to the government that it had properly developed products known as “Universal External Field Tank Certifiers” and “Universal Pre-Installation Testers.”

The certifiers are used to test the reliability of the fuel transfer process between the main fuel tanks and backup fuel tanks on military fighter planes. The testers are used to verify that the other equipment is working properly before the plane is aloft. Both products are important for pilot safety.

The suit asserts that Fairchild did not do the required research and development work for the testers and certifiers and that a number of them didn’t work properly.

The suit also contends that research, design and engineering costs incurred by Fairchild to get its products to the “base line” (minimum necessary level) “were hidden in false labor charges to the government” and that the government was defrauded in other ways.

Benson said there were “$5 million to $10 million” in excess charges to the government as a result of the fraud.

The suit was filed under the federal False Claims Act in 1988 under seal. That law provides that individuals who are aware of fraud against the government can bring suits on behalf of the United States and share in the recovery if the case is successfully prosecuted.

Neil Aliksanian, a former program manager for Fairchild, is the named plaintiff along with the U.S. government.

The statute provides that such cases remain under seal for at least 60 days to give the Justice Department time to investigate and determine if it will participate in the suit.

The Justice Department has joined in the Fairchild suit. It filed an amended complaint July 30, according to court documents.

Platte Moring III, the Justice Department lawyer on the case, said he could not comment because the suit is still under seal, even though the department requested that it be made public.

Earlier Motion

“The judge apparently misunderstood our motion,” he said in a telephone interview. “We hope it will be unsealed as soon as possible,” Moring added.

Benson said he was informed Tuesday by a letter from U.S. District Court Judge Consuelo B. Marshall that his suit had been unsealed on July 7. Benson said he assumed that the judge was responding to a motion that he had filed earlier this month asking for an expedited response as to whether the government would join the case.

Fairchild Industries, based in Chantilly, Va., was sold to Banner Industries, a Cleveland conglomerate in June.

On Friday, Fairchild Systems and the two other defense electronics divisions of Fairchild Industries were sold to Matra S.A., based in Paris, and those three divisions are now called Fairchild Space & Defense Corp.

Deborah Tucker, a spokesperson for Fairchild Space, said neither the parent company nor the subsidiary had been served with court papers and thus could not comment on the suit.