Fraud Suit Is Settled for $55.5 Million : Courts: A whistle-blower and a nonprofit group will share $7.5 million for their part in the Singer-Link flight simulator case.
A federal judge in Albany, N.Y., on Tuesday approved the largest monetary settlement ever--$55.5 million--in a whistle-blower suit alleging fraud against the federal government.
The settlement concludes a 1988 suit that alleged that two companies had overcharged the Defense Department $77 million for flight simulators from 1980 to 1988.
The government will be reimbursed by Bicoastal Corp. of Tampa, Fla., the successor to Singer Corp., and CAE Industries Ltd., a Toronto company that acquired Singer’s Link division, which made flight simulation units.
Christopher M. Urda, a former Singer-Link worker who discovered the scheme, and Taxpayers Against Fraud, a nonprofit organization, will share 15% of the recovery--$7.5 million--under terms of the federal False Claims Act, a Civil War-era statute that allows citizens to sue on behalf of the government.
According to the suit, after Urda joined Singer-Link as a bids and pricing administrator, he discovered that the company since the early 1980s had been deliberately inflating by 10% the estimated labor costs on military contracts for aircraft flight simulators. He discovered that the Binghamton, N.Y.-based company routinely developed two sets of cost estimates.
The first set, according to the suit, was prepared for internal use and was, in fact, the company’s “best estimate” of costs. The second set was inflated by 10% and used in negotiations with the government, according to Urda.
The suit emphasized that, as a sole-source contractor, Singer-Link was obligated to make full and accurate disclosures to the government of all cost and pricing data.
Urda said he tried three times, unsuccessfully, to interest Defense Department investigators in the case. Finally, he contacted John R. Phillips, a Los Angeles lawyer who is Taxpayers Against Fraud’s general counsel. The suit was filed in November, 1988.
Subsequently, the Justice Department and the Defense Criminal Investigative Service launched a full-scale probe, and the government decided to join the case. The suit was unsealed and made public in March, 1989.
Tuesday’s settlement followed extensive negotiations and came less than a week after a federal grand jury in Binghamton indicted five former Singer-Link executives on charges stemming from the investigation.
“This case is an excellent example of the (false claims) law achieving Congress’ original intention,” Phillips said. “There would have been no recovery for the government if it were not for the False Claims Act.”
Phillips’ firm, Hall & Phillips of West Los Angeles, will share $1.6 million in legal fees with Paul, Weiss, Rifkind, Wharton & Garrison, a New York law firm that also worked on the case.
