Federal Investigation of Litton Extends to Utah

The criminal investigation into allegations of fraudulent billing by Litton Industries continued as federal agents raided the defense contractor’s manufacturing and storage facility in Salt Lake City, authorities said Thursday.

Agents from the FBI and the Defense Criminal Investigative Service swarmed the Utah facility late Wednesday in search of billing records and other materials relating to a decade’s worth of government contracts, said DCIS spokesman Al White.

The Salt Lake City raid followed by about 10 hours a similar sweep of the company’s Canoga Avenue headquarters in Woodland Hills. Agents there spent about 10 hours Wednesday sifting through documents in the Guidance and Control Systems division--the unit that produces specialized navigation equipment used in military planes and ships.

Agents remained tight-lipped about the searches, which sources said stemmed from a sealed lawsuit filed last year by a still-anonymous whistle-blower who alleged that Litton arbitrarily inflated contract bids for defense work. Under federal regulations, all bids are supposed to be supported by actual cost data.

Investigators declined to discuss whether the searches were related to billing on a specific project or were part of a wider probe of the company’s overall practices.

“This is more sensitive than you can imagine,” said one agent who asked not to be identified. “We’ve got to make sure we do this one right. There are a lot of things at stake, people involved.”

Litton spokesman Robert Knapp confirmed the Salt Lake City raid, but said the company had no official comment on the searches.

“They were here and they took away the documents they wanted and that was it,” Knapp said. “Mostly, these investigations come to absolutely nothing. This was step one in an information-gathering mission. Maybe there will never be a step two.”

Indeed, few federal criminal investigations stem from lawsuits filed under the False Claims Act, which allows individuals to sue a contractor on behalf of the government and share in any damages collected.

Department of Justice spokesman Joe Krovisky said 1,100 lawsuits have been filed under the act since 1986. Of those, 126 were won or settled by the government, recovering more than $1 billion in damages.

About 582 of the cases were rejected by the government and the rest are pending--many of them under seal because they deal with sensitive defense issues. By law, cases are sealed for 60 days, but government attorneys can ask for extensions, Krovisky said.

“It’s not rare to have them sealed for a year or more,” he said.