2 Hughes Whistle-Blowers to Split $891,000

Two whistle-blowers who informed U.S. officials a decade ago that Hughes Aircraft Co. was not properly testing microelectronic circuits used in fighter planes have received an $891,000 reward.

The reward represents part of a $4.05-million settlement Hughes agreed to pay the government to settle a civil fraud suit originally filed by Margaret Goodearl and Ruth Aldred.

The suit was later taken over by the Justice Department under the Federal False Claims Act. The Justice Department announced the settlement Tuesday.

Hughes, which admitted no wrongdoing in the settlement document, declined to comment.

The two women, who worked at Hughes’ microelectronic-circuit division in Newport Beach, accused the company of routinely lying about conducting important quality-assurance tests of components used in missiles, fighter planes and other military aircraft.

Aldred and Goodearl “paid dearly for their efforts to stop Hughes from defrauding the government,” said John Phillips, one of two Washington attorneys who represented the women.

“When they became aware of the problems with testing procedures at the plant, they tried to bring the matter to the attention of upper management. But they were told to keep quiet and warned that they might get fired if they didn’t do so,” Phillips said.

“This settlement completely vindicates Ruth Ann Aldred and Margaret Goodearl, who made great personal and professional sacrifices to see justice done,” said co-counsel Mary Louise Cohen.

She said that as a result of “their efforts to stop the wrongdoing,” the two were subjected to threatening phone calls at home, random searches at work and other harassment.

Aldred left Hughes in 1988, saying she had been relieved of all meaningful responsibilities. Goodearl was laid off the next year.

After leaving the company, they were “effectively blocked” from obtaining other work in the defense industry, their lawyers said.

Phillips said Aldred, who now lives outside San Diego, and her husband were forced to apply for welfare before landing jobs in 1991.

“Despite the toll it has taken,” coming forward against the company “was the right thing to do,” Aldred said in a statement released through her lawyers.

Goodearl and her husband were forced to file for bankruptcy because of their inability to pay the bills and their marriage ultimately broke up, according to Phillips.

Goodearl eventually moved to Washington, D.C., where she is working as a housekeeper. She was not reachable Tuesday.

Tuesday’s announcement marks the culmination of a long-running case.

In June 1992, Hughes was convicted of criminal conspiracy stemming from some of the same issues, based largely on evidence the two women presented to a federal jury in Los Angeles.

Their accounts were corroborated by other witnesses, according to court documents. U.S. District Judge W. Matthew Byrne Jr. fined the company $3.5 million.

In a statement released Tuesday, the Justice Department said that from 1985 to 1987, Hughes ordered its employees not to perform certain environmental screening tests, to pass circuits that had failed tests and to falsify documents to show the tests had been done properly.

The circuits are critical parts of high-technology systems, including radar on the F-14, F-15 and F-18 fighter aircraft and guidance systems in missiles such as the Maverick, Phoenix and AMRAAM, the Justice Department said.

“Approximately 75 government programs involving all branches of the military were affected,” the department said.

After becoming frustrated with the government’s failure to take action, Goodearl and Aldred learned about the Federal False Claims Act, a statute designed to encourage people with knowledge of fraud against the government to reveal what they know.

The law provides that whistle-blowers bringing suit are entitled to a portion of the amount recovered by the government, not exceeding 25%.

The two women sued in 1990, and the government intervened and took over the case in 1992.

In addition to the $4.05 million, the settlement provides that Hughes will pay $450,000 for the women’s lawyers and to Taxpayers Against Fraud, a nonprofit advocacy group that encourages whistle-blowing.

The $891,000 Aldred and Goodearl will split represents 22% of the settlement pot.

“The reward is good but not that much considering what they’ve gone through,” Phillips said. “We feel good that they’ll be able to get on with their lives, but it’s a long, difficult road for anyone who wants to go against their employer with the False Claims Act.”