John G. Gravitt; His Suit Against GE Eased Path for Reporting Fraud

John G. Gravitt had his mettle tested in Vietnam in the mid-1960s, when his job was to crawl ahead of fellow Marines and tell them where to fire mortars. Wounded in an attack, he was awarded a Purple Heart.

Two decades later, he found himself in battle again--this time with his employer, who wanted him to help the company bilk the government out of millions.

Gravitt sued, using an all-but-forgotten Civil War-era law. His successful five-year legal battle against GE Aircraft Engines made it easier for employees to report fraud and for the government to earn damages from federal contractors.

The burly war hero, who was characterized by his lawyer as “the first true whistle-blower” in modern times, died Feb. 23 in Cincinnati of complications from diabetes. He was 61.

A machinist like his father and grandfather, Gravitt was hired at General Electric’s Evendale, Ohio, jet engine plant in 1980.

After he was promoted to foreman, his superiors asked him to falsify cost reports on B-1 bomber jet engines that the plant was making for the military. Altering the records allowed the company to shift cost overruns on commercial projects to federal contracts.

At first Gravitt went along with the scheme. It went so far that, on one occasion, GE employees were given several hours to donate blood, and that time eventually was billed to government contracts, too.

Later, he came to see the practice as not only dishonest but unpatriotic.

“In Vietnam we had trouble with the quality and quantity of weapons and supplies,” said Gravitt, the great-grandson of a Marine general. “I think the American serviceman ought to get everything the American taxpayers are paying for instead of half of everything. I think you just don’t do things that hurt your country. And that’s the reason I filed suit against General Electric.”

When Gravitt refused to continue falsifying time cards, his superiors took over, altering the documents with brazen strokes of a felt-tip pen. They told him not to worry because the practice had gone on for years. A Defense Contract Audit Agency study later found that GE had altered about 15,000 cards over three years.

Gravitt protested in a 60-page letter to a GE vice president. The next day, he was fired.

He went to see a lawyer, James B. Helmer Jr. of Cincinnati, who told him he had no legal remedy. GE said Gravitt had lost his job because of a planned reduction in its work force.

Then Helmer and an associate, Ann Lugbill, discovered the False Claims Act of 1863, signed by Abraham Lincoln to punish profiteers who sold sawdust to the government instead of gunpowder. The law, buried in the U.S. banking code, enabled the person who reported a swindle to collect as much as 25% of any court award that resulted from his lawsuit.

Armed with the obscure statute, Gravitt sued GE Aircraft Engines in 1984, charging that the company had cheated the Pentagon out of about $7 million. Under the False Claims Act, Gravitt’s attorneys calculated GE owed about $44 million in penalties.

Gravitt received death threats at home. His wife, Marlene, also a GE machinist, was harassed at work, forced to clean out grease pits and to take other difficult assignments.

The next year, the Justice Department and GE agreed to settle for a fraction of the amount Gravitt’s lawyers believed the company was liable for. Under the proposed agreement, GE would pay $234,000 and admit no guilt. The company said that, if anything, it had under-billed the government.

The proposal was rejected by a federal judge in Cincinnati, who criticized the Justice Department for an incomplete investigation and for failing to accept Gravitt’s help.

The final settlement came in 1989, just days before the company was to become the first government contractor to face a jury in a private whistle-blower case since World War II.

The settlement was not disclosed, but news reports said GE agreed to pay the government $4.7 million, while Gravitt and three other whistle-blowers represented by Helmer shared $770,000, then the largest such award in U.S. history.

Gravitt testified before Congress, which amended the False Claims Act to give more power and protection to whistle-blowers. The changes opened the door to scores of similar suits across the country. As a result, the government’s annual take in fraud causes has risen from $25 million in 1985 to more than $1 billion today, Helmer said.