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Lockheed Settles False Claims Act Case For $15.85M

Lockheed Martin Corp. will pay the U.S. government $15.85 million to resolve claims that Tools and Metals, Inc., a subcontractor, inflated the cost of military aircraft tools that it sold to Lockheed Martin between 1998 and 2005. Lockheed Martin then passed on the overpriced tools to the U.S. pursuant to its various government contracts, according to a Department of Justice Press Release.

On Dec. 8, 2005, Todd B. Loftis, a former president of TMI, pleaded guilty and was sentenced to seven years in prison in connection with his role in TMI’s scheme.  The federal prosecutors subsequently brought civil claims against Lockheed Martin under the False Claims Act, alleging that Lockheed Martin contributed to the inflated amounts paid by the United States in connection with TMI’s pricing scheme by “failing to adequately oversee TMI’s charging practices and by mishandling information revealing these practices.”

“It is troubling that a large defense contractor with long-established contractual ties with the United States failed to undertake appropriate measures to ensure the integrity and validity of the costs it submitted to the United States,” said Stuart Delery, the acting assistant attorney general for the Civil Division.

The settlement resolves two whistleblower actions filed in 2005 in U.S. District Court for the Northern District of Texas. DOJ said whistleblowers, whose suits were consolidated, will split a $2 million share of the government’s recovery.

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