Friday, July 24, 2015

Sikorsky Faces U.S. Criminal Probe, $148 Million In Fines, In Parts-Overcharging Case

The U.S. Department of Justice has opened a criminal investigation and is seeking damages totaling $148 million from Sikorsky, in two actions stemming from allegations that the helicopter maker overcharged the government for spare parts in training aircraft from 2006 to 2012.

Sikorsky parent United Technologies Corp. disclosed the criminal probe and the amount the government is seeking in a civil case in documents filed with securities regulators Friday. The civil lawsuit over the spare parts pricing started with a whistleblower complaint and was reported last August.

Sikorsky said at the time, and UTC repeated in the filing, that the company acted properly.

"Sikorsky and its subsidiaries intend to cooperate fully in the investigation," the filing said.

The case centers on Sikorsky's billing for spare parts sold to the Navy for T-34 and T-44 fixed-wing turboprop training aircraft, by a Sikorsky subsidiary called Derco Aerospace. Derco, in Wisconsin, sold the parts through another Sikorsky business, Sikorsky Support Services Inc. — after adding a 20 percent markup, according to documents.

Mary Patzer, a former compliance officer at Derco, said in a 2011 lawsuit that she had raised objections about overcharging within the company in 2010, and that she had been fired soon afterward, and that the company called the termination a reduction in force.

The lawsuit was unsealed last year when the Department of Justice intervened.

"The government's complaint asserts numerous claims for violations of the False Claims Act, for breach of contract and for unjust enrichment," UTC said in the Friday filing.

In April, the government told UTC it's seeking damages of $45 million, subject to tripling as a penalty, plus statutory penalties of $13 million, according to UTC's filing.

"We believe that Derco was lawfully permitted to add profit and overhead to the cost of the parts, and maintain that [Sikorsky Support Services Inc.] did not submit any false certificates."

UTC announced Monday it agreed to sell Sikorsky to Lockheed Martin for $9 billion.

Story and comments:  http://www.courant.com

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