Iraq Extradites Fugitive Defense Contractor to U.S. to Face Fraud Charges

A Las Vegas-based former Department of Defense contractor has been extradited from Iraq to the United States to face fraud and conspiracy charges for attempting to bribe U.S. officials in order to secure government contracts for his companies.   Metin Atilan, 54, is the first person extradited from Iraq to the United States pursuant to the U.S.-Iraq extradition treaty signed on June 7, 1934 and entered into force in 1936.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Carter M. Stewart of the Southern District of Ohio, Special Agent in Charge Kevin Cornelius of the FBI’s Cincinnati Office and Resident Agent in Charge Bret Flinn of the Defense Criminal Investigation Service (DCIS) made the announcement.
“This historic extradition from Iraq to the United States is an example of our cooperation with law enforcement worldwide to bring fugitives to justice,” said Assistant Attorney General Caldwell.  “Atilan’s return to the United States, after more than six years on the run, sends a clear message to fugitives: no matter where in the world you try to hide, we will find you, and we will prosecute you.”
“ This case is a tremendous example of a successfully organized and cooperative law enforcement effort put forth by the FBI, DCIS, Interpol and the Iraqi government,” said Special Agent in Charge Cornelius.  “I commend the work of the FBI’s Legal Attaché  Office and the U.S. Embassy Country Team in Iraq. They have garnered a superior level of law enforcement cooperation between the FBI and Iraqi officials. Without their support, this extradition would not have been possible.”
Atilan, a dual U.S. and Turkish citizen, is scheduled to appear today before U.S. Magistrate Judge Michael R. Merz of the Southern District of Ohio.
Atilan was charged by indictment on June 10, 2008, with conspiracy to engage in contract fraud, conspiracy to engage in wire fraud, and wire fraud.    According to court documents, Atilan is p resident and chief executive officer of PMA Services Ltd. of Las Vegas and Kayteks Ltd. of Adna, Turkey.    In 2006 through 2008, Atilan offered bribes and kickbacks in order to secure contracts for businesses he owned in connection with services and construction associated with U.S. military operations in Iraq.    Some of the Defense Department contracting officials who Atilan is accused of trying to bribe were stationed in Dayton at the time.
Atilan was first arrested in Las Vegas on May 23, 2008.  Atilan was placed on electronic monitoring pending his formal hearing before a federal judge in Dayton, Ohio.    On June 15, 2008, Atilan allegedly violated the terms of his pretrial release by cutting off his electronic bracelet and fleeing the country.    The government sought his extradition, and Atilan arrived in Dayton, Ohio on July 27, 2014.
An indictment is merely an accusation, and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
This case was investigated by the FBI and DCIS.    The case is being prosecuted by Assistant U.S. Attorney Dwight Keller of the Southern District of Ohio with assistance from Trial Attorney Dan E. Stigall of the Criminal Division’s Office of International Affairs and Department of Justice Attaché Ellen Endrizzi.    The Criminal Division’s Office of International Affairs also provided assistance.

 

Japanese Automotive Parts Manufacturer Agrees to Plead Guilty to Price Fixing and Bid Rigging on Automobile Parts Installed in U.S. Cars

Showa Corp., an automotive parts manufacturer based in Saitama, Japan, has agreed to plead guilty and to pay a $19.9 million criminal fine for its role in a conspiracy to fix prices and rig bids for pinion-assist type electric powered steering assemblies installed in cars sold in the United States and elsewhere, the Department of Justice announced today.

According to a one-count felony charge filed today in the U.S. District Court for the Southern District of Ohio in Cincinnati, Showa engaged in a conspiracy to suppress and eliminate competition in the automotive parts industry by agreeing to rig bids for, and to fix, stabilize and maintain the prices of, certain pinion-assist type electric powered steering assemblies sold to Honda Motor Co. Ltd. and certain of its subsidiaries in the United States and elsewhere.  In addition to the criminal fine, Showa has agreed to cooperate with the department’s ongoing investigation.  The plea agreement will be subject to court approval.

“Today’s guilty plea marks the 27th time a company has been held accountable for fixing prices on parts used to manufacture cars in the United States,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “The Antitrust Division and its law enforcement partners remain committed to prosecuting illegal cartels that harm U.S. consumers and businesses.”

According to the charge, Showa and its co-conspirators carried out the conspiracy through meetings, conversations and communications in which they discussed and agreed upon bids and price quotations on pinion-assist type electric powered steering assemblies to be submitted to Honda.  Showa then submitted quotations in accordance with those agreements and sold pinion-assist type electric powered steering assemblies at collusive and noncompetitive prices.  Showa and its co-conspirators monitored adherence to the agreed-upon bid-rigging and price-fixing scheme.  The conspirators kept their conduct secret by using code names and meeting at remote locations, among other things.  Showa’s involvement in the conspiracy lasted from at least as early as 2007 until as late as September 2012.

Showa manufactures and sells pinion-assist type electric powered steering assemblies.  These devices provide power to the steering gear pinion shaft from electric motors to assist the driver to more easily steer the automobile.  Pinion-assist type electric powered steering assemblies include an electronic control unit and link the steering wheel to the tires but do not include the column, intermediate shaft, steering wheel or tires.

Including Showa, 27 companies and 24 executives have pleaded guilty or agreed to plead guilty in the division’s ongoing investigation into price fixing and bid rigging in the auto parts industry and have agreed to pay a total of $2.3 billion in criminal fines.

Showa Corp. is charged with price fixing and bid rigging in violation of the Sherman Act, which carries maximum penalties of a $100 million criminal fine for corporations.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Today’s charge is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s criminal enforcement sections and the FBI.  Today’s charge was brought by the Antitrust Division’s Chicago Office and the FBI’s Cincinnati Field Office with assistance from the U.S. Attorney’s Office for the Southern District of Ohio.  Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Cincinnati Field Office at 513-421-4310.

General Electric Aviation Systems to Pay U.S. $6.58 Million to Resolve False Claims Act Allegations

General Electric Aviation Systems (GEAS) has agreed to pay $6.58 million to settle allegations that it submitted false claims in connection with multiple Department of Defense contracts, the Justice Department announced today.  GEAS, headquartered in Ohio, manufactures and sells integrated systems and components for commercial, corporate, military and marine aircraft.

“This case demonstrates the Department of Justice’s commitment to ensure that our military receives quality products to perform the important mission of protecting and defending our country,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division. “The department will aggressively pursue those who put that mission at risk.”

GEAS contracted to manufacture and deliver to the Navy external fuel tanks (EFTs) for use on the F/A-18 Hornet strike fighter jet.  GEAS manufactured the EFTs at its plant in Santa Ana, California.  In March 2008, a GEAS-manufactured EFT failed government testing, which led to a multi-year investigation by the local California offices of the Defense Contract Management Agency, the Defense Contract Audit Agency, the Defense Criminal Investigative Service and the Navy Criminal Investigative Service.  As a result of that investigation, the United States alleged that GEAS knowingly failed to comply with contract specifications and failed to undertake proper quality control procedures in connection with 641 EFTs it delivered to the Navy between June 2005 and February 2008.

In addition, the settlement resolves allegations that, between June 2010 and June 2011, GEAS knew that it falsely represented to another government contractor that GEAS had performed a complete inspection of 228 drag beams to be used on Army UH-60 Blackhawk helicopters, and that those 228 drag beams conformed to all contract specifications.

“Defense contractors agree to provide the government with a quality product, and in doing so, they promise to follow strict manufacturing and testing protocols to ensure that our military receives only the best equipment,” said André Birotte Jr., U.S. Attorney for the Central District of California.  “In this case, some of the hardware sold to the government did not meet quality-control standards, and that failure could have put our service members at risk.  This multimillion dollar settlement is designed to ensure that General Electric Aviation Systems does not engage in this type of misconduct in the future, and this case should serve as a warning to any government contractor who thinks it can cut corners.”

Carter Stewart, U.S. Attorney for the Southern District of Ohio, added, “We are determined to protect the integrity of the system that provides goods and services to the men and women who serve in the armed forces.  The False Claims Act is an effective and powerful tool to help us carry out our mission.”

Allegations about GEAS’s misconduct at the Santa Ana facility were included in a lawsuit filed by former GEAS Santa Ana employee Jeffrey Adler under the qui tam or whistleblower provisions of the False Claims Act, which permit private individuals called “relators” to bring lawsuits for false claims on behalf of the United States, and to receive a portion of the proceeds of any settlement or judgment.  Mr. Adler’s share of the settlement has not yet been determined.

This settlement was the result of a coordinated effort by the Department of Justice, Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the Central District of California; the U.S. Attorney’s Office for the Southern District of Ohio; the Defense Contract Management Agency; the Defense Contract Audit Agency; the Defense Criminal Investigative Service; and the Navy Criminal Investigative Service in investigating and resolving the allegations.

The qui tam lawsuit, filed in the U.S. District Court for the Southern District of Ohio, is captioned United States ex rel. Adler v. General Electric Aviation Services (1-CV-00313).  The claims resolved by the settlement are allegations only and do not constitute a determination of liability.

United Technologies Corporation Liable for Over $473 Million for Inflating Prices on Aircraft Engines Sold to Air Force

The U.S. District Court for the Southern District of Ohio found United Technologies Corporation liable for over $473 million in damages and penalties arising out of a contract to provide the Air Force with fighter aircraft engines for F-15 and F-16 aircraft between 1985 and 1990, the Justice Department announced today.  United Technologies, which is based in Connecticut, provides a broad range of high-technology products and services to the global aerospace and building systems industries.

“The department will relentlessly pursue justice against those who knowingly submit false claims to the government and abuse the public contracting process,” said Stuart Delery, Acting Assistant Attorney General for the Civil Division.  “It is vital that companies who do business with the government provide full and accurate information, and if they do not, they will pay the consequences.”

The government alleged that UTC’s proposed prices for the engine contract misrepresented how UTC calculated those prices, resulting in the government paying hundreds of millions more than it otherwise would have paid for the engines.  Specifically, the government alleged that UTC failed to include in its price proposal historical discounts that it received from suppliers, and instead knowingly used outdated information that excluded such discounts.

The government filed suit against UTC in 1999 under the False Claims Act and the common law, and those claims were tried, without a jury, in 2004.  An initial decision by the district court in 2008 found UTC liable under the False Claims Act, but did not award any damages.  The district court also dismissed the government’s common law claims.  That decision was appealed by both the government and UTC.  In 2010, the Court of Appeals for the Sixth Circuit affirmed the district court’s finding that UTC was liable under the False Claims Act, but reversed and remanded the case to the district court to recalculate the government’s damages and to reconsider the government’s common law claims.

In yesterday’s ruling, the district court awarded the government False Claims Act damages and penalties of $364 million, which is the highest recovery obtained by the government in a case tried under the Act.  The court also awarded an additional $109 million in damages on the government’s common law claims.  With the addition of prejudgment interest on the latter claims, which the court has yet to calculate, the government anticipates that the total judgment against United Technologies could be well in excess of half a billion dollars.    This case is being handled by the Civil Division of the Department of Justice.  The lawsuit is captioned United States of America v. United Technologies Corp., No. 3:99-cv-093 (S.D. Ohio).