Tag Archives: Carter Stewart

MINEBEA CO. LTD. AGREES TO PLEAD GUILTY AND PAY A $13.5 MILLION

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WASHINGTON — Minebea Co. Ltd., a small sized bearings manufacturer based in Nagano, Japan, has agreed to plead guilty and to pay a $13.5 million criminal fine for its role in a conspiracy to fix prices for small sized ball bearings sold to customers in the United States and elsewhere, the Department of Justice announced today.

According to a one-count felony charge filed today in U.S. District Court for the Southern District of Ohio in Cincinnati, Minebea conspired to fix the prices of small sized ball bearings in the United States and elsewhere.  In addition to the criminal fine, Minebea has agreed to cooperate in the department’s ongoing investigation.  The plea agreement is subject to court approval.

According to the charge, Minebea and its co-conspirator discussed and agreed upon prices to be submitted to small sized ball bearings customers.  Minebea’s participation in the conspiracy lasted from at least as early as early-to-mid 2008 and continued until at least October 2011.

“Because of the unlawful price-fixing by the defendant and its co-conspirators, American businesses paid more for small-sized bearings than they otherwise would,” said Bill Baer, Assistant Attorney General of the Department of Justice’s Antitrust Division.  “Working with the Federal Bureau of Investigation and our other law enforcement partners, the Antitrust Division will continue our efforts to ensure American businesses and consumers benefit from competitive markets.”

“Any agreement that restricts price competition violates the law,” said U.S. Attorney Carter Stewart of Southern District of Ohio.  “We will continue to work to protect consumers’ right to free and open competition.”

Bearings are used in industry in numerous products to reduce friction and help parts roll smoothly past one another; they “bear” the load.  Small sized ball bearings are those ball bearings whose outside diameter is 26 millimeters or less.

Minebea is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty 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.

The charge today is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the bearings industry, which is being conducted by the Antitrust Division’s Chicago Office and the FBI’s Cincinnati Field Office.  Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to the bearings 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

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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.

Testech and Ceso Agree to Pay $2.88 Million to Resolve False Claims Act Allegations

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The Justice Department announced today that a number of related entities and individuals agreed to pay $2,883,947 to resolve allegations that they falsely claimed disadvantaged business status on a number of federally-funded transportation projects.  These entities are Dayton-based TesTech, Inc. and its owner, Sherif Aziz, and Dayton-based CESO Testing Technology, Inc., CESO International, LLC, and CESO, Inc. (collectively CESO), and their owners, David and Shery Oakes.

“The Disadvantaged Business Enterprises program helps businesses owned by minorities and women work on federal transportation projects,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division of the Department of Justice.  “Those who falsely claim credits under the program to obtain federal funds victimize both the businesses that the program is designed to assist and the American taxpayer.”

The Department of Transportation’s Disadvantaged Business Enterprise (DBE) program encourages the use of woman- and minority-owned businesses on federally-funded transportation projects.  Contractors on such projects must make good-faith attempts to meet DBE participation goals as a condition of federal funding.

“DBE fraud harms the integrity of the program and adversely impacts law-abiding, small business contractors trying to compete on a level playing field,” said Michelle McVicker, regional Special Agent-in-Charge of the DOT’s Office of Inspector General. “Working with our Federal, State, and local law enforcement and prosecutorial colleagues, we will vigorously pursue those who violate the law, and expose and shut down fraud schemes that adversely affect public trust and DOT-assisted airport and highway programs.”

The settlement announced today resolves allegations that the defendants claimed DBE status for TesTech, a civil engineering firm, on numerous highway and airport construction projects in Ohio, Indiana, Michigan, and Kentucky.  The United States alleged that TesTech was owned and controlled by CESO, a non-DBE firm, and its owners, the Oakes, who falsely claimed that TesTech was owned by Aziz and qualified as a minority-owned business in order to take advantage of the DBE program.

“The message is that we will work to uphold the integrity of the Disadvantaged Business Enterprise (DBE) and similar programs,” US Attorney Carter Stewart said.  “Those who attempt to defraud the system will be held accountable.”

The allegations resolved by today’s settlement were initially alleged in a whistleblower lawsuit filed under the False Claims Act by Ryan Parker, a former employee of TesTech.  Under the False Claims Act, private citizens can sue on behalf of the United States and share in the recovery.  Mr. Parker will receive $562,370 of the settlement amount.

This case was handled by the Civil Division of the Department of Justice, the U.S. Attorney’s Office for the Southern District of Ohio, and the Department of Transportation Office of Inspector General.

The False Claims Act suit was filed in the United States District Court for the Southern District of Ohio, and is captioned United States ex rel. Parker v. TesTech et al., No. 2:10-cv-1028 (S.D. Ohio).  The claims settled in this case are allegations only; there has been no determination of liability.