DJ Northrop Grumman Unit Charged With $100M In Govt Fraud
10/30/2001
Dow Jones News Services
(Copyright © 2001 Dow Jones & Company, Inc.)
ROLLING MEADOWS, Ill. (AP)--U.S. federal prosecutors are conducting a criminal investigation of alleged major fraud by the Northrop Grumman Corp.'s (NOC) defense systems division in the Chicago suburb of Rolling Meadows, according to a published report.
The Chicago Tribune reported in Tuesday's editions that court papers filed by the U.S. Attorney's office allege more than $100 million in fraud against the Defense Department through systematic overcharging for radar jammers and other high-tech devices.
The devices are used in such warplanes as the B1 bomber, the F15 fighter and the B2 Stealth bomber.
The B2, which Northrop Grumman builds, is a mainstay of the current bombing in Afghanistan and the most expensive aircraft ever made at $2.2 billion apiece.
The overbilling allegations first surfaced in a civil complaint filed in U.S. District Court in Chicago 12 years ago by two former Northrop Aircraft employees. The two whistleblowers, who worked in the 1980s at the company's facility in Rolling Meadow, said they had firsthand knowledge of overcharging.
One of the plaintiffs, former company auditor James Holzrichter, said Northrop billed the government for parts that were returned to their makers as defective, and then charged the government again when the parts were replaced.
The other plaintiff, engineer Rex Robinson, said Northrop regularly built outmoded or incomplete testing equipment, so it could charge the government again to rebuild it.
Robinson was fired in 1988, about a year after he began giving information about the company's practices to the Federal Bureau of Investigation, the complaint said.
According to the complaint, Holzrichter began cooperating with government investigators in 1988, and was subjected to harassment by co-workers and supervisors after the company learned of his cooperation. He took a leave of absence because of stress in June 1989, and later was fired.
The company, which became Northrop Grumman when Northrop Aircraft purchased Grumman Corp. in 1994, has denied the allegations in the civil lawsuit, which has yet to go to trial.
The Tribune reported that the criminal investigation was disclosed in connection with a motion filed by the U.S. Attorney's office to take over the civil case. U.S. District Court Judge Ronald Guzman granted the motion Oct. 12.
In the documents filed as part of the criminal investigation, federal prosecutors allege that Northrop executives knew of the overcharging and covered it up.
"Northrop's fraud was institutionally imbedded," Assistant U.S. Attorney Linda Wawzenski said in a memorandum obtained by the Tribune. "Northrop was training its own managers to lie as part of a corporate culture which encouraged defrauding the government." |
