U.S. joins Lockheed suit over aircraft tool sales

BUSINESS DIGEST

November 20, 2007|By Robert Schmidt | Robert Schmidt,Bloomberg News

The U.S. has accused Bethesda-based Lockheed Martin Corp., the world's largest defense company, of bilking the government of millions of dollars in the sale of small tools for manufacturing military aircraft.

The Justice Department joined a whistle-blower lawsuit against Lockheed, its vendor Tools & Metals Inc. and two of the vendor's former executives. The suit alleges the companies submitted false claims to the government from January 1998 to February 2006, the Justice Department said yesterday.

The suit was filed in U.S. District Court in Dallas. Under the federal False Claims Act, whistle-blowers can bring a case on behalf of the government and receive a portion of the recovery. The United States can recover three times its losses, plus civil penalties.

One of the former executives accused in the civil case pleaded guilty and received an 87-month sentence last year for fraud conspiracy. Todd Loftis, who was president and chief operating officer of Tools & Metals, pleaded guilty to inflating prices for drill bits, router bits and other tools used to make planes including the F-16 and F-22 fighter jets.

Tools & Metals and Loftis made at least $18 million on these allegedly false sales, prosecutors said.

In the civil case, Lockheed is alleged to be liable for the false charges due to its reckless oversight of Tools & Metals. Linda Loehr, a former officer and director of the vendor, was also named in the complaint. Jeffery Adams, a spokesman for Lockheed, wasn't immediately available for comment.

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