Defense contractor AAR pays $11M to settle whistleblower case alleging failure to safely maintain aircraft

WASHINGTON, DC, July 6, 2021 – AAR Corp. and a wholly-owned subsidiary, AAR Airlift Group Inc., have agreed to pay the federal government $11 million to settle a whistleblower lawsuit filed under the False Claims Act by Phillips & Cohen LLP that alleged AAR failed to meet safety and maintenance requirements for planes it used to transport US military personnel and cargo in Afghanistan.

In addition, AAR will pay as part of the settlement agreement a Federal Aviation Authority fine of $429,273.

The government intervened in the “qui tam” (whistleblower) lawsuit after investigating the allegations of false claims. The whistleblower case was filed under seal in 2015 in federal district court in Fairview Heights, Illinois, near Scott Air Force Base, where US Transportation Command (USTRANSCOM) is based. The existence of the qui tam lawsuit became public today when the court unsealed the case.

“Our complaint alleges that AAR chose profits over safety by ignoring maintenance issues for years,” said Colette G. Matzzie, a whistleblower attorney and partner at Phillips & Cohen. “Our troops understand that they will need to take risks as part of their jobs, but flying in war zones on aircraft that hasn’t been properly maintained shouldn’t be one of them.”

The settlement agreement resolves false claims allegations that AAR knowingly failed to properly maintain nine aircraft used to transport US troops and cargo primarily in Afghanistan from Jan. 2012 to June 2018, including failing to track and replace certain airplane parts that had a limited life expectancy.

It also covers allegations that AAR falsely represented that the aircraft the military used were “fully mission capable,” as specified in the contracts.

The whistleblower in the qui tam case, Christopher Harvey, was a lead aircraft conformity specialist with AAR in Melbourne, Florida, who worked in the aviation industry his entire career.

“Christopher Harvey made a conscientious effort to report his concerns to his employer and the government, as we laid out in the complaint,” said Claire Sylvia, a whistleblower attorney and partner with Phillips & Cohen. “We all benefit when people like him step forward to voice concerns about safety.”

The qui tam complaint alleges that problems with AAR’s aircraft began before AAR purchased Aviation Worldwide Services in 2010 from Xe Services LLC, a high-profile defense contractor supporting US war efforts. Xe Services previously was known as Blackwater, which was founded by Erik Prince, and now is known as Academi LLC.

A subsidiary of Aviation Worldwide Services, Presidential Airways, had Department of Defense and State Department contracts to transport personnel and cargo. USTRANSCOM contracted with the company to support Army missions in Afghanistan, Uzbekistan, Pakistan and Kyrgyzstan with passenger and cargo air transportation services.

AAR inherited Presidential’s fleet and assumed those contracts as part of the acquisition and won additional government contracts.

The qui tam complaint states that “Internal reviews of the Presidential aircraft by AAR uncovered dozens, if not hundreds, of serious maintenance issues including failure to schedule timely inspection and replacement of many life-limited aircraft parts.”

AAR was concerned that it might lose the government contracts and not win additional government contracts if it revealed the problems it had found with Presidential’s aircraft, according to the whistleblower complaint. Because of that, the complaint says, “AAR chose to halt internal reviews of the aircraft and to conceal from DOD and the FAA that the aircraft purchased from Presidential had serious safety and maintenance issues and that there was no compliant maintenance and inspection program in place to address these issues.”

AAR acquired about 45 helicopters and fixed-wing planes from Presidential, which included Casa C-212s, Casa C-235s, Sikorsky S-61s, Sikorsky S-92s, Puma SA330Js, De Havilland DHC-8s, Bell 412s and Bell 214STs.

Harvey and his attorneys thanked the government attorneys and the Department of Defense and FAA investigators for their work on the false claims case. This includes Assistant US Attorneys Nathan Stump and Laura Barke and Paralegal Specialist Donna M. Gerdes from the Southern District of Illinois, and Department of Justice Trial Attorneys Elspeth England and Art Coulter.

Phillips & Cohen associate attorney Molly Knobler also assisted on the case. Loevy & Loevy LLP served as local counsel. Avi Kumin of Katz, Marshall, & Banks LLP represented Harvey in his employment claims against AAR, which were resolved separately.

The False Claims Act allows private citizens to file “qui tam” lawsuits against companies that are defrauding the government and recover funds on the government’s behalf.

Whistleblowers are provided protection against job retaliation under the False Claims Act and given rewards that range from 15% to 25% of the recovery when the government joins the case. Harvey will receive $2.16 million for the assistance and contributions he and his attorneys provided to the case.

Qui tam complaint: US ex rel. Christopher Harvey v. AAR CORP. and AAR Airlift Group, Inc., No. 3:15-cv-00390-NJR-PMF (S.D. Ill.)

DOJ press release: AAR Corp. Agrees to Pay $11 Million to Settle False Claims Act Allegations on Aircraft Maintenance Contract and to Pay Penalties Assessed by the FAA

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