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Navistar whistleblower case delivers $50 million defense contractor fraud settlement

Components for MRAP vehicles (pictured) were at the heart of a whistleblower matter against Navistar Defense LLC. The company settled the qui tam allegations for $50 million. / Photo credit: US Army via Flickr (CC BY 2.0)

Navistar Defense LLC paid $50 million this week to settle a whistleblower lawsuit that alleged the military contractor used phony documents to justify overcharging the federal government for components of military vehicles.

The whistleblower, a former government contracts manager for Navistar, will receive $11.6 million as a whistleblower reward for bringing the successful qui tam case. He filed the qui tam case in 2013.

The qui tam lawsuit, which the government joined, alleged that Navistar, an Illinois-based military vehicle manufacturer that is a subsidiary of Navistar International, defrauded the US Marine Corps by using fabricated invoices to secure a contract modification.

The padded invoices allowed Navistar to bill the military for suspensions systems for mine-resistant ambush protected (MRAP) armored vehicles at an inflated price, according to the government.

Navistar allegedly overcharged the military for MRAP components from 2007 to 2012.

Defense contractor fraud “steals money from American taxpayers, damages the integrity of the Department of the Navy procurement process, [and] degrades the readiness of the services by compromising the quality of goods and services used to protect the nation,” said Special Agent in Charge Thomas Cannizzo of the Naval Criminal Investigative Service in a statement.

Whistleblower cases involving defense contractor fraud have helped the government recover more than $3.5 billion.

Phillips & Cohen has brought a number of qui tam lawsuits on behalf of whistleblowers against defense contractors. The firm’s whistleblower case against Northrop Grumman set a record for garnering the largest settlement in a defense contractor whistleblower case ($325 million).

In 2018, Lockheed Martin Corp settled a Phillips & Cohen whistleblower lawsuit alleging that the military contractor sold defective communications systems to the Coast Guard’s National Security Cutter ships. The alleged problems complicated a helicopter landing, demonstrating the direct danger posed by malfunctioning equipment. Lockheed paid $2.2 million and guaranteed $2.2 million worth of repairs to resolve the case.

How whistleblowers can report military contractor fraud

Whistleblowers are essential to uncovering fraud by military contractors, which hurts US troops, national security and taxpayers. As industry insiders with specific insights into billing practices and unique technical requirements, whistleblowers have first-hand knowledge about how military contractors’ are cheating on their government contracts.

Under the False Claims Act, whistleblowers are able to file lawsuits – called qui tam lawsuits – on behalf of the government when government funds are being lost to fraud and deception. Whistleblowers who file qui tam lawsuits are entitled to protection against job retaliation and a reward. The whistleblower award ranges from 15% to 25% of the amount the government recovers as a result of their qui tam lawsuits when the government intervenes in the case.

Whistleblowers who are aware of fraud by military contractors should consult with an experienced whistleblower lawyer who can answer questions based on their circumstances and make recommendations about their options.

Phillips & Cohen offers free, confidential reviews of whistleblowers’ potential cases.


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