CIV (202) 616-2765 TDD (202) 514-1888

LUCAS INDUSTRIES PAYS U.S. $88 MILLION TO SETTLE LAWSUIT WASHINGTON, D.C. -- A British industrial corporation, Lucas Industries plc, and two of its U.S. subsidiaries will pay the United States $88 million to settle a lawsuit alleging they failed to properly test military airplane parts and knowingly shipped defective parts to the Navy, Army and Air Force under contracts with the Department of Defense, the Department of Justice announced today. Frank W. Hunger, Assistant Attorney General in charge of the Civil Division, said the agreement settles a suit, United States ex rel. Copeland v. Lucas Western, Inc., et al., filed as a qui tam, or "whistleblower" action, under the False Claims Act against Lucas Western Inc. in September 1993 by Frederick C. Copeland, a former machinist for the company. LWI, based in Park City, Utah, manufactures aerospace gearboxes, hoists and similar devices for the military. According to Hunger, the Department filed an amended complaint in May 1995 claiming that LWI employees falsified gear charts for the Airframe Mounted Accessory Drive (AMAD), a key component of the Navy's front-line carrier based fighter, the F/A-18 Hornet. LWI personnel, after finding one conforming gear in a lot with many non-conforming gears, ran multiple gear charts from the single good gear and attached the charts to uninspected gears. The government's complaint also alleged that LWI falsified manufacturing and assembly inspections on the AMADs. The government alleged that 100 percent of approximately 80 AMAD gearboxes subjected to tear down inspections as part of the investigation contained parts with major defects. LWI's illegal practices affected other military programs. For example, the government alleged that a tear down inspection of a gearbox called the Azimuth Drive Unit (ADU), which LWI produced for one of the Army's premier artillery systems, the Multiple Launch Rocket System, showed that 100 percent of the 35 ADU samples contained major defects. Lucas manufactured the parts under military contracts totalling $400 million. The Navy will receive $8.8 million of the settlement in the form of in kind considerations: products and spare part for the AMAD program. Copeland will receive 21 percent, or $19,360,000, as his share of the settlement. The agreement came on Saturday, September 30. On January 10, 1995, following a criminal investigation supervised by the U.S. Attorney's office in Los Angeles, California, LWI pleaded guilty to 37 felony counts of making false certifications to the Department of Defense that 35 AMAD and two ADU gearboxes had been fully inspected in accordance with the applicable contractual requirements, when, in fact, they had not. LWI paid a criminal fine of $18.5 million. The U.S. subsidiary of Lucas Industries plc, Lucas Industries,

Inc. (LINC), also was a defendant in the civil action. LINC owns 100 percent of LWI. The lead investigative agency assisting with the civil litigation was the Defense Criminal Investigative Service, with assistance from the Naval Criminal Investigative Service, the Army Criminal Investigation Command and the Air Force Office of Special Investigations. The government's litigation efforts also were supported by the Naval Air Systems Command (NAVAIR) and the F/A-18 Program Office, the Navy's Aviation Supply Office, the Navy General Counsel's Office, auditors from the Department of Defense's Office of Inspector General, and the Defense Logistics Agency Defense Contract Management Command. The False Claims Act entitles the government to recover three times its damages and a civil penalty of $10,000 for each act in violation of the statute, 31 U.S.C. ​ 3729(a). The qui tam case was filed in U.S. District Court in Utah. The Department took over the case in February 1995. Under the qui tam amendments to the False Claims Act, a private party may file a lawsuit on behalf of the government and, if the government takes over the suit and prosecutes it successfully, receive from 15 percent to 30 percent of the government's award. ##### 95-523