Navistar Defense Fined $50M for Submitting False Invoices to Bag MRAP Contract from U.S. Marine Corps

Navistar Defense LLC (Navistar), an Illinois-based subsidiary of Navistar International LLC, has been asked to pay $50 million for fraudulently inducing the U.S. Marine Corps to enter into a contract at inflated prices for a suspension system fitted on Mine-Resistant Ambush Protected (MRAP) vehicles.

During negotiations for the modification contract, Navistar was asked to provide sales information on the contract parts to assess the reasonableness of Navistar’s proposed prices.

The United States alleged that Navistar knowingly created fraudulent commercial sales invoices and submitted those invoices to the government to justify the company’s prices. The sales reflected in the commercial sales invoices never occurred. The government relied on the fraudulent sales invoices in agreeing to Navistar’s inflated prices, the U.S. Department of Justice said in a statement.

“We expect those doing business with the government to be truthful and transparent,” said Acting Assistant Attorney General Brian M. Boynton for the Justice Department’s Civil Division. “Today’s settlement demonstrates our commitment to pursue those who knowingly provide false information to government procurement officials for their personal gain.”

“Money overcharged to the United States is money that should go to providing the very protection and security that we contracted to provide to our troops,” said the Acting U.S. Attorney Channing D. Phillips for the District of Columbia. “The settlement evidences our commitment to go after any contractor who treats America’s dedication to our troops as a get rich quick scheme at the expense of the taxpayer and the safety of our military personnel.”

“It (fraud) steals money from American taxpayers, damages the integrity of the Department of the Navy procurement process, degrades the readiness of the services by compromising the quality of goods and services used to protect the nation, and squanders more money through the funding of criminal investigations which could have been avoided simply by individuals doing the right thing. NCIS will continue to work with our partner agencies to aggressively pursue those who perpetrate financial crimes,” said Special Agent in Charge Thomas Cannizzo of the Naval Criminal Investigative Service (NCIS), Southeast Field Office.

The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Duquoin Burgess, a former Government Contracts Manager for Navistar. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned U.S. ex rel. Burgess v. Navistar Defense, LLC, et al., No. 13-cv-1463 (D.D.C). Burgess will receive $11,060,000 out of today’s settlement.

The resolution obtained in this matter was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the for the District of Columbia, with assistance from the Department of Defense’s DCIS, NCIS, U.S. Army CID's Major Procurement Fraud Unit, and the Defense Contract Audit Agency.

The matter was handled by Trial Attorneys Gary Newkirk and Brandie Weddle and Assistant U.S. Attorneys Darrell Valdez and Benton Peterson.