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Boeing Settles False Claims Act Case for $23 Million

The Justice Department announced that the Boeing Company has agreed to settle four whistleblowers’ qui tam claims alleging violations of the False Claims Act. Boeing has agreed to pay the federal government $23 million to resolve the allegations that it submitted false claims to the United States for work on government contracts.

Boeing is a leading manufacturer of commercial jetliners and defense systems and the largest global aerospace company. According to its website, Boeing, headquartered in Chicago, Illinois, employs approximately 169,000 people in 65 countries. According to the whistleblowers, in 2005, over 50% of Boeing’s revenues were generated from contracts with the United States government.

In 2007, present and former Boeing employees residing in Texas, filed a qui tam complaint under the provisions of the False Claims Act against Boeing. The whistleblowers alleged that Boeing improperly charged the federal government for labor costs associated with contracts with the United States Air Force performed at Boeing’s Aerospace Support Center in San Antonio, Texas. The contracts related to maintenance and repair of the C-17 Globemaster aircraft, used by the military to carry large equipment, supplies and troops worldwide.

Specifically, the complaint alleged that Boeing knowingly misrepresented that work was performed on one task when, in reality, the work was performed on a different task payable under a different contact type. The whistleblowers claimed that Boeing shifted costs and tasks in this manner to increase its profits, to the detriment of the federal government. According to the government, the knowing submission of invoices containing improperly coded charges violated the False Claims Act.

The four whistleblowers, Clinton Craddock, Fred Van Shoubrouek, Anthony Rico, and Fernando de la Garza, will share in $3,910,000 of the settlement proceeds as their reward under the qui tam provisions of the False Claims Act. Craddock and Van Shoubrouek are current Boeing employees. De La Garza is a former Boeing employee. Rico was employed by a Boeing subcontractor, Aerotek.

What is Procurement Fraud?

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