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Whistleblower Case Charging ATK Knowingly Sold Defective Flares To U.S. Department Of Defense Demonstrates Importance Of False Claims Act

Robert J. Nelson of the national plaintiffs’ law firm Lieff Cabraser Heimann & Bernstein, LLP, and co-counsel for the whistleblower charging that ATK Launch Systems, a wholly owned subsidiary of Alliant Techsystems (NYSE:ATK), knowingly sold defective flares to the U.S. military, commented on the $37 million settlement of the False Claims Act lawsuit announced this week by the U.S. Department of Justice.

“This case highlights the importance of the False Claims Act,” stated Nelson. “Not only does the statute protect taxpayers from bearing the ultimate financial responsibility for contractors that defraud the federal government, in the case of defense contractors, the False Claims Act helps to ensure that military contractors provide equipment that meets the military’s safety and performance standards.”

The specialized flares ATK manufactured were used in nighttime combat, covert missions, and search and rescue operations. A key design specification set by the Defense Department was that these highly flammable and dangerous items ignite only under certain conditions. The complaint alleged that the ATK flares at issue could ignite when dropped from a height of less than 10 feet – and, according to ATK’s own analysis, from as little as 11.6 inches – notwithstanding contractual specifications that they be capable of withstanding such a drop.

“The purpose of this specification was to ensure the safety of personnel handling the flares, which burn at an extremely high temperature and once ignited cannot be extinguished,” Nelson stated.

The lawsuit was filed by Kendall Dye, a former ATK employee under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals called “relators” to bring lawsuits on behalf of the United States and receive a portion of the proceeds of a settlement or judgment awarded against a defendant. Mr. Dye retained Lieff Cabraser and Phillips & Cohen LLP as his counsel. Fillmore Spencer LLC served as local counsel.

The False Claim Act Summarized

The False Claims Act prohibits persons from defrauding the federal government by knowingly presenting a false claim for payment or approval. The Act is designed to prevent losses to the federal government. Violations of the False Claims Act can result in a judgment in an amount equal to three times the amount of losses to the U.S. Treasury, plus civil fines.

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