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Sunday, July 21, 2024 | Back issues
Courthouse News Service Courthouse News Service

Contractor to Pay $25M to Settle Fraud Claims

MANHATTAN (CN) - A company that makes sights for military weapons agreed to settle a False Claims Act lawsuit in which the government accused it of hiding defects in its products.

The federal government sued L-3 Communications EOTech Inc., L-3 Communications Corp. and EOTech head Paul Mangano in Federal Court on Tuesday.

The United States accused L-3 of fraud for allegedly selling the U.S. Defense Department defective holographic weapon sights that are mounted on guns.

"Beginning around 2006, defendants became aware that design defects in the sights caused them to fail in cold temperatures and in humid environments," the lawsuit said. "EOTech was contractually obligated to disclose these defects to DoD, so that DoD could prevent defective products from being fielded to troops. Defendants nevertheless failed to disclose these defects, while touting the U.S. military's use of their products in order to boost their image and drive sales in the commercial marketplace."

EOTech was "paid tens of millions of dollars" through its Defense Department contracts since 2004, according to the complaint. It allegedly sold thousands of defective weapons sights to the military.

The lawsuit was filed by Manhattan U.S. Attorney Preet Bharara, who said the companies knew that their weapons sights didn't function correctly in extreme temperature conditions.

"Those environmental performance representations were important to the United States because U.S. troops used EOTech's combat optical sights in Iraq and Afghanistan, as well as in the jungle, mountains, desert, and other extreme environmental conditions around the world," the lawsuit stated.

The government sought the maximum amount of damages and civil penalties, but L-3 agreed to settle the False Claims Act allegations.

The company will pay the government $25.6 million and all three defendants admitted that they knew the weapon sights had defects, according to Bharara, who said the government filed and simultaneously settled the case.

"With their own sights focused exclusively on corporate profits, the defendants let our soldiers fight with defective sights on their weapons," Bharara said in a statement. "We will continue to pursue and hold accountable corporations and their executives who put profits over honesty and fair dealing, particularly when it comes to dealings that affect our service men and women."

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