Last month, the Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC) announced that defense contractor, Raytheon Company, a subsidiary of Virginia-based defense contractor RTX (formerly known as Raytheon Technologies Corporation) will pay over $950 million to settle DOJ’s investigations into fraud related to pricing on government contracts and violations of the Foreign Corrupt Practices Act (FCPA) and the Arms Export Control Act (AECA). Separately, the U.S. Securities and Exchange Commission (SEC) announced that RTX will pay over $124 million to resolve charges for violating the FCPA over Qatari bribes.
The U.S. Attorney’s Office for the Eastern District of New York charged Raytheon with conspiracy to violate the anti-bribery provision of the FCPA for planning to bribe a government official in Qatar and conspiracy to violate the AECA for failing to disclose bribes to the Department of State. According to a three-year Deferred Prosecution Agreement (“DPA”) entered in connection with the case, Raytheon will pay roughly $383 million in penalties and allow supervision of the company by an independent monitor.
Raytheon will also enter into a three-year DPA in connection with the U.S. Attorney’s Office for the District of Massachusetts fraud charges against Raytheon. Raytheon admitted to engaging in two separate plots to defraud the Department of Defense (DOD) involving the provision of defense articles and services, including PATRIOT missile systems and a radar system. In both instances, Raytheon employees provided fraudulent information to DOD in order to mislead the agency into awarding the two contracts at inflated prices. These schemes caused the DOD to pay Raytheon over $111 million more than it should have been paid on the contracts. Under the terms of the DPA, Raytheon will pay a criminal monetary penalty of $146.7 million, $111.2 million in victim compensation, and retain an independent compliance monitor for three years.
In addition to resolution of the criminal charges, Raytheon entered into a False Claims Act settlement and will pay $428 million, with $111.2 million paid in victim compensation pursuant to the DPA to be credited toward that amount. The settlement resolves a lawsuit brought by a whistleblower under the qui tam provision of the False Claims Act. That case alleged that Raytheon used untruthful pricing data when negotiating with the DOD for government contracts and double billed on a weapons maintenance contract. The whistleblower, a former Raytheon employee, will receive approximately $4.2 million as her share of the settlement.
DOJ Criminal Division Deputy Assistant Attorney General Kevin Driscoll said, “Raytheon engaged in criminal schemes to defraud the U.S. government in connection with contracts for critical military systems and to win business through bribery in Qatar. Such corrupt and fraudulent conduct, especially by a publicly traded U.S. defense contractor, erodes public trust and harms the DOD, businesses that play by the rules, and American taxpayers. Today’s resolutions, with criminal and civil recoveries totaling nearly $1 billion, reflect the Criminal Division’s ability to tackle the most significant and complex white-collar cases across multiple subject matters.”
Whistleblowers can be instrumental in uncovering fraud involving defense contracts. If you would like to speak to an experienced whistleblower attorney, contact Phillips & Cohen for a confidential review of your case.