Department of Justice Seal

FOR IMMEDIATE RELEASE

CIV

FRIDAY, JANUARY 16, 1999

(202) 514-2007

WWW.USDOJ.GOV

TDD (202) 514-1888

U.S. JOINS FALSE CLAIMS ACT CASE AGAINST COMSAT CORPORATION

WASHINGTON, D.C. - The United States has joined a lawsuit against a Washington, D.C., company based on allegations that one of its subsidiaries defrauded the government by charging costs incurred on its commercial contracts to its contracts with the Department of the Navy for the restoration of radar equipment used on U.S. Navy warships. The government's motion seeking to intervene was filed yesterday in Tampa, Fla.

Assistant Attorney General for the Civil Division Frank W. Hunger and United States Attorney in Tampa, Fla., Charles R. Wilson announced that the United States has elected to proceed against five of seven defendants named in a complaint previously filed against Comsat Corporation. That complaint, which was originally filed on May 16, 1996, was filed by seven former employees of Radiation Systems Electromechanical Systems, Inc., (EMS), a subsidiary of Comsat, based in Largo, Fla.

In addition to Comsat, the United States will name EMS; Kenneth A. Grannon, president of EMS; and two former EMS officials as defendants.

The employees' complaint alleges that since at least 1989, EMS and its employees have defrauded the government by charging costs incurred on its commercial contracts to its contracts with the Navy for the refurbishment and restoration of radar pedestals, cones, reflectors and skis for radar used on U.S. Navy warships. The complaint also alleges that the mischarging by EMS substantially increased the prices paid by the Navy under its contracts with EMS.

According to the complaint, an anonymous letter exposing EMS's fraudulent activities was sent to Comsat in August 1994, and Comsat then sought to cover up the alleged fraud by conducting an internal investigation and, subsequently, by discharging employees who reported that they had been directed to mischarge costs to the Navy contracts.

Under the qui tam provisions of the False Claims Act, a person with knowledge of financial fraud against the government can file suit against the alleged wrongdoer on behalf of the government. Subject to certain statutory provisions, if the lawsuit results in a monetary judgment or settlement, the whistle blower is entitled to a share of the proceeds recovered by the government.

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