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. #### 99-014