Preet Bharara, the United States Attorney for the Southern District of New York, announced today that the United States has filed and simultaneously settled a civil fraud lawsuit against Electrical & Electronic Controls, Inc. (“E&E”), a small distributor of electrical components, for knowingly supplying the United States Department of Defense (“DoD”) with non-conforming electrical and other parts critical to weapons performance and operation, that later turned out to be defective. The Complaint was filed on March 21, 2013 in Manhattan federal court and the settlement was approved Friday by U.S. District Court Judge William H. Pauley, III.

Manhattan U.S. Attorney Preet Bharara said: “As E&E admitted, they provided less expensive unapproved parts to our Department of Defense, conduct that jeopardized both the flawless functioning of our weapons system and the safety of those who operate it. This Office is committed to ensuring that the U.S. Government gets what it pays for, and pursues those who would mislead it.”

According to the allegations contained in the Complaint:

From 2004 through 2007, E&E bid on and entered into fourteen contracts with the DoD. Under those contracts, E&E was required to supply parts from specific manufacturers that had been vetted and approved by the DoD for the quality of their products. Instead, E&E knowingly supplied less expensive parts from unapproved sources to the DoD. Twelve of the 14 contracts involved Critical Application Items, i.e., items that are essential to weapon system performance or operation, or the safety of operating personnel. In addition, many of the substituted parts turned out to be defective and unusable, costing the DoD hundreds of thousands of dollars.

As part of the settlement, E&E admitted, acknowledged, and accepted responsibility for repeatedly substituting less expensive parts from unapproved sources, and misrepresenting the source of the parts it then supplied to DoD. E&E must also pay $250,000 to the United States under the False Claims Act.

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Mr. Bharara praised the investigative work of the DoD in this case.

Assistant U.S. Attorney Jaimie L. Nawaday is in charge of the case.

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