AAR Corp. Settles False Claims Act Investigation For $11 Million

WASHINGTON – AAR  Corp., located  in Wood  Dale,  Illinois, and  its subsidiary, AAR Airlift
Group  Inc.  (Airlift),  located  in  Melbourne,  Florida,  have  agreed  to  pay  the  United  
States
$11,088,000  to  resolve  allegations  that  they  violated  the  False  Claims  Act  in  
connection  with aircraft maintenance services performed by Airlift on two United States 
Transportation Command (USTRANSCOM) contracts.

The  allegations  involve  helicopters  that  Airlift  owned  and  maintained  for  use  in  
transporting Department of Defense (DoD) cargo and personnel in support of DoD missions in 
Afghanistan and  Africa.  The  settlement  resolves  allegations  that  Airlift  knowingly  failed  
to  maintain  nine aircraft in accordance with contract requirements, and that because of this 
failure, the helicopters were not airworthy and should not have been certified by Airlift as “fully 
mission capable.”

AAR  and  Airlift  have  also  agreed  to  pay  $429,273.69  to  resolve  a  separate  Federal  
Aviation Administration (FAA) matter citing certain deficiencies in Airlift’s helicopter 
maintenance.

“The knowing failure to comply with contractual obligations is unacceptable, particularly when such 
violations raise safety concerns” said Acting Assistant Attorney General Brian M. Boynton for the 
Justice Department’s Civil Division. “Today’s settlement reaffirms that the government will  hold  
contractors  to  the  quality  and  safety  standards  in  their  contracts  that  are intended  to 
protect our men and women in uniform.”

“Defense contracting is a special trust because it supports the service members who protect our 
nation’s interests around the world. Whenever a military contractor cuts corners, it presents not 
only a possible fraud against taxpayers but also a potential safety hazard to our service members,” 
said Steven D.  Weinhoeft, U.S. Attorney  for the  Southern District of  Illinois. “The settlement 
announced today addresses both of those concerns. I am especially grateful to my staff, the many 
dedicated agents who worked on this matter, and the witnesses who came forward.”

“Our military is entitled to rely on high level contractor performance when it procures essential 
services  like  those  at  issue  here,”  said  Acting  U.S.  Attorney  Karin  Hoppmann  for  the  
Middle District  of  Florida.  “We  are  grateful  for  the  diligent  and  collaborative  work  
put  into  this investigation by the Southern District of Illinois, the Department of Justice Civil 
Frauds Section,
and all of the investigative agencies who supported these cases.

“Failure to properly maintain aircraft is unacceptable under any circumstances, but it’s especially 
egregious in a war zone, where the lives of America’s warfighters are on the line,” said John F. 
Sopko,  Special  Inspector  General  for  Afghanistan  Reconstruction.  “I’m  proud  of  the  work  
of SIGAR’s special agents – in Afghanistan and the United States – whose collaboration brought this 
case to a successful conclusion.”

“The  Department  of  the  Air  Force  Office  of  Special  Investigations  (OSI)  commends  the 
complainant  for  coming  forward,  which  allowed  us  and  our  joint  investigative  partners  
to vigorously protect the DoD’s procurement process, preserve the military’s ability to carry out 
its warfighting mission and ensured the wrongdoers were held accountable,” said Special Agent in 
Charge Nicholas J. Groesbeck of the OSI Procurement Fraud Detachment 4, Wright-Patterson AFB, OH.

“This case demonstrates the commitment of the Defense Criminal Investigative Service (DCIS), along 
with our partner agencies, to aggressively go after those who disregard and ignore critical safety 
and contractual specifications on Department of Defense contracts,” said Acting Special Agent in 
Charge Gregory P. Shilling of the DCIS Southwest Field Office. “Today’s resolution highlights the 
culmination of investigative efforts to hold those who supply  the Department of Defense 
accountable for their product and actions.”

“It is unacceptable that anyone would bypass contractual agreements and most importantly safety 
guidelines  meant  to  ensure  the  wellbeing  of  our  American  service  men  and  women,”  said 
Christopher Grey, spokesperson for the U.S. Army Criminal Investigation Command (CID). “We will 
continue to aggressively investigate allegations such as this and work closely with our law 
enforcement partners to bring a successful resolution.”

“The failure to perform critical maintenance to Department of Defense aircraft poses a grave and 
unnecessary  threat  to  our  nation’s  military  readiness,”  said  Special  Agent  in  Charge  
Michael DeFamio of the Naval Criminal Investigative Service (NCIS) Central Field Office. “NCIS and 
our federal law enforcement partners remain committed to fully investigating any and all 
allegations of  contract  fraud  that  compromises  the  safety  of  our  service  members  and  
wastes  American taxpayer money.”

“Those certified to perform critical safety aircraft inspections and maintenance work are expected 
to adhere to aviation regulations in order to ensure that safety is not compromised,” said Special 
Agent-in-Charge  Todd  Damiani  of  the  U.S.  Department  of  Transportation  Office  of  
Inspector General,  Southern  Region.  “The  settlement  reached  today  clearly  demonstrates  
that  we  will vigorously pursue those who choose profits over the quality and integrity of the 
work they are contracted to perform.”

“Improperly maintaining aircraft creates a safety risk that we absolutely will not tolerate,” said 
FAA   Administrator   Steve   Dickson.   “Today’s   agreement   makes   clear   that   disregard   
for maintenance requirements is unacceptable.”

The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Christopher Harvey, a former Airlift employee. The act permits private parties to sue for false claims on behalf of the United States and to share in any recovery. The qui tam case is captioned U.S. ex rel. Harvey v. AAR Corp., et al., No. 3:15-cv-00390 (S.D. Ill.). Mr. Harvey will receive $2,162,160 of the False Claims Act settlement.

The resolution obtained in this matter was the result of a coordinated effort between the Civil 
Division’s  Commercial  Litigation  Branch,  Fraud  Section,  the  U.S.  Attorney’s  Office  for  
the Southern District of Illinois, and the U.S. Attorney’s Office for the Middle District of 
Florida, with assistance from USTRANSCOM, the FAA, Air Force OSI, DCIS, NCIS, Army CID, Department 
of Transportation Office of the Inspector General, the Defense Contract Audit Agency (DCAA), and 
SIGAR.

The case was investigated by Trial Attorney Elspeth A. England and Assistant U.S. Attorneys Nathan 
D. Stump and Laura J. Barke of the Southern District of Illinois and Randy Harwell of the Middle 
District of Florida.

The claims resolved by the settlement are allegations only and there has been no determination
of liability.