Navistar Accused Of Overcharging Marine Corps By $1.28B

Posted December 4th, 2019.

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By Kaitlyn Burton

Law360 (December 4, 2019, 3:50 PM EST) — A former Navistar employee has accused the defense vehicle manufacturer of bilking the federal government out of $1.28 billion by overcharging the U.S. Marine Corps for components of military vehicles, according to a federal lawsuit unsealed Tuesday.

Duquoin Burgess, who worked in Navistar Defense LLC’s contract management department from March 2009 to October 2012, alleged that his former employer and its parent company, Navistar International Corp., forged invoices, catalog prices and other documents in order to win a defense contract for Mine Resistant, Ambush Protected, or MRAP, vehicles.

“Navistar Defense exploited the government’s need for vehicles that would provide American soldiers with the protection they needed in the field, and fraudulently charged the government prices far exceeding those it charged other customers for the same parts and components,” the complaint, originally filed under seal in 2013, said.

U.S. District Judge Tanya S. Chutkan unsealed the False Claims Act suit after the government decided to partially intervene in September, according to court documents. The government intervened in the part of the action accusing Navistar Defense of overcharging the government for the MRAP vehicles’ suspension system, but it declined to intervene with respect to Navistar International.

According to the complaint, the Marine Corps System Command awarded Navistar Defense a contract in January 2007 to supply the government with MRAP vehicles used in Iraq and Afghanistan. Throughout the course of the deal, the government ended up paying Navistar Defense about $9 billion, the complaint said.

But of that $9 billion, approximately $1.28 billion was shelled out on the basis of fraudulent documents that resulted in the government paying inflated prices for various MRAP vehicle components, including frames, engines and suspension systems, the complaint said.

Burgess also alleged that Navistar Defense overcharged the government more than $30,000 for each suspension, which added up to almost $120 million in total, and that Navistar Defense executives, including the company’s president and vice president, knew about and participated in the fraud.

In one instance, Navistar Defense President Archie Massicotte excluded Linda DiToro, the former director of government contracts at Navistar Defense from 2008 to 2009, from an end-of-the-year company party at his house after she raised concerns about the company’s pricing practices, according to the complaint.

“Navistar Defense’s fraud in obtaining the MRAP contract and being awarded delivery orders under that contract was no mere oversight,” the complaint said.

Lyndi McMillan, a Navistar spokesperson, told Law360 that Burgess’ unsealed complaint is not well founded in fact or law.

“We believe our pricing was fair, reasonable and competitive, and we are disappointed the government has chosen to intervene in this matter,” she said.

But H. Vincent McKnight of Sanford Heisler Sharp LLP, who is representing Burgess, said that “Navistar presented information that was fictitious and phony, and therefore, the government wasn’t able to truly set a fair and reasonable price on those components going forward.”

Burgess is represented by H. Vincent McKnight, Kevin Sharp, John McKnight, Andrew Miller and Robert Van Someren Greve of Sanford Heisler Sharp LLP.

The government is represented by Andy J. Mao, Robert J. McAuliffe and Gary Newkirk of the U.S. Department of Justice’s Civil Division.

Counsel information for Navistar wasn’t immediately available.

The case is Burgess v. Navistar International LLC et al., case number 1:13-cv-01463, in the U.S. District Court for the District of Columbia.

–Editing by John Campbell.

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