MILWAUKEE, Wis. – A whistleblower lawsuit filed by a former employee of a Milwaukee-based aircraft manufacturer alleges the company used special software to hide illegal markups on bills it submitted to the U.S. Defense Department for reimbursement on aircraft parts.
Plaintiff Mary Patzer, a former financial analyst and assistant controller at Derco Aerospace Inc., filed the lawsuit in 2011 on behalf of the federal government under the qui tam or “whistleblower” provisions of the False Claims Act. The case was unsealed this week by federal judge Rudolph Randa.
Ms. Patzer alleges that Derco, its parent company Sikorsky Aircraft Corp. of Stratford, Conn., and sister company Sikorsky Support Services Inc. jacked up the prices on aircraft parts it purchased from other vendors by 20 percent on bills it submitted to the government. According to the lawsuit, the illegal markup was difficult to detect because the companies used special software programmed to incorporate the markup into the prices it paid other manufacturers for the parts as reflected on the bills submitted to the Defense Department.
All the companies are owned by United Technologies Corp. of Hartford, Conn. – a company that employs more than 212,000 people and took in $63 billion last year. United Technologies is also named as a defendant in the suit.
“In the course of her employment, Patzer gained firsthand knowledge of fraudulent and improper billing practices by Derco and its parent and affiliated companies,” the complaint states. “Such practices included presenting inflated bills for costs to the United States government based on an unauthorized and undisclosed markup of parts and repair services obtained from suppliers, billed to Sikorsky Support Services Inc., and ultimately billed to the United States government.”
Ms. Patzer, who handled Derco’s finances since 2002, alleges the false billings involved parts used for military training aircraft and stretched back to at least 2006, bringing Derco an extra $50 million in extra revenue.
Whistleblowers suing under the False Claims Act are entitled to seek three times the actual damages, which would be $150 million in this case. The Act also sets penalties of $5,500 to $11,000 for each false claim submitted to the U.S. government for reimbursement.
A lawyer representing Ms. Patzer told the Milwaukee Journal Sentinel that the case is probably the “largest whistleblower suit ever filed in Wisconsin under the False Claims Act.”
The U.S. Justice Department said it would intervene in the case and file its own complaint within 60 days. Whistleblowers who help the U.S. recover funds fraudulently taken from federal agencies and programs receive up to 30 percent of the total recovery as a reward.