Consumer Fraud

Four whistleblowers share $3.9 million reward after Boeing settles fraud case

whistleblower Four whistleblowers share $3.9 million reward after Boeing settles fraud caseFour whistleblowers will share a $3.9-million reward for their role in exposing fraudulent billing practices at a Boeing C-17 Globemaster aircraft support facility in San Antonio. The reward is derived from a $23-million settlement the aircraft manufacturer and the U.S. Justice Department reached earlier this month.

Former Boeing employees Clinton Craddock, Fred Van Shoubrouek, Anthony Rico, and Fernando de la Garza filed their whistleblower suit against Boeing in federal court in San Antonio alleging the company defrauded taxpayers by overcharging the Defense Department for maintenance work on the C-17 airplanes, which provide one of the military’s major means of transporting troops and cargo throughout the world.

The lawsuit alleged that Boeing knowingly and improperly billed a variety of labor costs in violation of contract requirements, including for time its mechanics spent at meetings not directly related to the contracts.

The whistleblowers filed their complaint in 2009 on behalf of the U.S. under the qui tam provisions of the False Claims Act, which authorizes private individuals to take legal action in an effort to recover funds for the federal government. In return, whistleblowers receive a cut of any funds recovered in a successful case, up to 30 percent of the total recovery.

A Boeing spokesman told the Wall Street Journal that between 2003 and 2007 it had indeed billed the government inappropriately but denied that the errors were deliberate. The company said it has since retrained its employees to handle its contractual obligations appropriately.

The Wall Street Journal noted that the whistleblower reward is the second for Anthony Rico and Fernando de la Garza. In 2009, the two shared a $2.6-million reward for a False Claims Act suit they brought against Boeing alleging the contractor had defectively installed insulation blankets in KC-10 military refueling planes.


U.S. Department of Justice
Wall Street Journal