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

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

WASHINGTON (STL.News) 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
$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

“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

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.


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