Rocky Mountain Instrument Agrees to Pay $1 Million to Resolve False Claims Act Case Alleging Illegal Export of Military Information

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Oct 29, 2010, 05:35 ET

DENVER, Oct. 29 /PRNewswire/ -- Rocky Mountain Instrument Co. has agreed to pay $1 million to the federal government to settle civil charges related to the illegal export of sensitive military information for the manufacture of certain equipment overseas.

The civil settlement announced today was reached between Rocky Mountain Instrument (RMI), based in Lafayette, Colorado, and the federal government and a client of Phillips & Cohen LLP.

The case apparently is the first time the False Claims Act, has been used in connection with violations of International Traffic in Arms Regulations (ITAR) and the Arms Control Export Act, said Claire M. Sylvia, a San Francisco attorney with Phillips & Cohen.

RMI pleaded guilty to a related criminal charge in June and was sentenced at that time to forfeit $1 million and spend five years on probation. The criminal plea agreement said that RMI exported from 2005 to 2007 prisms and technical data related to various optics used in military applications to Turkey, South Korea, China and Russia without having first obtained from the U.S. Department of State a license or written authorization for such exports as required under ITAR.

The civil settlement today covers a related allegation that RMI caused defense contractors to submit false claims for payment to the Pentagon in violation of the False Claims Act by illegally exporting technical data that was used to manufacture parts used in certain military equipment the contractors sold to the Pentagon.

The False Claims Act is the government's primary law enforcement tool for combating fraud against the government. The law prohibits companies from submitting claims for payment to the government that are false or fraudulent.

"Laws and regulations governing the sale, export and transfer of defense articles and defense services are an integral part of safeguarding U.S. national security," said attorney Sylvia. "The submission of claims for payment while knowingly violating these important national security protections violates the False Claims Act."

Sylvia thanked the government attorneys, particularly Assistant U.S. Attorney Amanda Rocque in Colorado, and Justice Department Trial Attorneys Rebecca Ford and Paul Wogaman, for their work on the case.

RMI designs and manufactures optical components and assemblies for laser and imaging uses by the military and in the aerospace, medical and other fields. The company filed for chapter 11 bankruptcy in 2009.

Phillips & Cohen represents whistleblowers nationwide in False Claims Act cases and in claims made under the Internal Revenue Service and the Securities and Exchange Commission whistleblower reward programs involving tax law and securities law violations. It is the nation's most successful law firm representing whistleblowers. The firm's whistleblower cases have recovered more than $6.89 billion in civil settlements and related criminal fines and have earned its clients more than $730 million in rewards. For more information, see www.phillipsandcohen.com.

SOURCE Phillips & Cohen LLP