NORTHROP-GRUMMAN

Relators James Holzrichter and Rex Robinson were employed at Northrop’s Defense Systems Division in Rolling Meadows, Illinois during the Reagan-Bush era defense build-up in the late 1980s. At its Rolling Meadows facility, Northrop designed and built radar jammers and other electronic countermeasures for military aircraft, including the B-1 bomber, the B-2 “Stealth” bomber, and the F-15 fighter. Relator Holzricher was assigned to conduct internal audits of Northrop’s material accounting system. Holzrichter discovered, as later alleged in his “qui tam” complaint, that Northrop was engaged in systemic fraud and concealment in its accounting for materials and costs. Relator Rex Robinson was a test engineer at Northrop. He discovered, and later joined with Holzrichter in alleging, that Northrop fraudulently inflated costs and misrepresented the progress of a radar jamming device for the B-2 “Stealth” Bomber under an Air Force contract. Both relators only filed suit after voluntarily reporting the conduct to the FBI and the Department of Defense while working at the company, and fully cooperated with the government’s investigation. Both relators lost their jobs after their cooperation was discovered, and were left destitute.

This case is significant for many reasons. First, Northrop’s total payments, including reimbursement of certain costs to the government, amounted to $134 million, making it the largest settlement in the State of Illinois that year. Second, the 16 year history made it one of the longest-running False Claims Act cases ever, which included an eight year period between the government’s declination and later re-intervention. Third, relators and their counsel demonstrated tenacity and courageousness in persistently continuing to pursue the case. Finally, the case demonstrates how relators and their counsel can ensure that the government is made whole when it is subjected to false claims.

Relators Holzrichter and Robinson filed the qui tam lawsuit under the False Claims Act in 1989 and the government declined to intervene in 1992. After relators beat Northrop’s second attempt to dismiss the case, substantive discovery began in 1994 with millions of documents produced and numerous witnesses interviewed and deposed. Based upon evidence the relators and their counsel developed and won through extensive motion practice, the government intervened in the case on October 12, 2001.

Documents and evidence indicated that Northrop account managers were given training on how to manipulate the material accounting system and told to hide the manipulations from government auditors. The company purportedly engaged in a massive data cleanup project to make date entry changes and hide at least $117 million in material accounting discrepancies. Other documents substantiated allegations that Northrop made false claims of progress in designing an electronic countermeasure device for the B-2 Stealth Bomber.

This evidence and the government’s intervention led to a close working relationship between the relators’ counsel and the U.S. Attorney’s Office, the Department of Defense Criminal Investigative Service, the Defense Contract Management Agency, the Air Force, and a number of other agencies. Rex Robinson died in 2003, before the 2005 settlement. Jim Holzrichter went on after the settlement to get his paralegal degree and found a mentorship program for other relators.

United States Complaint

Plaintiffs’ Trial Brief

Relator’s Complaint

U.S. Dept. of Justice Press Release