CHICAGO, Ill. - Northrop Grumman Corp. has agreed to pay $62 million to settle a nearly 16-year-old case alleging fraud at the defense contractor's Rolling Meadows facility in the 1980s.
Although the settlement is the largest federal contractor-fraud case ever negotiated by the U.S. attorney's office in Chicago, the payment is only about a sixth of the $369 million that the government had been seeking.
The government had alleged that Northrop systematically overcharged for materials used in the production of several high-tech devices for warplanes. The government also accused the Los Angeles-based aerospace giant of inflating costs and lying about the progress of a radar jammer for the B-2 Stealth bomber.
Northrop issued a statement Tuesday denying any wrongdoing. The company said it agreed to settle so management could focus on business prospects.
Assistant U.S. Atty. Linda Wawzenski declined to elaborate on the reasons for the settlement.
The allegations against Northrop were contained in a lawsuit filed in 1989 by two former employees: James Holzrichter, a former auditor, and Rex Robinson, an engineer who died in 2003.
As a part of the settlement, Holzrichter and Robinson's estate will share $12.4 million under a federal statute designed to encourage whistleblowers.
The government initially declined to join in the case but reconsidered in 2001 after one of the plaintiff's lawyers, Michael Behn of Chicago-based Futterman & Howard Ltd., uncovered evidence of obstruction of justice.
- Gazette news services