The U.S. Attorney’s Office for the Southern District of California recently announced a settlement of a False Claims Act case against Tungsten Heavy Powder of San Diego (THP), which was filed and prosecuted by the Volkov Law Group on behalf of two relators, Global Tungsten & Powders Corporation (GTP), and Greg Caputo, a former employee of THP. 

GTP and Caputo filed the original lawsuit under the qui tam provisions of the False Claims Act, which authorize private citizens with knowledge of fraud to bring suit on behalf of the government and to share in the recovery.  GTP and Mr. Caputo will received 17 percent of the settlement.

Under the announced settlement, THP will pay $5.6 million to resolve allegations that it falsely certified that it sourced product materials in the United States for items it manufactured under a contract with the government of Israel that was paid for by the U.S. Defense Security Cooperation Agreement Agency (DSCA).  THP is a San Diego-based company that manufactures and supplies tungsten products, including those used in U.S. military applications and munitions. THP provided weapons systems manufacturing articles and services to U.S. Department of Defense agencies and to the Government of Israel.

The United States contended that THP knowingly submitted false certifications to the United States regarding the origin and manufacture of defense articles procured by the government of Israel that were financed with United States’ grant funds paid by the Foreign Military Financing (FMF) program through the DSCA. Specifically, it is alleged that THP submitted false certifications pertaining to seven government of Israel purchase orders. With respect to these procurements, the United States alleged that THP falsely certified that tungsten that was actually sourced in China had been sourced, instead, in the United States. The United States contended that THP also falsely certified that manufacturing occurred in the United States, when in fact THP contracted with a Mexican maquiladora. In order to promote American manufacturing, grant funds for foreign procurements are only available when the materials are sourced and manufactured in the United States by domestic companies.

“As always, we are committed to preserving the integrity of the government contracting process and to ensuring that funds fraudulently obtained are returned to the public fisc,” said Randy S. Grossman, Acting United States Attorney for the Southern District of California. Grossman praised Assistant U.S. Attorneys Paul Starita and Joseph Purcell for their excellent work on this case.

Defense Criminal Investigative Service (DCIS) Special Agent in Charge Bryan Denny, Western Field Office, stated “The DCIS is committed to working with our law enforcement partners and the Department of Justice to combat those who attempt to take advantage of the military’s procurement system. Each instance of fraud or corruption has the potential to harm the military’s mission or those who serve, and needlessly wastes taxpayer money.”

This case is captioned United States, ex rel. Gregory Caputo and Global Tungsten & Powders Corporation v. Tungsten Heavy Powder, Inc., d/b/a Tungsten Heavy Powder & Parts, Inc., Case No. 18-cv-2352-W (WVG).