The Department of Justice has resolved a False Claims Act whistleblower lawsuit with APTx Vehicle Systems Limited, a British contractor alleged to have entered into an $8.4 million contract involving the procurement of 51 vehicles for the Iraqi Police Authority. Originally, the contract was awarded to another contractor, which then subcontracted with APTx for the procurement in a $5.7 million deal. JP Morgan Bank issued the letters of credit used for payment under the contract.
In May and June 2005, APTx provided shipping documents to JPMorgan indicating that the 51 vehicles were ready for shipment to Iraq and asking to draw down on the letters of credit. In reality, however, the shipping documents APTx sent to JPMorgan were completely fraudulent and APTx knew it. The 51 vehicles had not been built, they were not legally owned by APTx, they were not in APTx’s possession and the vehicles were not on their way to Iraq. The fraudulent shipping documents sent to JPMorgan listed a freight carrier that was not even a shipping company and showed a completely fictional company as the freight forwarder.
The fraudulent scheme led to the filing of criminal and civil actions. The U.S. charged APTx with one count of wire fraud conspiracy. The British contractor has agreed to pay a $1 million fine to resolve that charge.
Benjamin Kafka, a U.S. representative for the company, was charged in 2009 with one count of misprision of a felony based on his alleged conduct in allowing APTx to use his name on the fraudulent shipping documents. Kafka’s corporate identity was allegedly used as the phony freight carrier and freight forwarder.
Whistleblower’s Related False Claims Act Suit is Settled
In addition to the criminal actions, a civil whistleblower lawsuit was filed as well. Ian Rycroft was hired by the original prime contractor to oversee APTx’s transportation of the 51 vehicles to Iraq. Rycroft filed suit against APTx on the U.S. government’s behalf in a federal False Claims Act suit. Under the qui tam provisions of the statute, whistleblowers who come forward to file such claims are entitled to share in any monies recovered by the government. Rycroft’s False Claims Act suit has been settled for $2 million. Rycroft’s estate will be paid $540,000 out of the total settlement amount.
Whistleblowers Help Authorities Prosecute Defense Contractor Fraud
As in the case against APTx, whistleblowers are often critical to uncovering and prosecuting defense contractor fraud. You deserve to know your rights under the False Claims Act. The lawyers at Waters & Kraus have decades of experience representing whistleblowers. Contact us or call our whistleblower attorneys at 800.226.9880 to learn more about our law firm and how we can help.
