Judge tentatively approves Settlement of Whistle-Blowers Suit
By Bill Lodge
Staff Writer
DALLAS MORNING NEWS
A DALLAS JUDGE has provisionally approved a $230,000 settlement of $10 million in fraud claims by a whistleblower alleging faulty work on the security system at a currency printing plant in Fort Worth.
Three contractors were sued They are Science Applications International of San Diego, Allied Signal Technical Services Corp. Headquartered in Morristown, N. J., and Lloyd Electric Company Inc. of Wichita Falls.
U. S. District Judge Robert Maloney stated in his written decision that federal investigators support the contention of the whistleblower, former Science Applications quality-control inspector Peter Jensen Thornton. Mr. Thornton has said that government money was paid for tests that were never conducted on underground security cables at the Western Currency Production Facility.
But the judge also accepted a settlement recommendation from Department of Justice attorneys who concluded that the security system currently works and that digging up cables for inspection would be prohibitively expensive.
None of the contractors admits any improper or negligent act in signed settlement agreements that were forwarded to Judge Maloney on Monday.
"We have always denied any wrongdoing," said a spokeswoman for Science Applications, which agreed to pay the Justice Department $125,000 to settle the suit. "We cooperated fully with the government ... and we agreed to the settlement to avoid the substantial cost of litigation".
Bobby Lloyd, an owner of Lloyd Electric, said Wednesday that his company was not a subcontractor on the currency-plant project but became embroiled in the litigation after merging with J.V. Clark Electric Co., which did some work on that job.
Mr. Lloyd said $25,000 will be paid to the federal government by a former Clark owner to settle the suit against Lloyd Electric.
"We did not improperly build anything," Mr. Lloyd said.
Allied Signal officials could not be reached.
The Justice Department intervened in the 3-year-old whistle-blower case and assumed the role of principal plaintiff, but Mr. Thornton has the option of appealing the judge's decision to approve the settlement. Mr. Thornton said Wednesday that he will appeal, adding that he will also ask U.S. Rep. Sam Johnson, R. Dallas, to seek appointment of a special prosecutor to pursue the allegations of fraud.
"The Justice Department can't investigate itself," Mr. Thornton said. "Through my case it's been proven that they have disregarded investigative reports of other federal agencies."
As a whistle-blower, Mr. Thornton can seek at least 15% of any funds recovered by the department Justice as a result of his suit.
Although the judge granted conditional approval of the settlements, he also criticized federal handling of the construction project.
"An incestuous system of government contracting seems partly responsible for the management and control problems in this case," Judge Maloney wrote earlier this month, when he ordered the government to send him the settlements more than two years ago with the contractors.
The Army Corps of Engineers granted the contracts for construction of the security system.
Judge Maloney noted that the projects former resident engineer testified that the Corps softened its stance on quality control issues after Science Applications hired the Corps' former second in command as quality control manager. "Some of the evidence presented by Thornton and the materials reviewed by the court ... support findings of fraud, primarily with regard to false reports of unperformed testing," Judge Maloney said. But he added, most of the evidence supports findings of widespread negligence and substandard contract performance."
Judge Maloney said he will review the settlement agreements before granting them a final approval.
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