FOR IMMEDIATE RELEASE CIV

THURSDAY, OCTOBER 20, 1994 (202) 616-2765

TDD (202) 514-1888

TELEDYNE PAYS U.S. $5.56 MILLION TO SETTLE DEFENSE FRAUD CASE

WASHINGTON, D.C. -- Teledyne Inc., a major military

contractor, will pay the United States $5.56 million to settle a
suit filed by a former employee charging that the firm failed to
properly test electronic identification systems used in Navy and
Air Force aircraft and filed improper labor charges, the
Department of Justice said today.
Today's settlement is the second involving defense fraud
that Teledyne has made with the government this year.
Frank Hunger, Assistant Attorney General for the Civil
Division, said, "This settlement shows that the qui tam
provisions of the False Claims Act provide the United States with
an additional weapon in the fight to prevent and redress
wrongdoing by government contractors. We are especially proud of
the efforts of the investigating agencies in this matter who
spent countless hours on this case."
Stephen Reddy, a former senior program manager at Teledyne's
Electronic Division at Newberry Park, California, alleged in a
suit filed in U.S. District Court in Los Angeles on June 24,
1992, that Teledyne had failed to properly test "identification
friend or foe" systems used in Navy E2C and Air Force APX-109
aircraft and charged nonproductive time to the United States.
An investigation by the Federal Bureau of Investigation, Air
Force Office of Special Investigations and the Naval
Investigative Service substantiated Reddy's accusations.
Reddy alleged that Teledyne failed to accurately test the A4
front end module of the IFF; failed to perform the "burn-in" of
units as required by the contract; manipulated the testing and
calibration of the units to achieve acceptable results; and
permitted employees waiting for work assignments to charge their
idle time to the government. The contracts totalled $74.1
million.
Reddy will receive $869,000 as his share of the recovery.
Under the qui tam provisions, a private citizen can file a suit
on behalf of the federal government and receive a portion of the
damages if the action is successful.
In April, Teledyne agreed to pay the United States $112.5
million to settle two lawsuits alleging the improper testing of
military equipment and overcharges on military contracts. Before
that, Teledyne paid $20.65 million in criminal fines and
restitution after pleading guilty in the same matter.
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