AAR Corp. Settles False Claims Act Investigation For $11 Million

WASHINGTON – AAR  Corp., located  in Wood  Dale,  Illinois, and  its subsidiary, AAR Airlift

Group  Inc.  (Airlift),  located  in  Melbourne,  Florida,  have  agreed  to  pay  the  United  

States

$11,088,000  to  resolve  allegations  that  they  violated  the  False  Claims  Act  in  

connection  with aircraft maintenance services performed by Airlift on two United States 

Transportation Command (USTRANSCOM) contracts.

The  allegations  involve  helicopters  that  Airlift  owned  and  maintained  for  use  in  

transporting Department of Defense (DoD) cargo and personnel in support of DoD missions in 

Afghanistan and  Africa.  The  settlement  resolves  allegations  that  Airlift  knowingly  failed  

to  maintain  nine aircraft in accordance with contract requirements, and that because of this 

failure, the helicopters were not airworthy and should not have been certified by Airlift as “fully 

mission capable.”

AAR  and  Airlift  have  also  agreed  to  pay  $429,273.69  to  resolve  a  separate  Federal  

Aviation Administration (FAA) matter citing certain deficiencies in Airlift’s helicopter 

maintenance.

“The knowing failure to comply with contractual obligations is unacceptable, particularly when such 

violations raise safety concerns” said Acting Assistant Attorney General Brian M. Boynton for the 

Justice Department’s Civil Division. “Today’s settlement reaffirms that the government will  hold  

contractors  to  the  quality  and  safety  standards  in  their  contracts  that  are intended  to 

protect our men and women in uniform.”

“Defense contracting is a special trust because it supports the service members who protect our 

nation’s interests around the world. Whenever a military contractor cuts corners, it presents not 

only a possible fraud against taxpayers but also a potential safety hazard to our service members,” 

said Steven D.  Weinhoeft, U.S. Attorney  for the  Southern District of  Illinois. “The settlement 

announced today addresses both of those concerns. I am especially grateful to my staff, the many 

dedicated agents who worked on this matter, and the witnesses who came forward.”

“Our military is entitled to rely on high level contractor performance when it procures essential 

services  like  those  at  issue  here,”  said  Acting  U.S.  Attorney  Karin  Hoppmann  for  the  

Middle District  of  Florida.  “We  are  grateful  for  the  diligent  and  collaborative  work  

put  into  this investigation by the Southern District of Illinois, the Department of Justice Civil 

Frauds Section,

and all of the investigative agencies who supported these cases.

“Failure to properly maintain aircraft is unacceptable under any circumstances, but it’s especially 

egregious in a war zone, where the lives of America’s warfighters are on the line,” said John F. 

Sopko,  Special  Inspector  General  for  Afghanistan  Reconstruction.  “I’m  proud  of  the  work  

of SIGAR’s special agents – in Afghanistan and the United States – whose collaboration brought this 

case to a successful conclusion.”

“The  Department  of  the  Air  Force  Office  of  Special  Investigations  (OSI)  commends  the 

complainant  for  coming  forward,  which  allowed  us  and  our  joint  investigative  partners  

to vigorously protect the DoD’s procurement process, preserve the military’s ability to carry out 

its warfighting mission and ensured the wrongdoers were held accountable,” said Special Agent in 

Charge Nicholas J. Groesbeck of the OSI Procurement Fraud Detachment 4, Wright-Patterson AFB, OH.

“This case demonstrates the commitment of the Defense Criminal Investigative Service (DCIS), along 

with our partner agencies, to aggressively go after those who disregard and ignore critical safety 

and contractual specifications on Department of Defense contracts,” said Acting Special Agent in 

Charge Gregory P. Shilling of the DCIS Southwest Field Office. “Today’s resolution highlights the 

culmination of investigative efforts to hold those who supply  the Department of Defense 

accountable for their product and actions.”

“It is unacceptable that anyone would bypass contractual agreements and most importantly safety 

guidelines  meant  to  ensure  the  wellbeing  of  our  American  service  men  and  women,”  said 

Christopher Grey, spokesperson for the U.S. Army Criminal Investigation Command (CID). “We will 

continue to aggressively investigate allegations such as this and work closely with our law 

enforcement partners to bring a successful resolution.”

“The failure to perform critical maintenance to Department of Defense aircraft poses a grave and 

unnecessary  threat  to  our  nation’s  military  readiness,”  said  Special  Agent  in  Charge  

Michael DeFamio of the Naval Criminal Investigative Service (NCIS) Central Field Office. “NCIS and 

our federal law enforcement partners remain committed to fully investigating any and all 

allegations of  contract  fraud  that  compromises  the  safety  of  our  service  members  and  

wastes  American taxpayer money.”

“Those certified to perform critical safety aircraft inspections and maintenance work are expected 

to adhere to aviation regulations in order to ensure that safety is not compromised,” said Special 

Agent-in-Charge  Todd  Damiani  of  the  U.S.  Department  of  Transportation  Office  of  

Inspector General,  Southern  Region.  “The  settlement  reached  today  clearly  demonstrates  

that  we  will vigorously pursue those who choose profits over the quality and integrity of the 

work they are contracted to perform.”

“Improperly maintaining aircraft creates a safety risk that we absolutely will not tolerate,” said 

FAA   Administrator   Steve   Dickson.   “Today’s   agreement   makes   clear   that   disregard   

for maintenance requirements is unacceptable.”

The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Christopher Harvey, a former Airlift employee. The act permits private parties to sue for false claims on behalf of the United States and to share in any recovery. The qui tam case is captioned U.S. ex rel. Harvey v. AAR Corp., et al., No. 3:15-cv-00390 (S.D. Ill.). Mr. Harvey will receive $2,162,160 of the False Claims Act settlement.

The resolution obtained in this matter was the result of a coordinated effort between the Civil 

Division’s  Commercial  Litigation  Branch,  Fraud  Section,  the  U.S.  Attorney’s  Office  for  

the Southern District of Illinois, and the U.S. Attorney’s Office for the Middle District of 

Florida, with assistance from USTRANSCOM, the FAA, Air Force OSI, DCIS, NCIS, Army CID, Department 

of Transportation Office of the Inspector General, the Defense Contract Audit Agency (DCAA), and 

SIGAR.

The case was investigated by Trial Attorney Elspeth A. England and Assistant U.S. Attorneys Nathan 

D. Stump and Laura J. Barke of the Southern District of Illinois and Randy Harwell of the Middle 

District of Florida.

The claims resolved by the settlement are allegations only and there has been no determination

of liability.