CyTerra Corporation, a defense contractor and maker of IED sensors for the US Military, has agreed to pay $2 million to resolve civil-fraud allegations. The whistleblowers in the case, two former finance executives with the company, alleged that CyTerra inflated the costs of labor and materials to increase the company’s profits. Shortly after blowing the whistle on the company, both whistleblowers were fired. They sued CyTerra for wrongful termination and are still in litigation.
The False Claims Act suit was filed in 2006 in federal court in Massachusetts and thereafter taken over by the U.S. Justice Department. CyTerra denied the allegations but stated that they would settle claims to avoid incurring the time and costs of any future litigation. The Justice Department recognized that the settlement does not find the company liable for the allegations. The whistleblowers will each receive half of 19% of the settlement totaling $361,000.
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