From: Nigel.Allen@lambada.oit.unc.edu
Subject: General Electric To Pay U.S. $59.5 Million In Civil Settlement
Organization: NCR Corporation - Law Department
Date: Sun, 26 Jul 1992 17:57:50 GMT


From Nigel.Allen@lambada.oit.unc.edu

Press release from U.S. Department of Justice

 General Electric To Pay U.S. $59.5 Million In Civil Settlement 
 To: National Desk, Defense Writer 
 Contact: U.S. Department of Justice, Public Affairs, 202-514-2007 
 
   WASHINGTON, June 22 /U.S. Newswire/ -- The Department of Justice 
announced today that it has reached final agreement with General 
Electric Co. to settle for $59.5 million the United States' civil 
fraud claims in United States ex rel. Taxpayers against Fraud and 
Chester L. Walsh vs. General Electric Co., Civil Action No. 
C-1-90-792 (S.D. Ohio.) 
   Civil Division Assistant Attorney General Stuart Gerson stated 
that the parties on today's date executed the settlement agreement, 
and filed a stipulation with the U.S. District Court for the Southern 
District of Ohio that dismissed the United States' claims. 
  The stipulation was filed with the court in conjunction with a 
criminal information charging General Electric with four felony 
counts, and a plea agreement in which General Electric pled guilty to 
these charges and agreed to pay a criminal fine of $9.5 million. 
   The settlement talks followed several months of comprehensive 
disclosures by General Electric of the results of its internal 
investigation into this matter. 
   Gerson stated that the civil lawsuit involved allegations that 
General Electric Aircraft Engines (GEAE) knowingly made false 
statements to the Israeli Ministry of Defense (MOD) in part to use 
United States funds for unauthorized purposes.  GEAE's false 
statements to MOD caused MOD to submit false claims to the United 
States Department of Defense under the Foreign Military Sales (FMS) 
Program. 
   The false statements and claims were made in connection with 
contracts between General Electric and the government of Israel for 
aircraft engines and aircraft engine support equipment for the 
Israeli Air Force. 
   Among other things, GEAE, acting principally through the then 
manager of International Government Sales (GEAE Sales Manager), 
unlawfully used FMS funds to make payments to bank accounts owned by 
former Israeli Air Force Brigadier General Rami Dotan and the GEAE 
sales manager.  Dotan held a secret partnership interest with 
Yoram Ingbir, an Israeli subcontractor.  In a second amended 
complaint filed in March 1992, the United States set forth the 
details of these frauds. 
   The lawsuit was filed originally under the qui tam provisions of 
the False Claims Act, 31 U.S.C. SS 3730(b), by Taxpayers Against 
Fraud, a corporation, and Chester L. Walsh, GEAE's in-country manager 
in Israel between 1984 and 1989.  As GEAE's sole managerial level 
employee in Israel responsible for the administration of the 
contracts during this period, Walsh attended many of the meetings at 
which GEAE and Israeli Air Force officials discussed the transactions 
that are the subject of Walsh's original complaint.  Walsh was often 
the only representative of GEAE at these meetings.  Between June 
1987, when Walsh first consulted his qui tam counsel, and November 
1990, when Walsh filed suit, the United States' damages grew by more 
than $27 million.  Walsh filed his qui tam complaint after reports 
appeared in the press in October and November 1990 concerning the 
arrest of Dotan by the Israeli police, and concerning an Israeli 
investigation of United States' contractors with ties to Dotan and 
Ingbir. 
   Gerson stated that the civil settlement represents a fair 
resolution of the United States' claims against General Electric. 
Gerson noted that the settlement does not include any payment to the 
qui tam plaintiffs, and that the issue of the appropriate share for 
the qui tam plaintiffs has yet to be adjudicated.  Gerson stated that 
he is concerned that the qui tam provisions in the False Claims Act 
might not substantially limit the award that should be made to the 
qui tam plaintiff in troubling circumstances such as these. 
 -30-


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