Illinois defense contractor agrees to pay $25 million for overcharging the government

Defense contractor to pay $25 million for fraud

CHICAGO — A defense contractor has agreed to pay a fine and damages totaling $25 million to resolve allegations that it overcharged the government for more than a decade, federal prosecutors announced Thursday.

MPC Products Corp., a Skokie-based manufacturer and supplier of parts used in fighter jets, helicopters and other military systems, will plead guilty to a single count of wire fraud and pay a $2.5 million fine plus $22.5 million in civil damages, the U.S. attorney’s office said.

It said taxpayers lost millions of dollars as a result of the fraud.

Woodward Governor Co., a Ft. Collins, Colo.-based company that acquired MPC last year, confirmed MPC planned to plead guilty to one count of wire fraud.

CEO Thomas A. Gendron said in a statement that the alleged overcharges occurred long before Woodward Governor acquired MPC. He said those allegedly involved in inflating amounts charged to the government are no longer with MPC and that Woodward “is firmly committed to a culture of integrity.”

Two former MPC executives, Michael A. Norwood, 57, of Wheaton and Wayne C. Penfold, 57, of Ft. Collins and formerly of Glenview, have been charged with obstruction of a federal audit in the case. Messages seeking comment were left for their defense attorneys. No arraignment date has been set.

Also named as defendants in the lawsuit were the estates of two deceased brothers who formerly owned MPC, Joe and Vince Roberti.

MPC manufactures and repairs aerospace parts including motors, gears, flight-deck controls, throttle assemblies, foot pedals, fuel pump assemblies, door controls and position sensors.

A former MPC employee who became a whistle-blower in the case, identified by the government as Joe Caputo, stands to receive $4.5 million as his share of the money the government will collect.

Caputo, a resident of Chicago’s northwest suburbs, said in a whistleblower suit unsealed Thursday that he was told in 1990 to falsify costs and price justifications so that MPC could increase its profit margin on government contracts.

The U.S. attorney’s office said the defendants knowingly overcharged the Defense Department and prime contractors by falsifying cost or pricing data used to negotiate 11 contracts and basic ordering agreements between 1993 and 2005.