FOR IMMEDIATE RELEASE

Friday, March 15, 2013

SACRAMENTO, Calif. — CS Business System Inc. has paid the United States $65,000 to settle claims concerning the delivery of nonconforming flash memory cards to the Naval Air Weapons Center in China Lake, Calif., in connection with a defense procurement contract, United States Attorney Benjamin B. Wagner announced.

The United States Navy contracted with CS Business for the delivery of specified, American-made flash memory cards for use in weapons guidance systems. CS Business delivered a shipment of memory cards to the Navy in November 2011, but agreed to take the items back because they were manufactured in Malaysia. Despite its assurances that it would ship the contractually required cards, CS Business again delivered nonconforming cards manufactured in Malaysia — this time affixed with reproduced labels of the specified American manufacturer. The cards were not distributed to the fleet. Following an investigation, the United States alleged CS Business’s conduct violated the False Claims Act and the Buy American Act. CS Business admitted to one violation each of the Acts and agreed to pay $65,000 to settle the violations.

“These flash memory cards are a vital component to the weapons guidance systems used in a training environment and during contingency operations. Nonconforming cards can compromise a weapon’s accuracy, with potentially devastating effects. Here, alert Navy officials discovered the cards were nonconforming before the products entered the supply distribution system. This case’s outcome demonstrates that the False Claims Act and Buy American Act are powerful remedies in protecting the integrity of the defense procurement system,” stated United States Attorney Wagner.

“The fast reaction by procurement officials at the Naval Air Weapons Center, China Lake, in understanding and identifying the fraud and the quick and efficient resolution through the hard work of the United States Attorney’s Office highlights the importance of the close working relationships being forged to combat this type of fraud. The Naval Criminal Investigative Service takes pride in these relationships and is appreciative of the team approach to resolve this issue without significant loss to the Department of Navy’s mission and personnel,” added Special Agent in Charge Susan M. Simon, Naval Criminal Investigative Service Southwest Field Office.

The Naval Criminal Investigative Service investigated the matter. Assistant United States Attorney Kurt A. Didier handled the case on behalf of the Department of Justice. CS Business Systems Inc. cooperated throughout the investigation.

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