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Justice News

Department of Justice
U.S. Attorney’s Office
Eastern District of Pennsylvania

FOR IMMEDIATE RELEASE
Monday, May 16, 2016

United States Reaches Settlement With Defense Contractor Over Yacht Expenses

PHILADELPHIA - Materials Sciences Corporation, a government contractor  headquartered in Horsham, Pennsylvania, has agreed to pay the United States $219,909 to resolve allegations that the company unreasonably billed federal agencies to cover depreciation and other expenses associated with a 58-foot-long Hatteras Yacht Fisherman.  The settlement was announced by United States Attorney Zane David Memeger.

Specifically, the United States contended that between 2006 and 2015, Materials Sciences Corporation described the yacht as the company’s Mississippi office and incorporated yacht-related expenses into the company’s indirect cost rate submissions to receive payment under government contracts, primarily with the United States Navy.  The United States contended that the yacht-related costs were unreasonable and therefore unallowable.

Materials Sciences Corporation also agreed not to use the yacht for any purpose and to dispose of the vessel within a specified period of time.  The agreement therefore ensures that the company’s billing practice will not repeat itself in the future.

As part of this settlement, Materials Sciences Corporation did not admit liability or wrongdoing.

This investigation was led by the United States Naval Criminal Investigative Service and the United States Department of Defense Criminal Investigative Service. The case was handled by Assistant United States Attorneys Michael S. Macko and Virginia Powel.

Updated May 16, 2016