United States Attorney Freedman Announces First-Ever Settlement of False Claims Act Whistleblower Case Involving Grants for Restaurants and Similar Businesses Struggling During the COVID-19 Pandemic
ALBANY, NEW YORK – Industrial Equipment and Supply Company, LLC (IESC) and its principals, Mark Nystoriak and Sandra Nystoriak, of Latham, New York have agreed to pay $75,000 to resolve allegations that they violated the False Claims Act for selling counterfeit batteries to the federal government on a contract valued at $33,928.60.
The announcement was made by United States Attorney Carla B. Freedman; Scott Moreland, Special Agent in Charge, U.S. Army Criminal Investigation Division’s Major Procurement Fraud Field Office; Peter J. Tolentino, Special Agent in Charge, Naval Criminal Investigative Service, Economic Crimes Field Office; and William W. Richards, Special Agent in Charge, Air Force Office of Special Investigations, Office of Procurement Fraud, Detachment 6.
“Our military received counterfeit batteries after a contractor cut corners to increase profits,” said United States Attorney Freedman. “We will continue to use the False Claims Act to hold government contractors accountable when they do not meet contract requirements.”
The Defense Logistics Agency (DLA) is the Department of Defense’s (DoD) combat logistics support agency and manages DoD’s supply chain, delivering consumable supplies to DoD components all over the world. IESC contracted to sell batteries to DLA for a total contract amount of $33,928.60. The contract required that the batteries be manufactured by SAFT America, Inc. and fit a standard military specification. IESC represented that it would comply with the Buy American Act (BAA) and supply domestically manufactured batteries. IESC procured the batteries from a supplier in Singapore and failed to verify that the Singapore distributor was an authorized SAFT America distributor. DLA distributed the batteries throughout its supply system, and later received reports that the batteries caused military equipment failures. DLA subsequently determined the batteries were counterfeit.
This settlement resolves the United States’ allegations that IESC violated the False Claims Act by recklessly disregarding a substantial risk that the batteries would be counterfeit when it procured batteries from an unauthorized distributor in Singapore, who offered a lower purchase price than an authorized SAFT distributor would have.
This settlement was the result of a joint investigation by the U.S. Army Criminal Investigative Division, Syracuse Fraud Branch Office; the Naval Criminal Investigative Service, Economic Crimes Field Office; and the Air Force Office of Special Investigations, Procurement Fraud Detachment 6 Rome, New York.
Assistant U.S. Attorney Christopher R. Moran represented the United States in this matter.