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Press Release

Colorado-Based Defense Contractor to Pay $450,000 to Resolve False Claims Act Allegations Under Civil Settlement with United States

For Immediate Release
U.S. Attorney's Office, Western District of Texas

IONU Security, Inc. (“IONU”) a Defense contractor based in Longmont, Colorado will pay $450,000 under a civil settlement with the United States Department of Justice, announced United States Attorney Richard L. Durbin, Jr. this afternoon.  The settlement resolves allegations that the company submitted false claims to the government in violation of the False Claims Act, 31 U.S.C. §§ 3729-3733, as well as certain other claims.

The claims were submitted for services rendered under an Army Contract for Bradley Fighting Vehicles (“Bradleys”).  IONU provided Turret Control Drive Units (“TDCUs”) for the Bradleys under subcontracts with the Prime Contractor.  The TDCU is a control box that provides power to control the turret, including weapons systems, of a Bradley.  

The United States contends that, from April 2013 through mid-September 2013, IONU’s subcontractor manufactured the TDCUs with phenolic insulating washers that did not meet the requirements of the contract.  The subcontractor discovered the issue when the washers began cracking and breaking during testing in August and September, 2013.  IONU was informed of the issue, and the manufacturing was halted until new washers were procured that met the contract specifications.  However, IONU and the subcontractor determined that the non-compliant washers belonged to three lots, and had been used in TDCUs manufactured beginning in April 2013.  Despite knowing that over 100 TDCUs manufactured and shipped between April 1 and September 19, 2013 contained washers not manufactured to the contract specification, and despite knowing that a failure of a washer could result in an electronic short and catastrophic failure of the TDCU, IONU did not notify the Prime Contractor or the United States of the defective parts.

The investigation arose after a whistleblower notified the Department of Defense through its fraud hotline.  After the Army was notified, it required the retrofit of the TDCUs.  The retrofit revealed that 96% of the washers removed from the affected TDCUs in the field were cracked or broken, putting the units at risk of failure.

"When defense contractors supply our armed forces with equipment and/or supplies, those contractors are required to meet certain required specifications," said Special Agent in Charge Janice M. Flores, of the

Defense Criminal Investigative Service (DCIS) Southwest Field Office.  "This settlement highlights the Federal Government's continuing resolve to ensure those who defraud the Department of Defense, especially those that put the safety of our men and women serving in the military at risk or unable to accomplish their mission, are held accountable for their actions."

To report fraud, waste, and abuse regarding programs under the purview of the U.S. Department of Defense go to or call 800-424-9098.

Under the settlement announced today, IONU will pay $450,000 to resolve the company’s potential False Claims Act and certain other liability.  Assistant United States Attorney Susan Strawn handled this matter for the United States Attorney’s Office, Western District of Texas.

Updated April 18, 2016