March 15, 2018 / 10:59 PM / 2 years ago

Toyobo to pay $66 million in U.S. bullet-proof vest fraud case

WASHINGTON (Reuters) - Japan’s Toyobo Co Ltd (3101.T) and its U.S. subsidiary have agreed to pay $66 million to resolve claims they sold defective fiber used in bullet-proof vests bought by the United States for federal, state, local and tribal law enforcement agencies, the Justice Department said on Thursday.

The settlement resolves allegations that Toyobo and Toyobo U.S.A. Inc, also known as Toyobo America Inc, from at least 2001 to 2005, knew that its Zylon fiber degraded quickly in normal heat and humidity and that this made bullet-proof vests containing the fiber unfit for use, the department said in a statement.

Osaka-based Toyobo is the sole maker of Zylon.

Despite this knowledge, the company continued to market Zylon for bullet-proof vests and published misleading data that understated the degradation problem, the statement said.

“Bullet-proof vests are sometimes what stands between a police officer and death,” Attorney General Jeff Sessions said.

“Selling material for these vests that one knows to be defective is dishonest, and risks the lives of the men and women who serve to protect us,” he added, according to the statement.

When U.S. manufacturer Second Chance Body Armor recalled some of its Zylon-containing vests in late 2003, Toyobo started a public relations campaign to encourage other body armor manufacturers to keep selling Zylon-containing vests, the statement said.

These actions delayed by several years U.S. efforts to determine the extent of Zylon degradation, after which a government study in August 2005 found that more than half of used vests could not stop bullets they had been certified to stop, the statement said. The government’s National Institute of Justice then decertified all Zylon-containing vests, it said.

The settlement is part of a larger probe by the Justice Department’s Civil Division into the body armor industry’s use of Zylon, the statement said.

“The Civil Division previously recovered more than $66 million from 16 entities involved in the manufacture, distribution or sale of Zylon vests, including body armor manufacturers, weavers, international trading companies, and five individuals,” it said.

The settlement also resolves allegations in another lawsuit brought by Aaron Westrick, a former law enforcement officer who used to work at Second Chance Body Armor and is a criminal justice professor. Westrick will receive $5.78 million under whistleblower provisions of the False Claims Act, the statement said.

Reporting by Eric Walsh; Editing by David Alexander; Editing by Richard Chang

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