December 19, 2017 / 4:53 PM / 3 years ago

United Technologies resolves U.S. counterfeit parts probe for $1 million

(Reuters) - United Technologies Corp (UTX.N) will pay $1.06 million to resolve claims that a company it indirectly owned falsely certified the authenticity of counterfeit parts incorporated into U.S. Army helicopter engines, the U.S. Justice Department said on Tuesday.

FILE PHOTO: United Technologies logo is displayed on a screen at the post where it's stock is traded on the floor of the New York Stock Exchange (NYSE) in New York, U.S., September 5, 2017. REUTERS/Brendan McDermid

The civil settlement with the Farmington, Connecticut-based aerospace supplier will resolve claims that a business it has since sold violated the False Claims Act while acting as a subcontractor to Rolls-Royce Holdings Plc (RR.L).

“Vulnerabilities caused by counterfeit parts will not be tolerated,” U.S. Attorney John Durham in Connecticut said in a statement.

United Technologies did not admit wrongdoing as part of the settlement and did not immediately respond to a request for comment.

The settlement centered on a pump and engine controls systems business that United Technologies came to indirectly own after purchasing aircraft components maker Goodrich Corp in July 2012.

As part of a deal to resolve a Justice Department antitrust lawsuit, United Technologies agreed to divest the pump and engine control systems business. United Technologies sold the business to Triumph Group Inc (TGI.N) in March 2013.

The department said the Goodrich business had been a subcontractor to Rolls-Royce, an Army contractor, and sold parts to the company to be included in the M-250 series of engines, which were installed in Army helicopters.

From 2005 to 2012, the Goodrich pump and engine control systems business bought, shipped and caused counterfeit microprocessors to be integrated into an engine control unit that was installed in the M-250 engines, Durham’s office said.

During that time, the Goodrich business provided to the government numerous false certifications as to the authenticity of the parts, according to the settlement agreement.

Prosecutors have previously brought criminal charges against two men in connection with the case, Jeffrey Krantz and Jeffrey Warga, who they say supplied computer chips to the Goodrich business that were then used in helicopters.

Krantz pleaded guilty to wire fraud and was sentenced in 2015 to three years of probation and a $100,000 fine. Warga pleaded guilty to conspiring to commit wire fraud and was sentenced in 2016 to three years of probation and a $10,000 fine.

Reporting by Nate Raymond in Boston; Editing by Tom Brown

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