NJ defense contractor admits fraud over parts made outside U.S

Reuters News
Posted: Apr 19, 2011 3:45 PM
NJ defense contractor admits fraud over parts made outside U.S

NEW YORK (Reuters) - A New Jersey defense contractor pleaded guilty to fraud after helicopter parts and other items he claimed were made in the United States turned out to be foreign-manufactured and reportedly failed during use, authorities said on Tuesday.

Former company president Eric Helf, 38, and his business, Staff Manufacturing Corporation, also known as Staff Gasket, both admitted to the scheme in U.S. District Court in Newark, New Jersey, on Monday.

The company based in Alpine, New Jersey, was contracted by the Department of Defense between August 2004 and March 2006 to provide replacement parts for U.S. military operations. Defense Department regulations mandate that many mission-critical items be manufactured domestically to precise specifications.

However, Helf bought the parts from overseas manufacturers who produced them at a much lower per-unit price than American manufacturers, according to court documents.

Rebekah Carmichael, spokeswoman for the U.S. Attorney's Office in Newark, told Reuters on Tuesday that $791,091 is the total value of the contracts that were fraudulently obtained.

Many of the foreign-made items -- specifically lock pins for helicopters -- were later reported to have failed while on operations.

Helf faces up to five years in prison when he is sentenced on August 2. Staff Gasket may also be fined up to $1.4 million.

(Reporting by Bernd Debusmann Jr.; Editing by Barbara Goldberg and Jerry Norton)