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The Wyoming State Commission of Commerce recruited Tungsten Heavy Powder-a California defense contractor based in Laramie-has agreed to pay the federal government $5.6 million to resolve the Justice Department's fraud allegations.
Federal prosecutors accused the company of violating the "False Declaration Act" by manufacturing U.S.-funded Israeli military parts in China-federal law does not allow this practice-while "falsely proving that its product materials were purchased in the United States." , According to a statement. Ministry of Justice press release.
The company’s “illegal activities directly threaten the economic and national security and safety of US military personnel, and provide false materials of unknown quality and integrity from uncensored Chinese suppliers for defense supplies provided to [The Department of Defense] ," the federal claims state.
Tungsten Heavy Powder's administrative office is located in San Diego and also produces parts for the US military. Court documents show that since 2008, it has signed a contract with the US government worth more than 7 million U.S. dollars.
According to court documents, federal lawyers now claim that the company "participated in a plan to deliberately defraud the United States" during that time.
In 2015, the Wyoming State Commission of Commerce and the Laramie Chamber of Commerce Business Alliance recruited THP, which had no domestic manufacturing capacity before, and established a manufacturing plant in Wyoming.
The Wyoming Business Council provided THP with a $3 million state grant to build a factory in Laramie.
The State Loan and Investment Commission, composed of five elected officials from across the state of Wyoming, approved the grant in December 2015.
The leadership of THP established a second company, Tungsten Parts Wyoming, to operate the Laramie factory, which started manufacturing in 2017.
According to a statement provided by attorney Megan Overmann Goetz on behalf of the company, Wyoming Tungsten Parts Company employed 32 employees in 2017, which has tripled since 2019. The plant produces tungsten parts-including balls, cubes, buffers, warheads and armor-piercing projectiles-for use in armor-piercing ammunition and other military applications. The company's customers include major aerospace and defense companies, including Lockheed Martin, BAE Systems, and Northrup Grumman. The company claimed in court documents last week that it is now the "largest independent commercial employer" in Wyoming and is installing equipment that will double the speed of production.
The statement stated that the company currently has 140 employees in Wyoming. Despite the settlement, the company "remains an outstanding and viable company and employer in Wyoming."
Nonetheless, a court document submitted by the company shows that the company is now struggling to maintain its reputation in the defense industry because THP's competitors and other critics have shared "disparaging" information about the company. The company’s lawyers wrote in a filing on Thursday that, as a result of these efforts, “the customer terminated, adjusted or postponed the business relationship with Wyoming Tungsten Parts”.
Goetz’s statement emphasized that THP did not “recognize any responsibility” in the settlement and stated that Wyoming Tungsten Parts Company has initiated “significant management changes” since 2019. The statement stated that the recent settlement involved allegations of changes earlier than 2019.
The Justice Department’s allegations were originally filed in a sealed complaint in October 2018, reflecting the allegations of former Wyoming Tungsten Parts employees who filed their own federal lawsuits in 2019 for improper dismissal, defamation and whistleblower retaliation .
These employees claimed that the company continued to manufacture in China during 2018 and 2019, which is a long time before the Laramie plant began operations.
According to a statement issued by the company in August, the lawsuit also ended in a settlement last summer when the company’s former owner and CEO Joseph Seroff “resigned and retire”. When former employees questioned the legality of Wyoming Tungsten Parts Company's practices, they accused Serov of retaliating against them.
When Serov resigned, the new CEO, JP Batache, stated in a statement that Serov had issued a "untrue" public statement regarding the allegations in the lawsuit.
"Sir. In addition to the emotions and pressure of the lawsuit itself, Serov is going through an emotional period in his life, when he makes worrying remarks to employees," Batash said. In an interview with Laramie Boomerang in January 2020, Serov accused former employees of stealing company property, breaching contracts, and attempting to make a “hostile takeover” of the company.
Goetz said Serov is still a minority shareholder in Tungsten Parts Wyoming.
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Wyoming State Commission of Commerce officials told WyoFile that when Wyoming recruited THP, state officials believed that the company’s manufacturing in China would cease because it began production in Wyoming.
"We know their manufacturing operations in China very well," said Ron Gullberg, director of strategic partnerships at WBC. "One reason they want to move back to the United States is the [Department of Defense] contract. We are working hard to develop and diversify the economy of Wyoming, and manufacturing is undoubtedly a key element."
WBC business development director Brandon Marshall (Brandon Marshall) said that the initial $3 million state grant was not directly allocated to THP. Instead, the money went to the city of Laramie, which built the building where TPW moved its manufacturing plant. According to Laramie Boomerang, Tungsten Parts Wyoming paid the rent before finally purchasing the building in 2019.
Marshall said this approach reflects the way the WBC issues all grants under the business-ready community grants and loan program, which only provides funds directly to government entities. He said the framework provides protection for public funds.
Marshall said: "The community and the country are not affected by bad actors, or just people who mess up and fail in business." "We are still protected. In this case, the building may be private, but the money It's back to the local government."
Marshall said that WBC conducted background checks and checked the company's financial records during the recruitment process.
"There is no indication that these people will be in trouble in a few years," Marshall said. "We do these checks. Is it perfect? Obviously not."
Marshall said that during the recruitment process, THP told Wyoming officials that its Israeli contract was a key reason for establishing manufacturing in the United States. THP must now repay the 2016 contract with Israel.
"The company was also talking about bidding for contracts with the Israel Defense Forces. The requirements for these contracts are exactly the same. In fact, because the US government provides funding to the Israel Defense Forces, you must own American-made products," Marshall said.
Federal lawyers claim that 67% of the cost of tungsten supply in the Israeli contract is for products made in China.
The federal claim against THP was filed as part of the qui tam complaint, which is a legal method that allows private whistleblowers (referred to as "related parties" in the law) to obtain partial recovery of damages.
In this case, the person involved includes Gregory Caputo, the former general manager of THP who left the company in 2017. Although Tungsten described itself as a manufacturer as early as 2015, Caputo claims that the company did not have production capacity until the Laramie business started in 2017.
The lawsuit stated: "Although the signed contract stipulates the requirements for American content and prohibits procurement from China, THP essentially acts as a middleman for China-made defense materials."
Caputo claimed that Serov did everything in 2016 and 2017 to conceal the fact that the company illegally manufactured parts and components in China.
Serov forged paperwork, lied to federal investigators who asked about the company's manufacturing practices, transferred tungsten parts from barrels with China marks to the barrel, falsely stated that these parts were manufactured in the United States, and asked employees to change the specifications of the parts And the certificate was translated from Chinese to English, Caputo claimed.
Another related person in this case is THP's competitor Global Tungsten & Powders Corporation.
The lawsuit alleges that THP inflated supply costs to earn an additional $2.6 million in profits, and that the company "caused the U.S. government and defense contractors to abandon contracts to legitimate U.S. companies and instead provide contracts to companies that essentially act as brokers. ". Defense goods manufactured in and shipped from China. "
Caputo and Global Tungsten & Powders Corporation will receive 17% of the total settlement of US$5.6 million.
Tungsten Parts Wyoming’s statement stated, “If THP suffers, the entity that will benefit is Global Tungsten because it can bid higher prices and try to eliminate major competitors.”
Last year, as part of the CARES Act, Tungsten Parts Wyoming received $350,000 to $1 million in salary protection program funding from the federal government.
The Small Business Administration has not disclosed the exact dollar amount.
Despite reaching a settlement of US$5.6 million, legal disputes with THP continue. The plaintiff’s lawyers have asked a federal judge to compel THP to pay the plaintiff US$500,000 to pay the attorney’s fees.
Tungsten Parts Wyoming sued two former employees of Global Tungsten & Powders Corporation and Laramie Factory in federal court on Thursday, claiming that they had been anonymously mailing "damaging and confidential" information to TPW customers in recent months. TPW's lawyers claimed that these efforts violated antitrust laws and "caused and continued to cause serious and irreparable financial and business-related damages to TPW Wyoming."
Daniel Bendtsen is a full-time student at the University of Wyoming. He previously worked for Riverton Ranger and Laramie Boomerang for five years. Originally from Upper Peninsula, Michigan, more works by Daniel Bendtsen
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This is interesting for liberals like me. However, for the "straightforward" kapuptalists course, the standards are the same. Ride them, you guys.
If the Wyoming Business Council wants to create jobs in Wyoming, this looks good on paper.
Just like the two elk projects of North American Power Group and Enz Sons, the smell of free money, or the scam of making money from those who are ready to distribute the money, is a temptation that many people cannot resist.
The "government" killed George Freud with a fake 20 dollars. I want to know how many companies are doing much worse than Old George.
The company should be shut down for threats to national security; not to mention its "theft" of public funds.
In improving and investing in the economy of Wyoming, we are facing chicken and egg problems. Many things that Wyoming needs to attract workers and companies are costly. Prepaid money.
For example, investment in infrastructure such as affordable Internet services. Better community healthcare. Adequate housing supply to meet the affordable needs of workers (consistent with wages). Those who are clearly able to pay more have raised the minimum wage.
To bring this home, a friend is considering moving to Rand. She found that none could meet her needs, and almost none could meet the needs of anyone. There is the same story in Alpine (probably the fastest growing community between WY and Jackson). Cody is not much better. She needed a laundromat while traveling, and Rand had one. It was too bad, and she decided that she could not move there unless she found a place with a washing machine. Airline service? poor. grocery store? Disappointing dedication. Community recreation service? Not impressive. salary? Depressed. Mobile phone service? Hi!
Attract all the external companies you want with free funds, but also invest in community infrastructure to provide local investors with funds to improve the community.
COVID proves the importance of affordable high-speed internet. If most people cannot afford it, the fiber optic ring in our state is meaningless.
It's time to take a serious look at what might actually attract people to move here instead of leaving Wyoming. Jackson has 100 jobs. There is no housing.
What a group of cowboys.