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Magistrate Recommends Acceptance of Fraud Settlement

August 25, 1987

CINCINNATI (AP) _ A U.S. magistrate recommends approval of a proposed settlement under which General Electric Co. would pay the federal government $234,000 for submitting falsified vouchers for work it performed under an Air Force contract.

Magistrate Robert Steinberg concluded in a report Monday that GE’s proposed settlement is fair and reasonable. The settlement is subject to final approval by U.S. District Judge Carl Rubin, who may accept, reject or modify Steinberg’s recommendations.

Under the settlement with the U.S. attorney’s office, GE promises to pay the government a $234,000 civil penalty. GE also promises to forgo pursuing a claim for what it said was actual underbilling of the government for work performed under the falsified defense-contract vouchers.

GE acknowledged that supervisors falsified some vouchers in an apparent attempt to avoid layoffs. But the company said it had no intent to defraud the government.

The vouchers came from GE’s plant in the Cincinnati suburb of Evendale, which builds jet engines.

The GE-government settlement resulted from a lawsuit filed by John Gravitt, a former Evendale machinist. Gravitt, laid off by GE in a work force reduction, filed suit alleging that the vouchers had been falsified.

Under a little-known law dating to the Civil War, the Justice Department took over Gravitt’s lawsuit and negotiated the settlement with GE. The anti- profiteering law entitles Gravitt to a share of the settlement.

Gravitt and his lawyer, James Helmer Jr., oppose the settlement. They say it is a ″sweetheart deal″ that will cost the American public potentially millions of dollars in recovered payments and penalties.

But Steinberg concluded that the government diligently investigated the allegations. He found no evidence of collusion in reaching the settlement.

The settlement and penalty should deter further cheating, Steinberg concluded.

GE spokesman Chris Williams said the company will not comment until its lawyers read the magistrate’s recommendation.

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