Plummer Ends Fraud Litigation

Stephanie A. Weiss

Plummer Precision Optics Co. and several company officials have agreed to pay $3.25 million in fines and other settlement costs to end federal civil and criminal charges of fraud and export violations.

The settlement will not affect Plummer's recent acquisition by Edmund Scientific Co. of Barrington, N.J.

In the settlement, the company (now calling itself Blue Jaunte Co. Inc.) and its former vice presidents of manufacturing and operations, Walter Lagger and Max Haskins, agreed to plead guilty to one criminal count of conspiracy to make false claims and two counts of Arms Export Control Act violations.

As part of the agreement, the company will pay an $875,000 fine plus a $1200 special assessment. Its maximum criminal penalty could have been $2.5 million and full restitution. Lagger and Haskins each face the possibility of additional fines of up to $250,000, plus up to five years in prison.

The company also agreed to pay a $2.375 million penalty to settle the civil portion of the litigation, said Assistant US Attorney Seth Weber. He said the US Department of Justice could release details of the settlement this month.

Besides the civil and criminal penalties, the Department of Defense will consider administrative penalties such as suspending or barring Plummer from future defense contracts. Officials will evaluate whether Edmund Scientific makes management or administrative changes that would be likely to prevent fraud at Plummer in the future.

The case stems from a federal "whistle-blower" case that Bob Basore, the company's former director of marketing, filed in 1997. The US Attorney's Office took over the case in 1999, accusing Plummer and officials of purposely falsifying documents and shipping nonconforming and defective optics to the US military and military contractors from about 1990 to 1998.

"This isn't a case of one guy missed one inspection report," Basore said. "It was blatant: hundreds of thousands of lenses made wrong and shipped out to the customer anyway."

In the fraud count, the US Attorney's Office alleges that Lagger and Haskins told employees to falsify inspection reports and other documents, and to ship out-of-specification antireflection-coated optics and doublets that were components for military weapons systems and laser rangefinders. The related civil lawsuit outlines extensive allegations culled from more than 300 boxes of documents and many interviews with current and former Plummer employees.

"There were employees who were correctly doing their job and would fail parts during testing," said Heather Ferris, a special agent with the Defense Criminal Investigative Service. "They would be told by management, 'They do pass the test."

Bob Koons, group manager of the Department of Defense investigation, described that scenario as common among defective product cases, which account for about one-third of the agency's workload each year. He could not recall another photonics case in his division, but he said defective product cases plague all levels of defense suppliers, from local machine shops to Top 100 primary contractors.

During the investigation, Plummer's defense optics contracts continued, but "the Army was apprised of the fact that we had allegations that might affect the quality of the lenses," Koons said. "They would have been more diligent in their oversight."

In the export violations, the company is accused of sending optical wedges to Saab Training Systems AB in Huskvarna, Sweden, and reflex collimator lenses to Aimpoint AB in Gällivare, Sweden, without first obtaining an export license.