United States v. Aerodex, Inc., Civ. No. 68-1165.

• Decision Date: 30 October 1970
• Docket Number: Civ. No. 68-1165.
• Citation: 327 F. Supp. 1027
• Parties: UNITED STATES of America, Plaintiff, v. AERODEX, INC., Raymond M. Tonks, Frank J. Crawford, and Hermann Waker, Jr., Defendants.
• Court: U.S. District Court — Southern District of Florida

327 F. Supp. 1027

UNITED STATES of America, Plaintiff, v. AERODEX, INC., Raymond M. Tonks, Frank J. Crawford, and Hermann Waker, Jr., Defendants.

Civ. No. 68-1165.

United States District Court, S. D. Florida.

October 30, 1970.

L. Stanley Paige, Chief, Frauds Section, U.S. Dept. of Justice, for plaintiff.

Walton, Lantaff, Schroeder, Carson & Wahl, Walters, Moore & Costanzo, Miami, Fla., for defendants.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

CABOT, District Judge.

Final hearing in this cause was held before the court without a jury for eight trial days beginning on February 16, 1970.

During the trial the court reserved ruling on the admissibility of certain exhibits and on certain motions and directed the parties to submit memorandum briefs thereon. The court has considered the briefs and is otherwise advised in the premises, and it is ordered that:

1. Defendants' Exhibit 19 for identification, defendants' Exhibits 26A-F for identification, and the Government's Exhibit 119 for identification are received in evidence.

2. Government's post-trial motion that its Exhibit 97 for identification, which the court earlier ruled was not admissible, be received in evidence, is denied, since it was not included on the pretrial stipulation entered into between the parties.

3. The court takes notice of Parts 1 and 2 of Chapter 4, and Chapter 13 of Secretary of the Navy Instructions concerning "Disposal of Navy and Marine Corps Records."

4. The defendants' separate motions to dismiss made at the close of the Government's case in chief and at the close of all the evidence are denied.

The court has considered the testimony, exhibits, and counsel's extensive post-trial written submissions, and makes the following

FINDINGS OF FACT

1. This is a civil action brought by the United States of America under the provisions of Sections 3490 and 5438, Revised Statutes, Title 31 U.S.C. § 231, and 28 U.S.C. § 1345. Jurisdiction of this court is conferred by Section 3491, Revised Statutes, Title 31 U.S.C. § 232, and 28 U.S.C. § 1345.

2. At all relevant times Aerodex, Inc., was a corporation organized and existing under the laws of the State of Delaware; Raymond M. Tonks was president and general manager, Frank J. Crawford was vice-president in charge of the commercial division, and Hermann Waker, Jr., was manager of the commercial division of Aerodex, Inc.

3. At such times none of the defendants was a person in the military or naval forces of the United States or in the militia called into or actually employed in the Service of the United States.

4. The Department of the Navy of the United States entered into a certain contract with defendant Aerodex, Inc., dated October 6, 1962, according to the terms of which defendant corporation was to supply certain parts for designated aircraft engines for a total price of $254,005.00. The contract provided in part for the furnishing by Aerodex, Inc., of 300 Wright Aeronautical Division Master Rod Bearings for the Curtiss-Wright R1820 engines to be in accordance with Wright Aeronautical Division of Curtiss-Wright Corporation Part Number 171815 at a cost of $90.00 each, for a total of $27,000.00.

5. The contract provided that the bearings were to be identified by applicable Curtiss-Wright Corporation, Wright Aeronautical Division, part number, and must conform to the requirements of the respective drawing for said article, and that all bearings must be in new, unused condition.

6. The contract also provided for preliminary inspection of the bearings at the plant of Aerodex, Inc., in Miami, and for a "100% final inspection" by the Overhaul and Repair Shop of the consignee, Naval Air Station, Jacksonville, Florida.

7. Defendant Frank J. Crawford, on September 18, 1962, prepared and submitted a bid to the Navy Aviation Supply Office for 300 bearings Part Number (P/N) 171815 at $90.00 each, and on September 20, 1962, informed the Aviation Supply Office that the bearings were new and unused.

8. Defendants purchased 300 bearings P/N 117971 and 117971Y10, and caused each of them to be reworked by replacing the lead-tin overlay on the inside diameter. The bearing was then re-identified as P/N 171815.

9. In October, 1962, Aerodex, Inc., delivered the 300 master rod bearings in three shipments to the Jacksonville Naval Air Station. Each bearing bore the part number identification "171815," and a stamped symbol "ADX," designating Aerodex, Inc., as the source.

10. For each shipment, the defendant presented to the Department of the Navy an invoice claiming payment at the contract rate of $90.00 each for Curtiss-Wright master rod bearing P/N 171815.

11. These three invoices, together with Forms DD-250 (Material Inspection and Receiving Report), were relied upon by the Department of the Navy in preparing vouchers which incorporated the invoices by reference. The vouchers, with the incorporated invoices and Forms DD-250, constituted claims against the United States for payment of money. The United States paid each claim in full.

12. P/N 117971 and P/N 171815 are nearly identical in appearance. The difference in metal composition of the steel back is not visually discernible, but can be ascertained by simple, non-destructive tests, one of which is the Rockwell hardness test. Since the Aerodex bearings were stamped with P/N 171815, appeared to be new and unused, and met the dimensional requirements, they were, after visual and dimensional inspection, installed in aircraft engines. The "100% final inspection" to be made at Naval Air Station, Jacksonville, by the Navy as provided in the contract, was not made. Indeed, there was no clear showing as to the meaning of the term and one government witness stated that they were not equipped to do such tests, which would be destructive of the bearings.

13. The 300 bearings delivered by Aerodex were actually P/N 117971 and P/N 117971Y10 and were not in accordance with Wright Aeronautical Division, Curtiss-Wright specifications for P/N 171815 in two particulars: (1) the steel backing was made of low carbon steel, whereas P/N 171815 was constructed of heat treated high carbon steel with a specific hardness requirement fifty percent higher than P/N 117971; and (2) the tin in the lead-tin overlay on the inside diameter was substantially less than the Curtiss-Wright minimum specifications for P/N 171815.

14. Raymond M. Tonks was the president and chief executive officer of Aerodex, Inc., and was active in the daily conduct of the corporation's business. He executed the pertinent Navy contract and approved the purchase of the 300 P/N 117971 bearings, which were furnished the Navy instead of the bearings specified by the contract.

15. On or about September 18, 1962, Frank J. Crawford sent a telegram to the Navy submitting a quotation to supply P/N 171815. At that time there was no more than one such part in Aerodex's inventory. He then arranged for the purchase of 300 P/N 117971 bearings from James G. Boone, signed the purchase requisition therefor, and approved the work orders which provided for the rework and re-identification of P/N 117971 and 117971Y10 to P/N 171815 for shipment to the Navy. Crawford knew the invoice for each such shipment would and did designate the bearings furnished as P/N 171815. Subsequently, Crawford willfully gave to the Navy and the Federal Aviation Agency false information as to the source and the identity of the bearings furnished.

16. Hermann Waker, Jr., in his capacity as manager of the commercial division of Aerodex, Inc., had general responsibility for the daily operation and activities of that division, particularly with respect to inventory, purchases, and sales. Waker knew that the pertinent contract called for P/N 171815, and that bearings of a different part number had been reworked and reidentified at Aerodex, Inc., prior to their shipment to the Navy. Waker supervised the employees who prepared the work orders calling for the rework and re-identification of the bearings.

17. The aforesaid invoices were false and were known by defendants Aerodex, Inc., Raymond M. Tonks, Frank J. Crawford, and Hermann Waker, Jr., to be false. Each of the individual defendants knowingly caused the presentation of the false claims to the United States through the purchase of non-conforming bearings, their rework and re-identification to the part number called for in the contract.

18. Defendant Aerodex, Inc., was advised by the Contracting Officer, Navy Aviation Supply Office on August 13, 1963, that the bearings delivered under the contract were defective in material and workmanship and were not in conformance with the specifications and other requirements of the contract.

19. Upon confirmation, through various tests, that the bearings furnished by defendant corporation were discrepant, the Navy ceased installing them in aircraft engines and instituted a program to recall and retrofit engines in which discrepant bearings had been installed.

20. Between December, 1962, and June, 1963, a retrofit program was performed at Naval Air Station, Jacksonville, during which the bearings furnished by Aerodex were removed from aircraft engines and were replaced with bearings P/N 147846. This new bearing superseded subject bearing P/N 171815, and had been specified by the Navy for replacement in the R1820 engine prior to the order for the retrofit program involving the Aerodex bearings.

21. The recall and retrofit program was based upon the Navy's determination that the unknown and spurious quality of bearings furnished by defendant corporation constituted a safety hazard. The master rod bearing is located in the heart of the power plant section of the R1820 engine and performs a critical function. Cracking of the steel shell of the bearing can cause seizure of the engine and failure in flight, resulting in emergency or crash landing. However, there is no evidence that any main bearing failure, of which there were an increasing number...