Company, CEO to Pay $2.75M to Resolve Government Contracting Fraud Allegations
(Source: Air Force Materiel Command; issued Jan 30, 2019)
WILMINGTON, Del. --- David C. Weiss, United States Attorney for the District of Delaware, announced Jan. 29, 2019, that E.M. Photonics, Inc. (EMP) and its Chief Executive Officer, Eric Kelmelis, have agreed to pay $2.75 million to resolve allegations that they violated the False Claims Act by seeking disbursements from federal agencies for falsified labor costs and duplicative work in order to maximize charges to contracts awarded by federal agencies.

As alleged in the settlement agreement, from January 2009 to April 2014, EMP received funds under seven different contracts and grants awarded through the federal Small Business Innovation (SBIR) and Small Business Technology Transfer (STTR) programs. These two federal initiatives are the nation’s largest source of early stage/high risk funding for start-ups and small businesses.

To be eligible, the small business must be American-owned, organized as a for-profit entity, and have less than 500 employees. There are 11 federal agencies that participate annually in the SBIR program and five that participate in the STTR program. Here, the contracts and grants at issue were awarded by a variety of federal agencies, including the Department of the Navy; Defense Advanced Research Projects Agency; Department of the Air Force; Department of Energy; and the National Aeronautics and Space Administration.

This matter was investigated by multiple agencies, including the Defense Criminal Investigative Service, National Aeronautics and Space Administration's Office of Inspector General, Naval Criminal Investigative Service Northeast Field Office, Air Force Office of Special Investigations Procurement Fraud Detachment 6 Operating Location-B, Army Criminal Investigation Command, and Department of Energy's Office of Inspector General.

"The settlement agreement announced today is the result of a joint investigative effort and is demonstrative of the DCIS' ongoing commitment to work with its law enforcement agency partners and the U.S. Attorney's Office, District of Delaware, to identify those who submit false claims to the federal government in order to fraudulently receive SBIR and STTR funding,” said Leigh-Alistair Barzey, Special Agent-in-Charge of the DCIS Northeast Field Office. “One of the top investigative priorities of the Defense Criminal Investigative Service (DCIS) is to ensure the integrity of the U.S. Department of Defense's (DoD) procurement system, to include the DoD's research and development programs."

The government alleged that Kelmelis and EMP engaged in two [principal] schemes to defraud the SBIR/STTR programs. First, EMP and Kelmelis directed EMP employees, or caused others to direct EMP employees, to falsely complete timesheets for direct labor that the employees did not perform and submit false invoices and public vouchers to the funding agencies for direct labor that was not performed on these contracts and grants.

Second, EMP and Kelmelis sought and received SBIR/STTR funding for essentially equivalent work already performed and funded by another government agency and falsely certified that such work was, in fact, non-duplicative. The government alleged that both of these schemes were designed to maximize charges to each contract or grant.

“The SBIR and STTR programs are critical components to our government’s economic strategy to fuel innovative small businesses across the United States. Any small business who seeks to participate in these programs must do so with integrity,” Weiss said. “In this era of limited government resources, our Office is committed to ensuring that every dollar spent on these critical economic programs is properly used – the public demands nothing less.”

The claims resolved by the civil agreement are allegations only, and there has been no determination of civil liability.

"I applaud the outstanding efforts of our agents and law enforcement partners, who successfully investigated this matter and with this agreement highlight the importance of protecting federal research funds," said NASA OIG Special Agent in Charge, Curtis Vaughn.

This case was investigated by Assistant U.S. Attorneys Jamie M. McCall and Jennifer Hall.

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Diehl Aviation Aquires New Engineering and Support Center (ESC) in Debrecen, Hungary
(Source: Diehl Aviation; issued Jan 30, 2019)
The aerospace supplier Diehl Aviation has today celebrated the opening of its new Engineering and Support Center (ESC) in Debrecen, Hungary.

Representing Diehl Aviation in Hungary, Dr. Mario Amschlinger, Diehl Hungary CFO, Christian Utz, Diehl Hungary COO, and Roman Damschke, ESC Debrecen Site Manager officially took possession of the new site during the celebratory opening in this eastern Hungarian university city.

Also attending the event were Péter Szijjártó, Minister of Foreign Affairs and Trade for Hungary, Dr. László Papp, Mayor of Debrecen, Róbert Ésik, President of the Hungarian Investment Promotion Agency (HIPA), the Members of Parliament Dr. Pósán Lajos and Dr. Simon Miklós, and Rainer von Borstel, Diehl Aviation CEO.

The Diehl Aviation ESC in Debrecen has been in development since 2016. The center, alongside the Hungarian production site in Nyírbátor, will support the Division, and its development and production activities in the country. Until recently, all support for the areas of Engineering, Administration, Program Management, Customer Services, and Procurement was chiefly located in Germany. By 2020, up to 150 Diehl Aviation employees will be based at the "Lion Office” in south-east Debrecen.

The decision to establish the ESC (the chief function of which will be to complement the existing capacities of the German Diehl Aviation sites) in Debrecen was based on the ideal background the city offers the aerospace supplier: the site’s cost advantages, its proximity to the Nyírbátor production site, the opportunity to work closely with the local university and the economic-cultural environment of the region.


Diehl Aviation is a Division of the Diehl Foundation & Co. KG, and unites all of the aerospace activities of the Diehl Group under one roof. Within the aerospace industry, Diehl Aviation and Diehl Aerospace (a Joint Venture with Thales) are leading systems suppliers for aircraft systems and cabin solutions.

Currently, Diehl Aviation employs over 5,400 people. The company's customers include the leading aircraft manufacturers Airbus (both aircraft and helicopters), Boeing, Bombardier, and Embraer as well as airlines and operators of commercial and corporate jets.

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