Exporter Fined $1 Million for Export Violations

On October 29, 2010, U.S. Politics Todayreported that Rocky Mountain Instrument Co. (Rocky Mountain) has agreed to pay a $1 million penalty to settle civil charges related to illegal exports of sensitive military information.

This case represents the first time that the False Claims Act (FCA) has been used in relation to violations of International Traffic in Arms Regulations (ITAR) and the Arms Export Control Act (AECA). Rocky Mountain pleaded guilty to a related criminal charge in June of 2010 and was sentenced to forfeit $1 million and five years probation.The criminal plea agreement detailed that from 2005 to 2007 Rocky Mountain exported prisms and technical data related to various optics used in the military applications in Turkey, China, Russia, and South Korea without a required U.S. Department of State license.
The civil settlement covered a related allegation that Rocky Mountain caused defense contractors to submit false claims for payment to the Pentagon in violation of the FCA by illegally exporting technical data overseas that was later used to manufacture parts used in certain military equipment the contractors sold to the Pentagon.

The FCA prohibits companies from submitting claims for payment to the government that are false or fraudulent and is the government's primary law enforcement tool for combating fraud against the government.