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Federal Contractor Misconduct Database (FCMD)
The federal government routinely awards contracts to companies with
histories of misconduct, including
…
contract fraud and other
violations. POGO believes that providing this website will help to
improve contracting decisions and increase public knowledge of how
the government spends billions of taxpayer dollars each year.
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Inadequate Internal Accounting Controls and Failure to Maintain Accurate Books and Records from 2011 to 2014
Under a settlement with the Securities and Exchange Commission (SEC), L3 Technologies (formerly L-3 Communications Holdings) agreed to pay $1.6 million to settle charges that it failed to maintain accurate books and records and had inadequate internal accounting controls. An SEC investigation found that, in December 2013, L3’s Army Sustainment Division improperly recorded $17.9 million in revenue on a U.S. Army contract by creating invoices associated with unresolved claims against the Army that were not delivered when the revenue was recorded. In October 2014, following an investigation conducted by outside advisors, L3 concluded it had material weaknesses in its internal controls over financial reporting for the fiscal year ended Dec. 31, 2013 and for the first quarter of 2014. This investigation uncovered accounting errors in L3’s Aerospace Systems segment from 2011 to 2014, which, when combined with the improper accounting associated with the undelivered invoices, had the effect of overstating the company’s pre-tax income by $169 million. L3 neither admitted nor denied the SEC’s findings. The settlement was part of a long-running case exposed by a False Claims Act lawsuit filed by a former employee, Robert A. Martin (see L-3 Communications instance, “U.S. ex rel. Martin v. L-3 Communications (CONUS Replacement Center Overcharging)”).
- Misconduct Type
- Securities
- Enforcement Agency
- SEC
- Contracting Party
- Defense - Army
- Court Type
- Administrative
- Disposition
- Settlement
- Date of SEC Order
- 1/11/2017