Michele Beckwith Acting U.S. Attorney | U.S. Attorney for the Eastern District of California
Defense contractor Aero Turbine Inc., based in Stockton, California, and private equity firm Gallant Capital Partners LLC of Los Angeles have agreed to pay $1.75 million to resolve allegations under the False Claims Act. The settlement addresses claims that the companies knowingly failed to comply with cybersecurity requirements in a contract with the Department of the Air Force.
The United States acknowledged that both Aero Turbine and Gallant took significant steps after discovering the issue, including cooperating with the government and taking remedial action.
“Government contractors must follow required cybersecurity standards to protect sensitive defense information,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “When defense contractors fail to comply with cybersecurity requirements, they can mitigate the consequences by making timely self-disclosures, cooperating with investigations, and taking prompt remedial measures.”
“Every defense contractor must provide adequate security to safeguard covered defense information,” said Acting U.S. Attorney Kimberly A. Sanchez. “We commend Aero Turbine and Gallant for disclosing the issue and promptly cooperating to address it. We encourage others to follow their example of self-reporting to resolve violations.”
“Protecting the integrity of the Department of Defense (DoD) procurement processes is a top priority for the DoD Office of Inspector General’s Defense Criminal Investigative Service (DCIS),” said Director Kelly Mayo of DCIS. “Failing to comply with DoD contract specifications and cybersecurity requirements puts DoD information and programs at risk of exploitation. DCIS will continue to collaborate with our law enforcement partners and the Department of Justice to investigate allegations of false claims on DoD contracts.”
“This case serves as a reminder that cybersecurity transcends mission sets. Ensuring companies adhere to robust cybersecurity safeguards is integral to maintaining the Air Force’s operational edge against adversaries,” said Special Agent in Charge Caroline Galinis of the Air Force Office of Special Investigations (AFOSI), Procurement Fraud Detachment 1. “AFOSI’s Procurement Fraud team, alongside investigative partner agencies and the Department of Justice, played a critical role in protecting U.S. national security interests.”
According to federal authorities, from January 2018 through February 2020, Aero Turbine did not implement certain controls required by National Institute of Standards and Technology (NIST) Special Publication 800-171 as mandated by its Air Force contract—controls meant to prevent potential exploitation or loss of sensitive defense data.
Additionally, between June and July 2019, Aero Turbine and Gallant provided files containing sensitive defense information to an Egypt-based software company whose staff were not authorized under contract terms to access such material.
After discovering these issues, both companies submitted written disclosures about what had occurred, cooperated during government investigations, and made efforts toward remediation.
The settlement was reached through cooperation among several agencies: The Justice Department’s Civil Division; Commercial Litigation Branch; Fraud Section; U.S. Attorney’s Office for the Eastern District of California; DCIS; AFOSI; and Air Force Materiel Command Law Office Procurement Fraud Division.
Attorneys Robin Overby and Christopher Terranova from the Fraud Section as well as Assistant U.S. Attorney David Thiess managed aspects related to this matter.
Authorities noted that all resolved claims are considered allegations only; there has been no legal determination regarding liability.
A copy of the settlement is available for review online.
