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Boeing agrees to accept whistle-blower settlement

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CINCINNATI (AP) — The Boeing Co. has agreed to a $61.5 million settlement in a lawsuit filed by a whistle-blower who accused the aircraft manufacturer of installing faulty gears in at least two Army helicopters that crashed, the Justice Department said.

The suit, settled Thursday, was filed in 1995 by Brett Roby and later was taken over by the federal government. A trial had been scheduled for Sept. 11.

Roby alleged that a company he worked for as a quality control engineer, Speco Corp. of Springfield, Ohio, produced faulty transmission gears. He said Speco provided the gears for helicopter rotors to Boeing and that they were installed in hundreds of Chinook transport helicopters sold to the Army.

Two Chinook CH-47D helicopters crashed, one in Saudi Arabia in 1991 during Operation Desert Storm and the other at Fort Meade, Md., in 1993, according to Roby's lawsuit. There were injuries but no deaths.

Seattle-based Boeing knew that the gears could develop cracks, according to the lawsuit.

"Boeing continues to deny the allegations in these cases," the company said in a statement released Thursday. "Boeing believes that it acted not only legally but also ethically and responsibly in addressing the issues covered by this litigation."

The company said it agreed to the settlement "because resolving this protracted litigation is in the best interests of both Boeing and its U.S. Army customer" and would allow Boeing to seek appellate court rulings on two issues it said were important to the entire defense industry.

Boeing said it would challenge the scope of damages claimed by the government under the False Claims Act, and whether the Defense Department's self-insurance contract clause applies to actions brought under the False Claims Act.

Roby, who was fired from Speco in 1994, sued Boeing and Speco under the provisions of the Civil War-era law that allows citizens to sue over fraud against the government.

The government can intervene if it finds merit in such a suit. The whistle-blower receives a share of any damages the government recovers.

Speco settled with the government for $7.2 million in 1996 and was no longer a defendant. Roby received 23 percent — $1.7 million — of that settlement.

Roby will be paid $10.5 million under terms of the settlement with Boeing, the Justice Department said. The government will get $43.5 million, and Boeing is to pay $7.5 million for Roby's legal fees.

"My primary goal in this litigation was to ensure the safety of the men and women who fly in these aircraft by keeping Speco gears out of the air," said Roby, 42, of Ponte Vedre Beach, Fla.

"My second goal was to satisfy the United States with the terms of any settlement with Boeing. Both goals have been met and I authorized this settlement."

This was the second hit Boeing received from the federal government in as many days. On Wednesday, the Federal Aviation Administration levied a $1.24 million penalty against the company for failing to report possible parts defects on jets in active service, and for failures in quality-control procedures for its suppliers.