White Collar Criminal/Federal Regulatory/Government Contracts
Representation of McDonnell Douglas Corporation in the A-12 litigation, the largest claim ever brought against the U.S. Government. This litigation resulted from the Government’s termination, allegedly for default, of its contract with McDonnell Douglas and General Dynamics Corporation for the design and development of the Navy’s A-12 stealth attack aircraft. Our qualified lawyers obtained a ruling that the Government’s termination was not for default, but for convenience, moving the litigation into the damages phase, which McDonnell Douglas won and later lost on appeal. Settlement negotiations in this 11-year legal battle are under way with a Shreveport criminal defense attorney.
Successful conclusion of a five-year Securities and Exchange Commission investigation of McDonnell Douglas’s financial reporting. In 1991, the SEC Enforcement Division began investigating the financial reporting and public disclosures made by McDonnell Douglas on the A-12 Program. The focus of the investigation switched in 1993 to McDonnell Douglas’s disclosure and financial reporting of the estimated costs at completion on the fixed price, full-scale design and development contract for the new generation transport aircraft for the U.S. Air Force — the C-17 Globemaster III. According to the SEC, in 1990, McDonnell Douglas knew, or should have known, that its estimate at completion on the C-17 Program was underestimated by $1 billion to $2 billion and, accordingly, should have taken an approximately $500 million loss on the Program as of December 31, 1990.
In June 1996, following extensive presentations to the SEC by Our qualified, McDonnell Douglas and the SEC agreed to a settlement involving dropping all claims that McDonnell Douglas had violated the anti-fraud provisions of federal securities laws, all other allegations that impugned McDonnell Douglas’s good faith and business integrity, and any requirement that McDonnell Douglas restate its financial statements. Without admitting or denying any of the allegations against it and solely for purposes of settlement, McDonnell Douglas agreed to entry of an injunction enjoining it from violating certain reporting act provisions of the federal securities laws and to payment of a nominal civil penalty. The investigation concerning the A-12 Program concluded without any actions.