California Defense Contractor and Private Equity Firm to Pay $1.75M Over Cybersecurity

Two California companies agreed to pay $1.75 million for failing to comply with cybersecurity requirements in an Air Force contract.

Defense contractor Aero Turbine Inc., in Stockton, California, and private equity company Gallant Capital Partners LLC, in Los Angeles, settled to resolve their liability under the False Claims Act.

The government acknowledged in connection with the settlement that Aero Turbine and Gallant took significant steps that earned them credit for cooperating with the government, according to the U.S. Department of Justice.

The settlement resolves the liability of Aero Turbine and Gallant under the False Claims Act for knowingly submitting or causing others to submit false or fraudulent claims for payment on a Department of the Air Force contract. From January 2018 to February 2020, Aero Turbine allegedly failed to implement certain cybersecurity controls that could have potentially led to exploitation of the system or exfiltration of defense information, according to the DOJ.

From June to July 2019, Aero Turbine and Gallant also allegedly failed to limit unauthorized access to sensitive defense information by providing a software company based in Egypt with files containing such information, even though the company and its foreign citizen personnel were not authorized to receive sensitive defense information under the contract.

After learning of the issues, Aero Turbine and Gallant reportedly provided the government with multiple written self-disclosures, cooperated with the government’s investigation of the issues and took immediate action to remedy the problems.

Topics California Cyber Contractors