Companies Operated by New York Man Agree to $1 Million Settlement Over Alleged False Claims and Use of Chinese‐Made Components

MONTGOMERY, Ala. - A New York man and two companies he operates have agreed to pay $1 million to resolve allegations that they violated the False Claims Act by supplying the U.S. Department of War (DOW) with Chinese-manufactured products and components in violation of the Buy American Act (BAA) and other federal military-procurement requirements.

Ranga Ranganathan, Nielsen Hardware Corporation (Nielsen), and J&P Khamken Industries, Inc. (JPK) entered into the settlement agreement with the United States and the qui tam relators. Ranganathan acquired the assets of Alabama-based JPK in May 2017. Nielsen and JPK manufacture and supply aircraft components, aerospace ground support equipment, missile and munition material-handling equipment, storage containers, and other machined products used in DOW procurement. The settlement agreement was unsealed by the United States District Court in Montgomery this week.

"Federal procurement requirements are designed to ensure that taxpayer dollars are spent appropriately and that American businesses have a fair opportunity to compete for federal contracts," said U.S. Attorney Thomas Govan. "This settlement reinforces that companies doing business with the United States military must comply with those requirements and be truthful in their representations to the government."

According to the allegations resolved by the settlement, after Ranganathan acquired JPK, the defendants began sourcing components and end products from China and supplying them to the DOW, either directly through JPK or indirectly as a subcontractor. The United States alleged that the defendants submitted, or caused to be submitted, false claims for payment supported by certifications falsely representing compliance with the BAA and federal requirements governing specialty metals.

The settlement resolves allegations that, between May 2017 and November 2019, the defendants provided the DOW with Chinese-manufactured aluminum tables, groove pulleys, storage-rack assemblies, portable bath-unit bases, Red Cross vehicle body panels, mounting brackets, and 25mm loader-replenisher tables.

The BAA, enacted in 1933, generally establishes a preference for domestically produced goods in federal procurement. The matter also involved regulations restricting the acquisition of certain articles containing specialty metals. Although the BAA and specialty-metals regulations permit procurement from certain qualifying countries, China is not among those countries.

The settlement also resolves claims brought by the relators under the False Claims Act's qui tam provisions. The qui tam provisions allow private parties to sue on behalf of the United States for false claims and, subject to certain statutory requirements, to receive a portion of the recovery. The relators, who were founders and former employees of JPK, will receive a portion of the settlement proceeds.

The investigation was conducted by special agents with the Air Force Office of Special Investigations (OSI), the War Criminal Investigative Service (DCIS), and the U.S. Army Criminal Investigation Division (Army CID). Assistant U.S. Attorney MaryLou E. Bowdre of the U.S. Attorney's Office for the Middle District of Alabama handled the matter.

The claims resolved by the settlement are allegations only, and there has been no determination of liability.