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Updated 12/12/05 08:41:14 PM Colleyville Resident Pleads Guilty to Defrauding Government |
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Colleyville
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Updated 12/12/05 08:41:14 PM Colleyville Resident Pleads Guilty to Defrauding Government |
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December 12, 2005 Former President of Tools and Metals, Inc. pleads guilty to conspiracy to defraud the government with false and fraudulent claims according to US Attorney's office A Colleyville, resident, Todd Loftis was Charged with Defrauding the United States Department of Defense and Lockheed Martin Aerospace of at least $18 Million Richard B. Roper, United States Attorney for the Northern District of Texas, announced that in federal court in Fort Worth, Texas, Todd Brian Loftis, waived indictment and pled guilty this week to a one-count Information, charging conspiracy to defraud the Government with false and fraudulent claims, in violation of 18 U.S.C. § 286. Loftis, age 38, of Colleyville, Texas, faces a maximum statutory sentence of 10 years imprisonment, a $250,000 fine, and restitution. He is scheduled to be sentenced on March 20, 2006, by the Honorable Terry R. Means, United States District Judge. According to documents filed in court, Loftis admitted that from 1998 and continuing through 2004, as President of Tools and Metals, Inc. (TMI), he, along with others known but not charged, conspired to defraud the United States Department of Defense and Lockheed Martin Aeronautics by obtaining payments from Lockheed and the Department of Defense by making false and fraudulent billings. In 1998 TMI, acting through Loftis, obtained a sole source integrated supply contract with Lockheed Martin Aeronautics to supply all of Lockheed's perishable tools for manufacture of airplanes including Department of Defense’s F-16, F-22, and other military needs in Fort Worth, Texas; Marietta, Georgia; and San Diego, California. Perishable tools are the drill bits, router bits, and other small tools that are consumed in the manufacturing process. TMI's contract with Lockheed called for very specific markup percentages over TMI's cost on all tools sold to the aircraft manufacturer. Loftis and others were able to falsely and fraudulently misrepresent TMI's costs as higher than actually paid so that the profit dollars to TMI would be inflated above what was allowed by the contract. Todd Loftis trained TMI buyers and customer service representatives to obtain multiple quotes from supplies and then to quote to Lockheed a high price. The tools would then be purchased at a lower cost allowing TMI to realize a fraudulent profit. Lockheed passed the cost of these fraudulently priced tools onto the Department of Defense as material monetary claims in the manufacturing overhead billings. In order to cover up this activity when Lockheed performed audits, Loftis and others under his direction created false invoices using a computer scanner to remove actual pricing data and substitute fictitious data to give the appearance of legitimate pricing. Loftis was able to control the audit sample of invoices as well so as to limit the possibility that a fraudulently priced part would be found. After the audits, Loftis ordered the fraudulently created documents and computer files to be destroyed. TMI and Loftis are charged with realizing at least $18 million in profits on these fraudulent sales to the government. TMI was founded in the 1950's in California and moved its corporate offices to Fort Worth in the late 1990's to provide services to Lockheed Martin Aeronautics. In 1998 with the award of the Lockheed contract, TMI also opened a branch in Marietta, Georgia to supply the plant there. Todd Loftis was employed by TMI for more than 12 years and was in charge of the company for most of that time. Until 2004 the company was owned by a family trust in California and its members and directors did not participate in daily operations. In September 2005 the company sought Chapter 7 bankruptcy protections as the scope of the fraud became apparent and the company lacked resources to repair the damage caused by the fraud. U.S. Attorney Roper praised the investigative efforts of the Department of Defense, Defense Criminal Investigative Service (DCIS), the Defense Contract Audit Agency (DCAA), the Internal Revenue Service - Criminal Investigation and the Federal Bureau of Investigation. Assistant United States Attorney Ronald C.H. Eddins is prosecuting the case.
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