TN plant to pay $8M for selling U.S. military defective products

TN plant to pay $8M for selling U.S. military defective products

Toone, TN (WMC) - A Tennessee-based defense contractor agreed to pay a fine to resolve allegations that they cut corners when making defensive weapons for the U.S. military.

According to the Department of Justice, Kilgore Flares Company and one of their subcontractors, ESM Group, will pay a total of $8 million after they were accused of selling defective infrared countermeasure flares to the U.S. Army.  In addition, the DoJ said ESM knowingly evaded tariffs owed to the nation.

Kilgore Flares makes and sells electronics and flares to the U.S. Military. The countermeasure flares in question help distract heat-seeking missiles shot at American military airplanes.

ESM, which is based in New York, makes magnesium powder for chemical, welding and pyrotechnic companies.

The DoJ said ESM imported magnesium powder from China, which was then sold to Kilgore Flares to be used in their products. Kilgore's contracts with the U.S Army prohibit the use of magnesium powder from other countries, with the exception of Canada. The DoJ said ESM denied that their magnesium was from China in order to avoid paying tariffs owed to the U.S. between July 2003 and May 2005.

The Department of Justice said unapproved magnesium may burn at a different temperature and therefore not effectively distract heat-seeking missiles aimed at Americans.

The U.S. government said Kilgore used the illegally imported magnesium powder from ESM in countermeasure flares it sold to the U.S. Army between March 2005 and August 2006.

"The Department of Justice is committed to ensuring that contractors do not cut corners in manufacturing critical items sold to the U.S. military," said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department's Civil Division, in a written statement.  "These settlements also show that the department will aggressively pursue those who avoid paying duties to gain an unfair business advantage over competitors who abide by the rules."

Kilgore and ESM agreed to pay $6 million and $2 million respectively.

"Our warfighters– along with everyone who relies upon them, including their families – need to know that the equipment they use is of the highest quality and dependability," said U.S. Attorney William J. Hochul Jr. of the Western District of New York, in a written statement. "In this case, the magnesium flares made by Kilgore were literally the last line of defense for our brave aviators. Because of today's resolution, Kilgore will now ensure that similar incidents do not happen in the future."

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