Maker of EOTech Sights Pays $25.6 Million to Settle Fraud Lawsuit
OutdoorHub Reporters 11.25.15
L-3 Communications Holdings Inc, which owns EOTech, agreed on Tuesday to pay the US government $25.6 million to settle a lawsuit accusing the company of providing thousands of defective holographic sights to the military, despite knowing that the sights were defective.
According to Reuters, L-3’s shares dropped as much as 6.1 percent after the lawsuit was filed on Tuesday, but recovered after the company announced the settlement and ended the day at just a 1.1 percent drop. The settlement still requires court approval before it can be paid.
In a copy of the lawsuit obtained by soldiersystems.net, the government accused L-3 of knowingly selling defective sights in a scheme to defraud the Department of Defense (DoD), Department of Homeland Security, and the Federal Bureau of Investigation. EOTech president Paul Mangano was also included alongside L-3 Communications as a defendant.
“Beginning around 2006, Defendants became aware that design defects in the sights caused them to fail in cold temperatures and in humid environments. EOTech was contractually obligated to disclose these efects to DoD, so that DoD could prevent defective products from being fielded to troops. Defendants nevertheless failed to disclose these defects, while touting the U.S. military’s use of their products in order to boost their image and drive sales in the commercial marketplace,” stated the lawsuit.
The lawsuit further claimed that EOTech initially told the DoD that the sights performed in temperatures ranging from -40 degrees to 140 degrees Fahrenheit, as well as in humid conditions. In practice, however, government officials said that the sights failed to perform in extreme temperatures and produced an error called “thermal drift.” In an extremely hot or cold environment, officials said that the sight’s point of aim began to shift, making the sight inaccurate. The US government also claims that EOTech discovered this fact almost a decade ago and it was only when the FBI independently confirmed the thermal drift that the company voluntarily disclosed the defect.
“Even though Defendants knew of EOTech’s contractual obligation to disclose reliability issues involving the sights, Defendants delayed disclosure of this negative information about the sights’ performance to the Government. Moreover, even after Defendants learned of the defects, EOTech continued to sell sights to the Government without disclosing the defects,” stated the lawsuit.
Officials claim that the defect can be noticed at around 32 degrees when the aiming dot becomes visibly distorted. As temperatures drop, the distortion becomes more drastic and can affect accuracy by as much as 20 inches for every 100 yards. Defects also occurred in warm and very humid situations.
The recent settlement is yet another black eye for the holding company. L-3 Communications also agreed in September to pay out $4.63 million to settle allegations that they overcharged the US government for contractor work at military bases in Texas and Georgia.
