The United States government has filed a civil fraud lawsuit Sept. 28, against two Indian-American defense contractors for allegedly selling massively marked up spare parts to the military.
The lawsuit announced by Acting United States Attorney Louis D. Lappen of the Eastern District of Pennsylvania, was filed against defendants Babu (Bob) Metgud and Shubhada (Sue) Kalyani, of Moorestown, New Jersey, and four companies, Shubhada Industries, d/b/a Shubhada, Inc., Metcon Aerospace & Defense, d/b/a Metcon Industries, NRI Capital Corporation, and The Innovation Technology & Enterprise Development Center, Inc.
The lawsuit was filed under the False Claims Act, according to which, a person who causes false or fraudulent claims to be submitted to the government for payment, is liable for three times the government’s damages, plus civil penalties for each false claim.
At this time, the government’s complaint is only an allegation against the two Indian-Americans and the named companies.
According to the complaint, Shubhada Industries described itself as a manufacturer to the Defense Logistics Agency and agreed to manufacture two light assemblies, a type of turn signal for munitions vehicles.
But instead of manufacturing these assemblies, Shubhada Industries allegedly purchased them from someone else for $1,351.62, charged the military $73,842.00 for the same items—a 5400 percent markup—and pocketed the difference.
The complaint alleges that when the government asked Metgud about the price, he made false statements describing Shubhada Industries’ non-existent manufacturing process and encouraged the military to buy more of the items. Kalyani likewise allegedly made false statements to conceal the company’s actual role as a dealer instead of a manufacturer.
The complaint additionally names as defendants Metcon Industries, the entity through which Metgud purchased the light assemblies, and two other alleged alter egos of Shubhada Industries.