January 10, 2008

Sioux Manufacturing Corporation (SMC) has paid $2 Million Dollars to resolve allegations that it deliberately and systematically shorted an average of more than 10,000 strands of Kevlar from the helmets of U.S. Soldiers.

SMC is a military defense contractor, and corporation which is wholly owned by the Spirit Lake Sioux Tribe in North Dakota. 

SMC contracted to manufacture and provide Kevlar cloth shields which were installed as the sole armor within the helmets of more than 2 million U.S. Soldiers and servicemen.

The Department of Defense (DOD) agreed to the use of Kevlar as the sole armor within the helmets of U.S. Soldiers provided that the Kevlar cloth was woven to a density sufficient to ensure an adequate level of protection for the soldiers.

To ensure such protection, the DOD adopted specifications requiring that such Kevlar cloth be woven to a “minimum” weave density of 35 x 35 strands of Kevlar (or “picks”) per square inch 

Such specifications also explicitly stated that a failure to maintain the proper material composition would constitute a “critical” defect in the manufacture of the helmets.

Two of SMC’s former employees commenced a qui tam action against the company, alleging that they were fired for raising objections that SMC was “shorting” the amount of Kevlar in the shields it was providing for the soldiers.

More specifically, the employees alleged that, after SMC was awarded a contract under which it was paid $53 million dollars for such Kevlar shields, the company deliberately and systematically shorted an average of more than 10,000 strands of Kevlar for each helmet, by deliberately setting their weaving looms to weave the Kevlar cloth at densities below the weave density which had been determined to be the “critical minimum” by the Department of Defense.

They further alleged that, despite the fact that SMC’s own internal inspection records reflected that SMC was producing the Kevlar cloth at densities below the “critical minimum” density which had been determined by the Department of Defense, SMC proceeded to ship the Kevlar cloth shields together with false certifications, wherein SMC’s Quality Assurance Department falsely certified that each shipment met the minimum weave specifications.

The two employees who filed the suit included Jeff Kenner, SMC’s weaving supervisor who was responsible for supervising SMC’s weaving operations, and Tamra Elshaug, SMC’s purchasing manager, who was responsible for purchasing the Kevlar with which SMC proceeded to weave the Kevlar shields.

In support of their allegations, Mr. Kenner secured and provided the U.S. Department of Justice with various tape recorded admissions of other SMC employees, including one from SMC’s Quality Assurance Manager, who was responsible for certifying that the Kevlar met the weaving specifications required by the Department of Defense.

In addition, Mr. Kenner and Mrs. Elshaug incorporated into their federal complaint copies of actual internal inspection records of SMC, within which inspectors employed by SMC had inspected the Kevlar cloth being woven by SMC, and recorded weave densities below the minimum which had been set by the Department of Defense.

As part of the settlement, Mr. Kenner and Mrs. Elshaug will receive over $400,000 as a reward for having filed the claims.

The Following Documents have been unsealed from the Federal action

Federal Complaint - To read a copy of the actual 62-page Federal Complaint against Sioux Manufacturing Corporation, click here.

Tape transcript 1 – To read a partial transcript of a tape recording of SMC’s Quality Assurance Manager, acknowledging that SMC sent out Kelvar “under weight” and “under picks,” and expressing concern of what would happen if someone got “killed” and “they decided to investigate.”  - click here.

Tape transcript 2 – To read a transcript of a tape recording of SMC’s Quality Assurance Manager, acknowledging that she and other inspectors from SMC “rounded-up” when counting the threads in the Kevlar fabric. – click here.

Exhibit “C” - To read the actual military specification which required that the (Kevlar) cloth be woven to a “minimum” weave density of 35 x 35 strands of Kevlar (or “picks”) per square inch, click here.

Exhibit “B” – To read the actual military specification which classified a failure to maintain the proper material composition as a “critical” defect in the manufacture of the helmets, click here.

Exhibit “DD” – To see a sampling of SMC’s internal weave inspection logs within which SMC inspectors: (a) recorded actual Kevlar cloth weave densities below the “critical minimum” pick count of 35 x 35, set by the Department of Defense, and then (b) still stamped or noted their approval of the Kevlar rolls to proceed towards their ultimate use as the sole armor in U.S. military helmets click here.

In an effort to undermine the credibility of Mr. Kenner and Mrs Elshaug, and all of the evidence they presented in their case, which SMC settled by paying two million ($2,000,000.00) dollars, representatives of SMC have described them as “disgruntled employees.”  

In response to such allegation, Mr. Kenner and Mrs. Elshaug have made the following exhibits from their Federal Complaint available on-line.

Exhibit “AA” – To see an SMC internal employee performance record, within  which Mrs. Elshaug is described as “one of our most valuable employees, and which is signed by SMC President (and defendant) Carl McKay, click here.

Exhibit “R” – To see a letter of appreciation from SMC Director, (and defendant) Hyllis Dauphinais, to Jeff Kenner, within which the SMC Director described Jeff Kenner as “an inspiration to coworkers” click here.

For more information, contact:

Campanelli & Associates, P.C.
623 Stewart Avenue
Suite 203
Garden City, NY 11530

(516) 746-1600

ajc@FederalFraud.com

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