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With the payment, Industrial Equipment and Supply Company (IESC), located in Latham in Albany County, along with its principals, Mark and Sandra Nystoriak, settled allegations that the company violated the False Claims Act.
According to the US Attorney’s Office in the Northern District, IESC contracted to sell batteries to the Defense Logistics Agency (DLA), which manages the worldwide supply chain for the Department of Defense.
As part of a contract valued at nearly $34,000, the company agreed that the batteries would be manufactured by SAFT America Inc., thus complying with the Buy American Act, and would fit a standard military specification.
However, federal investigators said the company instead procured the batteries from a supplier in Singapore and failed to verify that the Singapore distributor was an authorized SAFT America distributor.
The batteries were distributed throughout the military supply chain by DLA, which later received reports that the batteries caused military equipment to fail, the US Attorney’s Office said.
DLA eventually determined that the batteries were counterfeit.
Federal investigators did not specify which specific military equipment was affected.
As part of the settlement, IESC acknowledged that it “recklessly disregarded a substantial risk that the batteries would be counterfeit” when it procured them from an unauthorized distributor at a cheaper price.
“Our military received counterfeit batteries after a contractor cut corners to increase profits,” US Attorney Carla Freedman said in a statement.
“We will continue to use the False Claims Act to hold government contractors accountable when they do not meet contract requirements.”
The settlement was the culmination of a joint investigation involving multiple branches of the US military, including the Army, Navy, and Air Force.
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