In a statement, Nicole Argentieri, head of the DOJ’s Criminal Division, condemned Austal’s actions. “Austal USA engaged in a years-long scheme to illegally inflate its profits on ships the company was building for the U.S. Navy,” she said, adding that the company misled investors, the Navy, and auditors about its financial condition and performance.
Austal USA Pleads Guilty to Fraud : Executive Involvement
Three former Austal USA executives — Craig Perciavalle, Joseph Runkel, and William Adams — were charged in March 2023 for their involvement in the scheme. The executives are awaiting trial after pleading not guilty. The SEC complaint revealed that these individuals instructed employees to manipulate the company’s financial metrics to meet budgets and boost revenue.
According to the SEC, Austal’s stock price soared from 0.88 Australian dollars in early 2014 to 2.40 Australian dollars by November 2015 as a result of these inflated financial reports.
Faulty Valves and False Claims Act Violations
In addition to accounting fraud, Austal USA violated the False Claims Act by invoicing the Navy for valves that did not meet military specifications. These valves were installed on five littoral combat ships, even though the company knew they had failed to meet required testing standards.
Austal USA Pleads Guilty to Fraud : Legal Representation and Case Details
Austal USA LLC is represented by Ike Adams of Sidley Austin LLP. The DOJ’s team includes Kyle Hankey, Laura Connelly, Spencer Ryan, and Art Coulter. The SEC’s legal team comprises Sharan Lieberman, Christopher Martin, and others.
