UTC Settles With Government Over Chinese Microprocessors

United Technologies Corp. has agreed to pay $1.06 million to settle a Pentagon claim that an electronics subcontractor it briefly owned allowed substandard computer chips to be installed in military helicopter control systems.

The U.S. Attorney’s office, which negotiated the settlement, said the former Goodrich Corp.’s pump and engine control systems division in West Hartford, briefly a UTC acquisition, installed counterfeit microprocessors it bought from a Rhode Island distributor in Rolls Royce helicopter engines.

The settlement is one of several recent cases in which the Pentagon has discovered counterfeit electronics components from China or elsewhere in Asia in U.S. military control systems.

UTC bought Goodrich in July 2012, but sold the pump and engine control systems business eight months later to satisfy a government anti-trust complaint. UTC sold the Goodrich unit to the Triumph Group of Pennsylvania. The West Hartford division continues to operate as Triumph Engine Control Systems.

The settlement said UTC was not directly responsible for the use of suspect microchips.

“We are pleased that the matter is resolved without any admission of liability,” a UTC spokesman said. “As the government acknowledged in settling this matter, no UTC employees were involved in the conduct at issue and UTC never exercised control or management over the operations of Goodrich Pump and Engine Controls Systems.”

The government claims that Goodrich pump and engine control systems falsely certified knockoff Chinese microprocessors that it installed in the digital control systems it made for Rolls Royce M-250 series engines. Rolls Royce was a prime U.S. Army contractor and the engines were used on Kiowa Warrior and Littlebird helicopters.

The suspect chips were discovered during the Pentagon’s investigation of a 2011 military helicopter crash that took the lives of two servicemen. While not found to be a contributing cause, computer chips installed by the Goodrich were determined to be counterfeit.

The suspect chips reached Goodrich through distributors in New York and Rhode Island, both of whom have been criminally prosecuted. Jeffrey Krantz of New York was fined $100,000 and Jeffrey Warga of North Kingston, R.I., was fined $10,000. Both were ordered to pay hundreds of thousands of dollars in restitution. Federal prosecutors said Krantz acquired the chips in China and delivered them to Warga, who certified them to Goodrich.

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