Defense contractor Aero Turbine Inc., based in Stockton, and private equity firm Gallant Capital Partners LLC, located in Los Angeles, have agreed to pay $1.75 million to settle allegations under the False Claims Act. The settlement addresses claims that they knowingly failed to meet cybersecurity requirements specified in an Aero Turbine contract with the Department of the Air Force.
The U.S. government acknowledged that both companies took steps to cooperate with authorities after identifying the issue. According to Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division, “Government contractors must follow required cybersecurity standards to protect sensitive defense information. When defense contractors fail to comply with cybersecurity requirements, they can mitigate the consequences by making timely self-disclosures, cooperating with investigations, and taking prompt remedial measures.”
Acting U.S. Attorney Kimberly A. Sanchez stated, “Every defense contractor must provide adequate security to safeguard covered defense information. We commend Aero Turbine and Gallant for disclosing the issue and promptly cooperating to address it. We encourage others to follow their example of self-reporting to resolve violations.”
Director Kelly Mayo of DCIS commented on the broader impact: “Protecting the integrity of the Department of Defense (DoD) procurement processes is a top priority for the DoD Office of Inspector General’s Defense Criminal Investigative Service (DCIS). Failing to comply with DoD contract specifications and cybersecurity requirements puts DoD information and programs at risk of exploitation. DCIS will continue to collaborate with our law enforcement partners and the Department of Justice to investigate allegations of false claims on DoD contracts.”
Special Agent in Charge Caroline Galinis from AFOSI added, “This case serves as a reminder that cybersecurity transcends mission sets. Ensuring companies adhere to robust cybersecurity safeguards is integral to maintaining the Air Force’s operational edge against adversaries. AFOSI’s Procurement Fraud team, alongside investigative partner agencies and the Department of Justice, played a critical role in protecting U.S. national security interests.”
According to federal officials, from January 2018 through February 2020 Aero Turbine allegedly did not implement certain controls outlined in NIST Special Publication 800-171—guidelines intended for securing sensitive federal information—which could have exposed systems or led to loss of protected data if not followed.
Additionally, between June and July 2019, Aero Turbine and Gallant are alleged to have allowed a software company based in Egypt access to files containing sensitive defense data without proper authorization under their Air Force contract.
After these issues were discovered, both companies provided written disclosures about what had occurred, worked with investigators during their review process, and made changes aimed at addressing vulnerabilities.
The investigation involved several agencies including the Justice Department’s Civil Division Commercial Litigation Branch Fraud Section; U.S. Attorney’s Office for the Eastern District of California; DCIS; AFOSI; and Air Force Materiel Command Law Office Procurement Fraud Division.
Officials clarified that all resolved claims remain only allegations at this stage without any finding or admission of liability.
