## Facts

- Aerodex, Inc. contracted with the U.S. Navy Aviation Supply Office in 1962 to supply 300 master rod bearings for the Curtiss-Wright R-1820 aircraft engine.
- Aerodex bid to furnish 300 bearings identified as Curtiss-Wright part no. 171815 at $90 each, and the bid was incorporated into an October 6, 1962 contract.
- The contract required delivered items to be identified by the applicable Curtiss-Wright part numbers, conform to the relevant drawings and specifications, and be in “new, unused” condition.
- The contract included an inspection and acceptance provision calling for a 100% final inspection at destination for conformance to the contract data, drawings, and specifications.
- Aerodex delivered bearings that did not conform to the contract’s specified part and condition requirements.
- Aerodex submitted invoices seeking payment as though the bearings satisfied the contract specifications.
- The United States sued under the Federal False Claims Act; the district court found the invoices were false claims and entered judgment for $381,838.36 plus interest against Aerodex and certain individuals.
- Aerodex and two corporate officers, Raymond Tonks (president/general manager) and Frank J. Crawford (vice-president in charge of the Commercial Division), appealed.

## Issues

1. Whether submitting invoices for materially nonconforming goods, representing them as conforming to contract specifications, constitutes a “false claim” under the Federal False Claims Act.
2. Whether government inspection and acceptance provisions bar or limit False Claims Act liability for fraudulent nonconformance.
3. Under what circumstances corporate officers may be held personally liable for false claims submitted by the corporation.
4. How damages should be adjusted when False Claims Act liability is reversed as to one individual defendant.

## Decision

- The Fifth Circuit affirmed False Claims Act liability against Aerodex.
- The Fifth Circuit affirmed False Claims Act liability against Crawford.
- The Fifth Circuit reversed the judgment against Tonks for insufficient proof of his personal knowledge or participation in the false invoicing.
- The case was remanded with directions to modify the judgment amount consistent with the reversal as to Tonks.

## Legal Principles

- Invoicing the government for goods while knowingly misrepresenting that the goods meet material contract specifications (including required part identity and “new, unused” condition) can constitute a false claim under the False Claims Act.
- A contractor cannot avoid False Claims Act liability merely because the contract provides for government inspection or because the government inspects and accepts delivery; inspection provisions are protection for the government and do not immunize fraud, including claims involving latent defects or fraudulent nonconformance.
- False Claims Act liability for corporate officers depends on proof of individual scienter and involvement; corporate title alone is insufficient without evidence of personal participation or knowledge of the falsity.
- When liability is affirmed for some defendants but reversed for another, the damages award must be recalculated to conform to the appellate disposition.

## Conclusion

The court held that knowingly billing the government as if delivered goods satisfied material contract requirements supports False Claims Act liability, that inspection/acceptance clauses do not defeat fraud-based claims, and that individual officer liability requires proof of the officer’s own knowledge and participation rather than mere corporate status.


United States v. Aerodex, Inc., 469 F.2d 1003 (5th Cir. 1972)