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The US Federal Prosecutor's Office said that three men from Alabama organized a multimillion-dollar accounting fraud scheme at a defense contractor that builds ships for the US Navy.
The US Department of Justice announced that the citizens were charged with conspiracy to mislead shareholders and investors about the financial situation of the shipbuilding company Austal USA from Mobile, Alabama, from about 2013 to at least July 2016.
According to the US Department of Justice and the Securities and Exchange Commission, former president of Austal USA Craig Percival, current Director of financial Analysis Joseph Rankel and former director of the Littoral Combat Ships program William Adams sought to artificially underestimate the cost estimates for the shipbuilding of US Navy projects by tens of millions of dollars.
The trio knew that Austal USA's expenses were growing and exceeding the planned ones, but ordered others to lower the cost estimates to match the defense contractor's revenue budget and financial forecasts. In other words, they deliberately underestimated the cost of work in order to get an order, and then reported that the estimate had increased for a number of reasons, seeking to increase funding from the bottomless American military budget.
Investigators said the defendants hid an accounting metric known as "completion score" in relation to several US Navy coastal warships. This, in turn, led to false data on the accounting of the company's profits in public financial statements.
During the investigation, the US Department of Justice concluded that the fraudsters did this in part to maintain and increase the value of the company's shares, and when the higher costs eventually became known, the share price dropped significantly, and the parent company of Austal USA, Austal Limited, wrote off more than $ 100 million.
Austal USA is a wholly owned subsidiary of Austal Limited, an Australian company whose shares are traded on the US OTC market through American depositary receipts and are also traded on the Australian Stock Exchange. A representative of Austal USA said that the company is aware of the allegations and civil lawsuits filed against three former employees of the company.
If found guilty, the defendants face up to 30 years in prison for each count of conspiracy and each count of fraud using electronic means affecting a financial institution.
