US Navy shipbuilder ordered to pay $24 million to settle fraud investigation – NBC10 Philadelphia

Austal USA, an Alabama-based shipbuilder that builds vessels for the U.S. Navy, has admitted wrongdoing and agreed to pay a $24 million fine to settle an investigation into accounting fraud, the U.S. Justice Department announced Tuesday.

From 2013 to July 2016, Austal USA conspired to deceive shareholders and investors about the company's financial condition, the department said. The company pleaded guilty to one count of securities fraud and one count of obstructing a federal audit.

Austal USA was “engaged in a years-long conspiracy to illegally inflate its profits on the ships it built for the U.S. Navy by reporting false financial results to investors, lenders and auditors,” Nicole M. Argentieri, assistant attorney general and chief of the Justice Department's criminal division, said in a statement.

Austal USA LLC is a subsidiary of Australia-based Austal Limited and builds littoral combat ships for the Navy designed for use in shallow coastal waters.

The Justice Department said Austal artificially lowered cost estimates to meet its revenue and forecasts despite rising shipbuilding costs. As a result, the profitability of Austal USA's vessels and Austal Limited's reported profits in its public financial reports were falsely overstated.

According to court documents, the company has agreed to settle complaints from the U.S. Securities and Exchange Commission (SEC) and the Department of Justice. A sentencing hearing is scheduled for November 25.

The Justice Department said the appropriate penalty was $73 million, but that was reduced due to Austal USA's insolvency. In addition to the $24 million penalty, the company must also repay $24 million for its shareholders' losses.

Austal USA has also agreed to employ an independent compliance monitor for three years and to implement a compliance and ethics program.

Three former Austal USA executives were charged with accounting fraud last year and are awaiting trial.

An email to a media representative from Austal Limited was not immediately answered Tuesday evening.