Monday, November 30, 2009

Carlyle Group's Whistle Blower Lawsuit regarding Sequa Corporation

An Oklahoma whistle blower said The Carlyle Group:

defrauded the United States by approving, certifying, and presenting “certain airplane engine parts as serviced according to Specifications without actually and/or fully complying with the Specification."

The qui tam lawsuit involves Carlyle affiliate Sequa Corporation and airline parts division, Chromalloy. Carlyle tried to weasel out of the suit, saying it does not do business in Oklahoma. Oddly, six of Sequa's eight board members are Carlyle Group employees. The judge denied Carlyle's motion for removal.

However, the judge found lacking the "evidence of fraud." He dismissed the case, with one caveat:

The court, however, grants the relator leave to file an amended complaint within twenty (20) days of the date of this order. It is so ordered this 16th day of November, 2009.

The whistle blower has a week to rebuild his case. Like robber baron Cornelius Vanderbilt, The Carlyle Group knows how to use the court system to their favor. Ask Dunkin' Donuts franchisees or LifeCare hospital patients post Hurricane Katrina.

Update 9-2-15:  Uncle Sam will send Chromalloy $74 million in business via Oklahoma's Tinker Air Force Base. 

Update 9-3-22:  Carlyle will sell Chromalloy to Veritas Capital.