Whistle-Blower Now Whistling in the Dark

The dictionary calls them informers. Some people call them patriots. Others, snitches. The law calls them whistle-blowers.

Litton Industries Inc. has such a whistle-blower, someone who filed a lawsuit--still under court seal--that led to the recent, massive search of Litton’s Woodland Hills headquarters by FBI agents who are investigating alleged overbilling on government defense contracts.

Herbert “Casey” Shoupp knows all about being a whistle-blower, what it’s like to be on the inside and looking for cover.

Three years ago he was a repair technician working on Litton’s military navigation systems when he filed his own whistle-blower suit. Shoupp alleges that Litton fraudulently billed the Navy for navigation repairs when it was swapping in failed, suspect or unrepaired gyroscopes. He claims that Litton was charging full price as if they were using new or refurbished parts, and in doing so overbilled the government by about $25 million, according to court documents and Shoupp’s attorneys.

With Shoupp’s case under court seal, Litton figured out that he was the mole. Once exposed, Shoupp felt ground down by the pressure at work, so he quit Litton in January 1995. And after 30 years in aerospace, the 63-year-old Shoupp now scrapes by as a security guard in Las Vegas, earning $6.50 an hour for driving a patrol car from midnight to 7 a.m. around a housing development.

He’s waiting to hit age 65 so he can draw a modest Litton pension, and he wants his say in court. The jury trial won’t begin until 1997 at the earliest, if it begins at all.

Litton has asked a federal judge in Los Angeles to dismiss the Shoupp case, and a ruling is expected soon. Litton spokesman Robert Knapp says Shoupp’s allegations “reflect a lack of understanding of government contract procedures. We have done this [repair] work in complete compliance with our contract.”

The company has a lot riding on the case: It faces treble damages--maybe $75 million--plus $5,000 for each false claim. Shoupp and his attorneys would share up to 30% of any penalties and fines, with the federal government taking the rest.

All this falls under the federal False Claims Act, which dates to the Civil War and was amended in 1986 to encourage citizens to file whistle-blower suits. For Uncle Sam, this has been a bounty. Last fall the government’s income surpassed $1 billion from the 1,100 whistle-blower suits filed by citizens since 1986. That’s because even if the Justice Department does not file charges, the law says the Treasury Department gets at least 75% of any court-ordered penalties should a whistle-blower win his or her case.

When the Justice Department decided a year ago not to prosecute the Shoupp case--although it left open the opportunity to intervene later--that left his attorneys to fight a civil case in federal court. “We can deal with only so many [whistle-blower] cases. It’s largely a matter of resources,” said David Ringnell, assistant U.S. attorney in Los Angeles.

So Shoupp is left to wait and wonder. His story, if nothing else, illustrates the long, painful process a whistle-blower faces while the wheels of justice turn.

On a recent afternoon under the dim lights of a coffee shop in a second-rate Las Vegas casino, Shoupp talked about the case with bitterness in his voice. “The government really dropped the ball on this thing,” he said, claiming that his case got lost in the system “in the swamp in the Potomac.”

To understand Casey Shoupp, you need to know that working as a civilian advisor during the Vietnam War was one of his life’s highlights and that he is proud to count some retired admirals as friends. Shoupp can talk for hours about the minutiae and wonders of navigation design while alternating between cigarettes--he’s up to two packs a day now--and endless cups of coffee.

He feels as though he’s been pushing a boulder up a hill. He’s written to high-ranking Navy officers in Washington and tried to contact senators, with nothing to show for it. “It’s been a real eye-opener doing this,” he said.

But even now, with that steady diet of frustration and having landed in a dead-end job with no prospects and almost no compensation, Shoupp says he’d file his case all over again.

The case focuses on repairing the inertial-navigation systems that guide most large airplanes across the globe.

Inertial navigation relies on a computer, accelerometers and gyroscopes to calculate a plane’s true heading between any two vertical points on Earth by tracking pitch, roll, turn, speed and distance. Because the machinery is on board, pilots have no need of outside aids like radio beacons or ground lights, which is critical on long flights over water or in remote areas.

The navigation systems the Navy sent to Litton for repair have two gyroscopes. It was routine practice at Litton, Shoupp’s suit claims, to remove gyros from faulty navigation units, store them and later swap those gyros left behind into other navigation units that came in for repair. Litton’s repair depot in Woodland Hills often had 10 failed or suspect gyros left from other navigation units, Shoupp claims. The staff was told to try those parts first, before using refurbished gyroscopes sent from Litton’s office in Canada, which he contends was the only facility certified by the Federal Aviation Administration to repair gyroscopes because Woodland Hills lacked the proper tools.

Litton then billed the Navy the full repair figure, up to $18,000 for each gyroscope, even when it used a gyroscope that was left from another system, Shoupp claims. This happened about 200 times a year, he contends, and went on for eight years.

Phillip Benson, Shoupp’s attorney, said: “Litton was charging for a service they didn’t do. They were not repairing them, just swapping gyros from box to box and charging the full repair price . . . and that’s fraudulent.”

Litton counters that everything it did was in line with its Pentagon contract. “We retain the ability to substitute like-quality parts as a replacement in place of the equipment returned to us,” said Litton spokesman Knapp.

Whenever Litton replaced a gyroscope, the whole navigation system had to pass a test before it was shipped out. Then it charged the Navy a single, set price for a gyroscope repair--whether the gyroscope was from another navigation unit or was sent from Litton’s Canadian office, the company said. This procedure met terms of its contract, Litton said.

As a repair technician, Shoupp didn’t know how much Litton charged the government for each repair step, but he got curious. Eventually he gave a list of gyroscope serial numbers to someone at Litton to track the billing records, he said.

Soon afterward, a Litton attorney called him in and asked why he wanted to know about the billing process. Litton then issued a memo telling repair technicians to stop switching gyroscopes in and out of different navigation units, according to Shoupp’s court records. Shoupp also claims he saw a Litton manager walk out with the detailed navigation repair log and that it was later thrown away to free up the use of a three-ring binder, according to court records. “That told me right then these guys were quaking in their boots that somebody would find out about this,” Shoupp said.

Shoupp eventually filed a whistle-blower suit in June 1993. The case was under seal for two years, but Litton already knew he was the one who had asked about repair bills, he said. Later, Shoupp claims, Litton officials summoned him to a meeting and told him he could bring an attorney. When Shoupp showed up with Benson, who has made a name handling whistle-blower suits, any last shred of anonymity was gone.

Shoupp stayed at Litton for another year, but it was difficult, he said. Benson, who has worked on 60 whistle-blower cases, said once Litton suspected that Shoupp was the whistle-blower, things followed a common pattern. “They didn’t stop making his life miserable. Basically the supervisory staff gave him the cold shoulder. And they attempted to falsely document poor performance” by Shoupp on the job, Benson said.

“I can’t blame him” for quitting, Benson said. “Basically you’re working for people you informed on. It’s a tricky situation.”

Shoupp eventually moved to Las Vegas to be near his brother and started applying for any job that called for a military-electronics background. He said he mailed out 500 resumes without receiving a nibble. Together, the post-Cold War aerospace downsizing, his whistle-blower reputation and his age “mean I’m probably finished in that business,” he said.

His 18 years at Litton will give him a pension of a few hundred dollars a month, Shoupp said, plus Social Security, but it won’t be enough. Money is tight and the Buick he drives is about to turn over 300,000 miles.

Thinking about his two grandsons in Buffalo, N.Y., helps him keep going, he said. One grandson is named Casey, after him. He’s putting in overtime on the security guard job to make enough for a plane ticket to visit.

Shoupp was trained as an engineer, but he’s a military man at heart, and airplanes and navigation systems have been his life. During the Vietnam War, Litton sent him as a senior field engineer to supervise navigation repairs on Navy fighters and spy planes that took off from the aircraft carrier Kitty Hawk.

“I enjoyed the camaraderie. I’m an old-fashioned patriot. I believed in what they were doing,” Shoupp said.

His tours in the South China Sea also cost Shoupp his marriage. “My wife felt I was more interested in the Vietnam War than her. She was probably right.”

At Litton, Shoupp rose to the position of senior technical advisor for the Navy’s Pacific Fleet, then in 1979 he left, hoping for a better job. In the following decade he bounced around, working at Rockwell, ITT and a smaller Virginia aerospace company, and his salary climbed to $65,000. By 1990, after corporate reorganizations and layoffs, he was out of work, so a friend got him a job at Litton as a repair technician making $17 an hour.

Shoupp tells himself that if he wins his case, he’ll put money into trust funds for his sons and two grandkids. After all these years of being around aircraft, if there’s anything left over he’ll get a pilot’s license and buy an amphibious plane so he can fly off with the boys and take them fishing.

But now, alone in that patrol car with the headlights sweeping Las Vegas roads in the dark, he has plenty of time to think.

“Most of the time, I wonder, what the hell am I doing here?”