Judge clears Bollinger in fraud case

A federal judge Wednesday dismissed the Department of Justice’s suit against Bollinger Shipyards Inc., Lockport, La., over the stretching of eight Coast Guard cutters, saying the government needs to specify where fraud occurred.

The suit filed in 2011 claims Bollinger “made material false statements to the Coast Guard” about the hull strength of the 110' Patrol Boats (WPBs) that were converted to 123' at a cost of $78 million. “The first converted cutter, the Matagorda, suffered hull failure when put into service,” the government said. Efforts to fix it and the other vessels were unsuccessful, and the cutters have been taken out of service.

The suit sought damages from Bollinger under the False Claims Act for the loss of the vessels.

The government’s allegations “do not add up to a plausible theory of fraud,” said U.S. District Judge Sarah Vance in New Orleans. “The government still has not said what was false about Bollinger’s section modulus calculations so that an inference can be drawn that whoever made them had to know they were untrue. The government has already abandoned one theory of fraud. It is time for it to plead with particularity what the fraud is.”

The judge said the government’s complaint “does not even allege that Bollinger made an intentionally false or recklessly untrue statement, or acted with deliberate indifference.” Instead, the suit alleges “that Bollinger’s 7,152 cubic inches statement to the Coast Guard was consistent with an internal statement made by Bollinger’s chief naval architect, not that Bollinger knew one thing internally but said something different to the Coast Guard.” 

A Bollinger spokesman said the company had no immediate comment on the judge’s order.

Bollinger, which built the original vessels, expressed disappointment when the lawsuit was filed. The work was completed in 2006, Bollinger said in a statement, and, “Throughout this process, Bollinger has been open and cooperative with the government, and we remain committed to providing the government all necessary information and assistance to bring this matter to a close. Bollinger has tried to find a way to resolve this matter short of litigation, but we are fully prepared to defend our good name aggressively in a court of law.”

Judge Vance gave the Justice Department 20 days to amend its claims.

A Justice Department spokesman said Thursday via e-mail, "We’re reviewing the matter and have no further comment at this time.".

Read the judge’s 40-page order here: https://ecf.laed.uscourts.gov/doc1/08516287573