Whistleblower Helps Stop $1.2 Million Embezzlement At Pennsylvania Defense Contractor

From the Daily Times on 12/23/2014:

The Glenolden woman who blew the whistle on cheating military contractor Kenneth Narzikul said she is satisfied her actions put an end to his embezzlement scheme which cost U.S. taxpayers some $1.2 million.
“I’m actually proud of the fact I was able to put a stop to it,” Amy Farrow said in a recent interview. “So often people let things slide and look the other way. If I had just quit, I knew things would just continue the way they were.”
Farrow, 42, worked for Narzikul at NP Precision, a Folcroft-headquartered military contractor that did more than $30 million in business with the U.S. government. NP primarily had contracts with the Department of Defense to provide critical flight safety parts for U.S. military helicopters.

In March 2012, Farrow filed a civil complaint against Narzikul and his wife, Sandra Rosch Narzikul, who kept the company’s books and was once its chief financial officer. The complaint was filed under the federal False Claims Act, which makes it illegal to deceive the federal government for financial gain.
The law allows whistleblowers to file suit on behalf of the government and to receive a share of the proceeds if they prevail in court. It also provides damages for any illegal punishment of whistleblowers, such as workplace retaliation or firing.
Farrow’s complaint led to a federal criminal investigation. Farrow cooperated with investigators and in August, Narzikul pleaded guilty to stealing about $1.2 million in progress payments the federal government paid NP Precision under two contracts to produce drive shaft couplings for the U.S. Army Chinook helicopter. No criminal charges were filed against his wife.
Narzikul, who owned 85 percent of the company, admitted he failed to pay subcontractors and requested progress payments for costs the business had not incurred. As a result, many of the military aircraft were not completed or were completed late.
This was not Narzikul’s first run-in with law enforcement. In 1993, when he was CEO of Tura Machine Co. Inc., he was convicted of paying more than $200,000 in kickbacks in return for government subcontracts. Instead of the possible maximum sentence of 10 years and a $500,000 fine, he was given a slap on the wrist — four months house arrest and 400 hours of community service.
“He was proud of the fact he got off with a few months of house arrest,” Farrow said.
Despite his conviction, Narzikul’s new company, NP, was awarded more than $30 million in government contracts.
Narzikul hired Farrow as his administrative assistant in 2010. In April 2011, she was promoted to office manager and received a pay increase. Among her tasks was responding to vendors regarding payments and payroll.
“I knew something was amiss within a few months of my employment,” she said.
But it wasn’t until she was asked to assist with an audit conducted by the Defense Contract Audit Agency that she discovered the full extent of the fraud.
“It was obvious to myself, as well as other employees, that Ken and his wife operated the company fraudulently,” Farrow said. “They billed for things that were not done and falsified records.”
According to the suit, Narzikul and Rosch perpetuated the embezzlement scheme by presenting forged progress payment checks to DCAA. Instead of the checks going to subcontractors, the funds went “directly to Narzikul himself or his shell corporations and partnerships,” the court documents states.
Farrow spotted numerous acts of intentional fraud, embezzlement and breach of contract and began to “meticulously” document what was described in the court document as the “ongoing, escalating and shocking misconduct she witnessed.”
When Narzikul realized Farrow was investigating his actions, he demoted her by making her an “independent contractor” and said he intended to phase out her position. She resigned in April 2012.
Farrow’s civil case, originally filed under seal in U.S. District Court for the District of Columbia, was unsealed on Nov. 14.
On Dec. 17, a federal judge entered a $3.6 million civil judgment against NP and Narzikul and a $20,000 judgement against his wife. The Narzikuls, who reside in the 600 block of North Heilbron Drive in Media, agreed to the orders and did not dispute their liability, according to Farrow’s attorneys.
Attorneys for Narzikul and Rosch declined to comment.
“Amy’s strong moral compass is directly responsible for bringing this criminal — a repeat offender against American taxpayers — to justice,” said David L. Scher of the Employment Law Group and lead attorney on the case. “Her testimony and the evidence she courageously brought to light, were crucial to the government’s victory in both the criminal and civil cases.”
While under the whistleblower statute Farrow is eligible to receive 20 percent of the damages, she doesn’t anticipate receiving a dime.
“There is nothing to recover,” she said. “The judgment is basically just on paper, but that’s fine. The reason I came forward was just the principal of it.”
When she first decided to go forward with the allegations of wrongdoing against NP, Farrow feared there would repercussions and a potential impact on her career.

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