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East Aurora firm to pay $2 million for using Chinese powder in military flares

An East Aurora military contractor will pay $2 million to resolve a whistleblower suit accusing it of illegally using a product made in China.

The settlement, announced Monday by the U.S. Department of Justice, resolves the allegation that ESM Group Inc. took part in a conspiracy to sell defective infrared countermeasure flares to the U.S. Army.

The settlement also includes $6 million from Kilgore Flares Company, the Tennessee-based firm that subcontracted with ESM.

The suit centered around the military’s use of infrared flares to divert enemy heat-seeking missiles from aircraft. One of the components of those flares is magnesium powder, the product produced by ESM.

The whistleblower suit claimed ESM used magnesium powder from China. Kilgore’s military contracts prohibited the use of magnesium powder from any foreign country except Canada in an effort to insure the domestic manufacturing of the important military product.

“The Department of Justice is committed to ensuring that contractors do not cut corners in manufacturing critical items sold to the U.S. military,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.

The allegations against ESM date back several years to the criminal prosecution of five former employees and agents of ESM. They pleaded guilty to charges related to the magnesium powder scheme and were ordered to pay more than $14 million in restitution.

“Our war fighters – along with everyone who relies upon them, including their families – need to know that the equipment they use is of the highest quality and dependability,” said U.S. Attorney William J. Hochul Jr.