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Analyst turned corporate spy helps feds
Secret recordings lead to $25 million settlement over pricing fraud
By Jeff Coen
Tribune reporter
October 16, 2009
Joe Caputo's efforts to secretly record his company ripping off the government didn't always go smoothly.
There was the time a co-worker at the suburban defense contractor playfully elbowed him and bumped the recording device hidden in his shirt pocket.
"He said, 'What's that?' And I told him it was a heart monitor," Caputo recalled Thursday. "I said I had been having heart palpitations and they were being monitored. But I told him not to say anything to anyone because I didn't want (the company) to know I was sick."
Caputo said he ended up recording three dozen damaging conversations and meetings in which supervisors at MPC Products Corp. in Skokie plotted to inflate contracts and pocket fraudulent profits. As a result of Caputo's undercover work,
MPC agreed to hand over more than $25 million to settle a lawsuit, pay a criminal fine and pick up Caputo's legal expenses and fees, federal authorities disclosed Thursday.
The manufacturer of aircraft parts will plead guilty to a criminal wire-fraud charge, according to the U.S. attorney's office in Chicago.
Caputo's efforts won't go unrewarded. Under a federal whistle-blower law, he will share in $4.5 million of the settlement. He said he plans to use the money to cover college tuition for his three children and maybe take a trip or two.
But all in all, he's just glad that
years of furtively taping his superiors at the company and then helping the FBI and the Defense Department decipher the recordings are behind him. The 48-year-old from Mount Prospect is normally a reserved guy whose idea of fun is working on cars or doing a little bowling -- not playing corporate spy.
"It was terrifying," he said of his experience wearing a wire. "I didn't know what to do or what to say."
Caputo's tale began in 1990 when the company hired him as a pricing analyst. After just two weeks, Caputo said, he was ushered into a meeting and told that the company needed to make more money on the defense side of its business to offset lower profits on its commercial side.
"They wanted me to come up with documentation that supported the higher amounts," he said. "I objected to it at first, but I needed the job at that time."
Caputo said he often altered computer records to inflate the prices charged the military, had the false documentation printed out for its bills for the Defense Department and then changed the computer entries back to try to conceal the fraud. Those fraudulent profits enabled MPC to undercut its prices to try to win more private-sector business, Caputo's lawsuit alleged.
By 1999, Caputo's conscience caught up with him, however, he said.
"I told them I didn't want to do that anymore," he said of his superiors. "I think it was having kids and realizing that's not the way to go through life."
Caputo said his supervisors talked him into doing one more fraudulent job in 2000. Two weeks later, Caputo said, he was mysteriously assaulted in a company parking lot by an "employee" whom he had never seen before or since.
He was fired over the incident and told that the other man was terminated as well, said Caputo, who suspects the assault was all a ruse to can him for his refusal to cheat anymore. Upset that he had been let go for defending himself, Caputo contacted attorney Dennis Favaro of Palatine, who lined him up with Mark Kleiman, a whistle-blower specialist from California.
The FBI showed up at his doorstep in March 2002 asking about MPC's possible involvement in producing defective parts, Caputo said. Before long, he found himself working closer than he ever thought he would with federal agents.
When MPC called him in August 2002 and asked him to return to work, Caputo did -- under the watchful eye of the FBI. His undercover recording began late that year after he was again asked to participate in pricing fraud, he said.
He remembered meeting with agents at 6 a.m. on the first day he was fitted with recording equipment. Caputo's normally calm demeanor faded under the constant stress and fear that his secret life would be discovered.
"I had to act completely normal for all of those years, like the completely faithful employee," Caputo said. "Sometimes I would just walk away. I remember I walked out once and walked around a Wal-Mart for a while and came back."
But he succeeded in recording meetings in which superiors discussed inflating contract prices.
At times, bosses openly discussed how they were engaged in illegal conduct and reminded one another to be careful in case the FBI was listening in, Caputo said.
"And I was sitting there with a recording device in my pocket," he said.
Caputo's undercover work ended in June 2005 when federal agents raided the business on a Saturday morning. He didn't return to his job but spent many more months helping the FBI go through records they seized.
In a statement released Thursday, the company, now doing business as Woodward MPC, noted that the wrongdoing took place several years before Woodward Governor Co. acquired MPC last year. And the individuals allegedly involved in the misconduct "are no longer employees of MPC," the statement said.
Two former company executives, Michael A. Norwood, 57, of Wheaton, and Wayne C. Penfold, 57, formerly of Glenview, were also criminally charged with obstructing a federal audit. MPC's former co-owners, brothers Joe and Vince Roberti, were accused of wrongdoing in the lawsuit, but both have since died.
As for Caputo, he said he was happy to be able to help the government after years of helping defraud it.
"I'm a taxpayer, too," he said. "For that I'm proud."
His $4.5 million settlement will help Caputo repair the toll the case took on his family, he said. He spent thousands of hours poring over recordings and documents, all the while unable to tell his family what he was really up to because of the sensitivity and secrecy of the matter.
"I missed a ton of school and sporting events," he said in reference to his children, now 16, 13 and 12. "I'm happy to be getting my life back."
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