MTS agrees to settle feds' probe for $7.75M

  • Article by: NICOLE NORFLEET , Star Tribune
  • Updated: July 31, 2012 - 9:12 PM

If approved by the Justice Department, the deal would end inquiry into export violations.

More than a year after federal investigators began to examine Eden Prairie-based MTS Systems Corp. for possible export law violations, the company announced Tuesday night that it had reached a tentative $7.75 million settlement with the U.S. attorney's office in Minnesota.

According to MTS, the agreement in principle would settle the U.S. Department of Justice's potential claims against the company for its past disclosures on its government certifications and representations in connection with federal government contracting.

MTS, a maker of sophisticated test systems and sensors, has been under investigation since last January. The company disclosed last March that it was not allowed to bid on new government contracts, which had accounted for 5 to 7 percent of its business. That ban was lifted in the fall.

"We are very pleased," CEO Jeffrey Graves said Tuesday in a prepared statement. "The resolution of this matter has been a top priority for the company. We have invested significant resources to improve our government contracting and general compliance infrastructure during the last eighteen months. As a result, we are a stronger company today and remain committed to meeting the government's fully responsible contractor status."

The Star Tribune reported last August that the U.S. attorney's office was issuing grand jury subpoenas related to the company's exports. MTS said that the scope of the investigation had grown to include the company's general compliance record and practices in areas including export controls and government contracts. It marked the second time in three years that MTS had been investigated for its export activities.

In September, the U.S. Air Force lifted sanctions that prevented MTS from doing business with the service.

The agreement allowed the company to resume federal contracting and work with state and local governments. The agreement came a month after Laura Hamilton, the company's CEO since 2008, resigned without explanation.

The settlement must still be approved by the Department of Justice to be finalized. If given final approval, the agreement would end the U.S. Department of Commerce and the U.S. attorney's office investigation.

Nicole Norfleet • 612-673-4495; Twitter: @stribnorfleet

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