ILS Alleges Former CTO Defrauded Company With Shell Companies

ILS, the U.S.-based company that markets Khrunichev’s Proton launch vehicle, has charged that former Chief Technical Officer (CTO) bilked the company by funneling funds meant for safety analysis work through two fictitious companies he co-owned with an accomplice.

Reston, Va.-based ILS is further alleging that the actions of the former employee, James M. Bonner, violated the U.S. Racketeer Influenced and Corrupt Organizations (RICO) Act, a federal law commonly used to prosecute organized crime.

In documents submitted to the U.S. District Court for the Eastern District of Virginia, ILS says Bonner, who was fired in August, conspired with a friend, Thomas J. Dwyer, to create two fictitious companies that billed ILS for safety-related analysis.

Lawyers for Bonner and Dwyer, along with their two affiliated companies, have asked the court to reject the idea that what they did rises to the level of a RICO charge, saying that ILS is attempting to portray a “garden variety” violation of fiduciary duty as a federal crime.

If the court rejects the RICO charge, the defense lawyers argue, then the entire case must be thrown out because it is not one involving violations of federal law. The defendants’ motion neither admits or denies the basic ILS allegations.

In its court filings, submitted starting Oct. 12, ILS says Bonner conspired with Dwyer to set up a shell company called Pegasus Global International. Bonner, in his position as ILS chief technical officer, steered ILS contract work to Pegasus for a five-year period ending in August.

Pegasus in turn contracted with a company called Rocket Sled Motors for much of the safety-certification work. ILS says Dwyer is the only employee of Pegasus, and Bonner the only employee of Rocket Sled.

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