February 15, 2007—Siemens Medical Solutions Inc, Malvern, Pa, pleaded guilty last week to obstruction of justice and admitted to misleading officials in order to land a $49 million medical equipment contract.

The contract required that all bidding companies have a minority-owned partner sharing in at least 30% of profits; Siemens claimed to have entered into an eligible partnership with Faustech Industries Inc, River Grove, Ill. The arrangement came under scrutiny when GE Healthcare, Waukesha, Wis, filed suit in October 2000 against Cook County, Illinois, which had awarded Siemens the contract. GE asserted that Cook County had awarded the contract against the terms of the bidding.

In the ensuing trial, Siemens manager Daniel Desmond falsely testified that a one-time $500,000 payment to Faustech was “an advance of profits.” The company later admitted in its signed plea agreement that its managers agreed to pay the $500,000 to Faustech in return for using its name, knowing that the company lacked the ability to perform the work specified in the contract.

Siemens pleaded guilty to obstruction of justice and agreed to pay a $1 million fine and a restitution of more than $1.5 million to Cook County. Desmond, Faustech owner Faust Villazan, and Siemens attorney Ellen Roth are currently awaiting trial. All have pleaded not guilty.

—Cat Vasko