Federal contractors pay up over cybersecurity and hiring claims as a spying plea lands

Two settlements, two compliance failures

ILC Dover LP and ILC Astrospace LLC, based in Frederica, Delaware, agreed to pay $13 million to resolve False Claims Act allegations. The allegations involve failure to comply with cybersecurity requirements in federal contracts with the Department of the Army, the Missile Defense Agency and NASA. A settlement that resolves allegations is not a court finding that the conduct occurred, and the available claims do not say whether the companies admitted wrongdoing. m:…6901

Lockheed Martin agreed to pay $29.5 million to resolve employment discrimination and false certification allegations. Of that total, $22 million is paid to the U.S. government for False Claims Act violations, and $7.5 million is allocated to over 1,000 affected employees. The False Claims Act violations relate to failures to comply with anti-discrimination requirements in federal contracts. m:…1817

The employment side of the Lockheed case comes from the Equal Employment Opportunity Commission, whose settlement resolves a 2025 Commissioner's Charge filed by Chair Andrea Lucas. The EEOC alleged Lockheed violated Title VII by engaging in race discrimination against white employees, including in performance assessments, bonuses and compensation decisions. The settlement is described as the largest class of workers to recover under an EEOC settlement related to a DEI program. m:…1817

This suggests a practical point for executives with federal contracts: cybersecurity controls and hiring practices are both treated as contract compliance issues, not just internal policy matters, and both can produce False Claims Act exposure. The two settlements together total $42.5 million, a figure that combines two separate resolutions and should not be read as a single penalty. m:…6901 m:…1817

An insider-spying plea

Separately, Abraham Teklu Lemma, a 53-year-old resident of Maryland, pleaded guilty to conspiring to commit espionage on behalf of the government of the Federal Democratic Republic of Ethiopia. Lemma worked as an IT contractor for the National Reconnaissance Office, the U.S. Department of State and the U.S. Department of Justice. m:…6365

The available claims do not describe what information was involved, how long the conduct lasted, or what sentence Lemma faces. The case is a reminder that insider risk is not only a cybersecurity-controls problem of the kind at issue in the ILC settlement — it is also a personnel problem, and the same contractor workforce sits at the intersection of both. m:…6365

Beyond the contractor cases

Two other enforcement actions surfaced in the same batch of announcements. The Securities and Exchange Commission obtained final judgments against The Movie Studio, Inc. and its CEO Gordon Scott Venters on October 15, 2026. The defendants made material misrepresentations regarding film ownership, film-production operations, blockchain technology and Amazon revenue, and conducted an unregistered securities offering from April 2017 through December 2020 that raised at least $1.2 million from more than 70 investors. m:…4406

Venters was ordered to pay $69,000 in disgorgement, $17,735 in prejudgment interest and a $100,000 civil penalty, and used some investor funds for purposes unrelated to legitimate business activity. The final judgments permanently enjoin the company and Venters from violating sections of the Securities Act of 1933. m:…4406

In a separate appellate decision, the Second Circuit affirmed the district court's judgment against Sow for trafficking counterfeit goods. The court found the district court did not err in applying a two-level aggravating role enhancement, that its valuation of counterfeit goods using a midpoint estimate and bank records was reasonable, and that trademarks are a form of property covered by the Mandatory Victims Restitution Act. Sow was sentenced to 24 months' imprisonment, three years' supervised release and $111,250.72 in restitution. m:…8403