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Starrett Denies Fraud Allegations

September 12, 2002

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ATHOL, Mass. (AP) _ L.S. Starrett Co., which makes high-tech measuring devices for industry, denied allegations Thursday that it defrauded customers including the government but said it was cooperating with federal investigators.

The Wall Street Journal reported Thursday the Justice Department is investigating the company for allegedly selling substandard equipment. The investigation was prompted by Richard Parks, a technician at a Starrett subcontractor, who filed a civil suit under seal in Boston in March.

Starrett’s machines are used in precise manufacturing techniques used by the Pentagon, NASA and defense contractors. They have been used in the construction of the Space Shuttle and Air Force jets, and the government is attempting to determine if they were used to test parts on commercial airliners, the Journal reported.

Investigators raided the company’s Metrology Systems division in Mount Airy, N.C., last week and seized documents.

The company released a statement Thursday saying it ``emphatically denies the allegations in the article.″ The statement said that the company, on its own initiative, made improvements to its machines and in March began replacing all of its ``Rapid Check″ machines at no cost to customers.

Starrett said it is ``fully cooperating with the government’s investigation, and is confident that after all the facts are reviewed, it will be determined that the Company acted in a lawful and responsible manner.″

However, the Journal reported that documents taken from Mount Airy show the company knew about problems as far back as the late 1990s but failed to warn customers.

In afternoon trading on the New York Stock Exchange, Starrett shares tumbled 23.9 percent, or $5.47 a share, to $17.45.

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