Los Angeles Business Journal

OSI Denies Faking Body Scan Tests

By James Rufus Koren Friday, November 16, 2012

OSI Systems Inc. has denied allegations that it faked test results for the company’s airport body scanners.

Shares of OSI plummeted Thursday after the company disclosed that an Alabama congressman said the Hawthorne company might have faked software test results.

Shares dropped 28 percent Thursday, closing at $54.89. OSI stock rebounded Friday, closing the week at $63.94, still down 16 percent from Wednesday’s close.

In response to the allegations, OSI issued a press release on Thursday saying the company and its body scanner unit, Rapiscan Systems, had done nothing wrong.

“At no time did Rapiscan Systems falsify test data or engage in any fraudulent conduct,” Deepak Chopra, chief executive of OSI, said in the release. “We take the matter very seriously and are fully cooperating with the TSA during this process.”

In a Tuesday letter to the head of the Transportation Security Administration, Rep. Mike Rogers, R-Ala., said OSI “may have attempted to defraud the government by knowingly manipulating an operational test,” according to Bloomberg News.

A spokesman for Rogers’ was not available by phone and did not immediately return emails requesting comment or a copy of the letter.

Rapiscan has been developing software for its backscatter X-ray scanners – ones that drew fire from travelers because they show what look like naked images to security screeners – to show less risqué images. TSA officials have said OSI has “faced challenges in developing and refining” the software.