MTS Systems CEO Resigns Amid Federal Investigation

The company will soon begin a search for a new CEO as federal investigators probe disclosure issues related to government contract forms.

The CEO of Eden Prairie-based MTS Systems Corporation-Laura Hamilton-resigned on Thursday while the company continues to wrestle with legal problems.

Hamilton, who had been CEO since 2008, left by “mutual agreement” with the board, the company said.

William Murray, an MTS director since 2010, has taken over as interim CEO. The company said it plans to begin searching for a new CEO “as soon as practicable.”

The announcement comes several months after the company said in March that it was under federal investigation over disclosure issues, and that it was barred from federal government contracting. The Star Tribune reported earlier this month that the U.S. Attorney's office in Minneapolis is now issuing grand jury subpoenas to third-party individuals over these issues.

Three years ago, then-CEO Sidney Emery Jr.-on behalf of MTS-pleaded guilty to two misdemeanor criminal offenses related to the planned sale of equipment that could have been used to test nuclear weapons in India. While the equipment was never shipped, MTS employees making export applications allegedly failed to disclose their knowledge about how the equipment might be used. The company paid $836,000 in fines and penalties.

The current investigation points to similar disclosure issues. According to the Star Tribune, MTS gets between 5 and 7 percent of its business through contracts with the federal government. To be eligible for these contracts, companies must file a lengthy certifications document that includes, among other things, acknowledging the existence of past convictions or civil judgments for making false statements.

MTS filed five such disclosure forms after it pleaded guilty in 2008 and before the current investigation began. In each case, company officials allegedly failed to disclose previous convictions or plea agreements that took place during the preceding three years.

MTS makes test systems and sensors for industries such as aerospace, biomedical devices, and civil engineering. The company employs 1,948 and reported revenues of $374 million for the fiscal year that ended in October 2010.