ALEXANDRIA, Va. A federal grand jury Friday handed up the firstindictments in the Pentagon procurement scandal, accusing a defensecontractor, consultants and a Navy civilian employee of bribery andfraud.
Another defense contractor and three former executives pleadedguilty and are expected to cooperate with the FBI and the Navy in thecontinuing investigation of military contractors, middlemanconsultants and government officials.
A Navy electronics engineer, Stuart E. Berlin, so far the onlygovernment official charged in the scandal, was the central figureindicted Friday. He was accused of taking bribes in exchange forslipping contractors confidential information about bids by rivalcompanies and passing on other insider information about DefenseDepartment purchasing plans.
U.S. Attorney Henry E. Hudson singled out Berlin's role during apress conference called to announce the indictment of TeledyneIndustries, of Newberry Park, Calif.
"He sold information and his services to a private consultant,who in turn sold that to Teledyne Corp.," the federal prosecutorsaid. "Citizens of the United States . . . have an absolute right tothe honest services of public officials. And when individuals arereceiving money for violating rules and regulations, passingconfidential information, I think it strikes at the very heart of theprocurement process and that's what makes this a serious case."
Berlin and two private consultants who specialized in helpingclients land Pentagon contracts - Fred H. Lackner, of Woodland Hills,Calif., and William L. Parkin, of Alexandria - each face sentences ofup to 185 years in prison and fines up to $5.5 million, theprosecutor said. Also indicted were Teledyne officials George H.Kaub, Eugene R. Sullivan and Dale Schnittjer. The company itselfcould be fined $6.5 million, Hudson said.
The investigation, called Operation Ill Wind, was launched morethan two years ago by a tip that a private consultant was hawkingsecret information about bids and contracts.
The conspiracy indictment detailed times when money wasdiscussed while government investigators listened in on telephonewiretaps.
"It takes a lot of spaghetti and meatballs to grease the skidson some of these things," a Teledyne official was told by one of theconsultants in a Nov. 18, 1987, phone call, about one month beforethe company agreed to pay the consultants $150,000, the indictmentsaid.
"I'll have to give you a little green to do what we have to do,"the indictment said Parkin told fellow consultant Lackner in a May 5,1987, telephone conversation in which Parkin reported receiving a$4,000 payment from Hazeltine Corp., of Greenlawn, N.Y.
Hazeltine, a subsidiary of Emerson Electric Co., earlier in theday pleaded guilty before U.S. District Judge Claude M. Hilton andwas fined $1 million and agreed to pay a $500,000 civil penalty plus$410,000 that the prosecutor said would cover the cost of theinvestigation.
Hudson said executives of Hazeltine and Emerson "have been fullycooperative in connection with this investigation and upon theirdiscovery of this activity came forward to cooperate with us in thisinvestigation." The company issued a statement in New York that saidit already "has taken additional steps to enforce its long-standingrequirement of ethical business behavior and to guard against suchincidents in the future."
Two former Hazeltine executives - Joseph R. Colarusso, who wasthe senior vice president, and Charles A. Furciniti, a marketingrepresentative - also pleaded guilty to conspiracy charges and facesentencing on March 17. Each could be imprisoned for five years andfined $250,000.
Michael Savaides, a Teledyne marketing representativeresponsible for Navy procurements, also pleaded guilty and faces fiveyears in prison and a $250,000 for conspiracy to commit bribery.
The federal prosecutor said the guilty pleas and indictmentsrepresented "a small percentage" of the Operation Ill Wind cases andHudson said "over the next few months, perhaps the next year, you'llsee a great deal of additional activity."
Kenneth P. Walton heads up white-collar crime investigations forthe FBI. Said Walton, "The Department of Defense spends an estimated$620 million every day, every weekend, every holdiay. They have 6.3million employees. So the availability of funds, the number ofopportunities for corruption is substantial."
Defense figures indicted // 4 others plead guilty in arms scandal
ALEXANDRIA, Va. A federal grand jury Friday handed up the firstindictments in the Pentagon procurement scandal, accusing a defensecontractor, consultants and a Navy civilian employee of bribery andfraud.
Another defense contractor and three former executives pleadedguilty and are expected to cooperate with the FBI and the Navy in thecontinuing investigation of military contractors, middlemanconsultants and government officials.
A Navy electronics engineer, Stuart E. Berlin, so far the onlygovernment official charged in the scandal, was the central figureindicted Friday. He was accused of taking bribes in exchange forslipping contractors confidential information about bids by rivalcompanies and passing on other insider information about DefenseDepartment purchasing plans.
U.S. Attorney Henry E. Hudson singled out Berlin's role during apress conference called to announce the indictment of TeledyneIndustries, of Newberry Park, Calif.
"He sold information and his services to a private consultant,who in turn sold that to Teledyne Corp.," the federal prosecutorsaid. "Citizens of the United States . . . have an absolute right tothe honest services of public officials. And when individuals arereceiving money for violating rules and regulations, passingconfidential information, I think it strikes at the very heart of theprocurement process and that's what makes this a serious case."
Berlin and two private consultants who specialized in helpingclients land Pentagon contracts - Fred H. Lackner, of Woodland Hills,Calif., and William L. Parkin, of Alexandria - each face sentences ofup to 185 years in prison and fines up to $5.5 million, theprosecutor said. Also indicted were Teledyne officials George H.Kaub, Eugene R. Sullivan and Dale Schnittjer. The company itselfcould be fined $6.5 million, Hudson said.
The investigation, called Operation Ill Wind, was launched morethan two years ago by a tip that a private consultant was hawkingsecret information about bids and contracts.
The conspiracy indictment detailed times when money wasdiscussed while government investigators listened in on telephonewiretaps.
"It takes a lot of spaghetti and meatballs to grease the skidson some of these things," a Teledyne official was told by one of theconsultants in a Nov. 18, 1987, phone call, about one month beforethe company agreed to pay the consultants $150,000, the indictmentsaid.
"I'll have to give you a little green to do what we have to do,"the indictment said Parkin told fellow consultant Lackner in a May 5,1987, telephone conversation in which Parkin reported receiving a$4,000 payment from Hazeltine Corp., of Greenlawn, N.Y.
Hazeltine, a subsidiary of Emerson Electric Co., earlier in theday pleaded guilty before U.S. District Judge Claude M. Hilton andwas fined $1 million and agreed to pay a $500,000 civil penalty plus$410,000 that the prosecutor said would cover the cost of theinvestigation.
Hudson said executives of Hazeltine and Emerson "have been fullycooperative in connection with this investigation and upon theirdiscovery of this activity came forward to cooperate with us in thisinvestigation." The company issued a statement in New York that saidit already "has taken additional steps to enforce its long-standingrequirement of ethical business behavior and to guard against suchincidents in the future."
Two former Hazeltine executives - Joseph R. Colarusso, who wasthe senior vice president, and Charles A. Furciniti, a marketingrepresentative - also pleaded guilty to conspiracy charges and facesentencing on March 17. Each could be imprisoned for five years andfined $250,000.
Michael Savaides, a Teledyne marketing representativeresponsible for Navy procurements, also pleaded guilty and faces fiveyears in prison and a $250,000 for conspiracy to commit bribery.
The federal prosecutor said the guilty pleas and indictmentsrepresented "a small percentage" of the Operation Ill Wind cases andHudson said "over the next few months, perhaps the next year, you'llsee a great deal of additional activity."
Kenneth P. Walton heads up white-collar crime investigations forthe FBI. Said Walton, "The Department of Defense spends an estimated$620 million every day, every weekend, every holdiay. They have 6.3million employees. So the availability of funds, the number ofopportunities for corruption is substantial."
