Thayer Admits He Lied to SEC : Former Defense Official a Target of Fraud Probe

W. Paul Thayer, who resigned last year as deputy secretary of defense on the eve of being charged with stock fraud, pleaded guilty Monday to obstruction of justice in connection with the case and admitted that he had lied under oath to federal investigators.

An associate of Thayer, prominent Dallas stockbroker Billy Bob Harris, also pleaded guilty in federal court to charges arising from an “insider trading” stock market case. The pair were among nine persons accused of civil fraud in January, 1984.

The Securities and Exchange Commission alleged that friends and associates of Thayer had reaped illicit stock profits of $1.9 million because of tips that he had given them before becoming the Pentagon’s No. 2 official. Thayer was never accused of profiting personally from the insider trading.

Thayer and Harris each could face maximum punishment of five years in prison and $5,000 in fines, in addition to being ordered to compensate unidentified victims of the fraud, presumably other stockholders in companies involved in the case. U.S. District Judge Charles R. Richey set their sentencing for April 18.

Assistant U.S. Atty. Charles H. Roistacher said that the government would recommend “not a substantial sentence” in return for Thayer’s and Harris’ pleas.

Thayer, 65, was chairman of LTV Corp. of Dallas, a major defense contractor, for 12 years before he joined the Reagan Administration in 1983. He also had served on the boards of directors of Anheuser-Busch Cos., the nation’s largest brewery, and Allied Corp., a New Jersey-based conglomerate.

Lauded by Reagan

When he resigned from the Pentagon 14 months ago, Thayer called the civil stock fraud charges “entirely without merit” but said that he needed time to prepare his legal defense. President Reagan told him at the time: “You have played a key role in planning and putting into effect . . . a major program to modernize every element of our military forces.”

However, the civil case against Thayer soon grew into a criminal investigation under U.S. Atty. Joseph E. DiGenova of the District of Columbia, when evidence surfaced that Thayer and Harris had given false testimony to SEC investigators. DiGenova said Monday that the two men had attempted to obstruct the SEC inquiry through that testimony.

In court Monday, Thayer acknowledged that he had given “false and misleading” answers during formal questioning by SEC attorneys on three occasions in 1983, while he was a Pentagon official. Harris, 45, admitted that he had done the same thing on five occasions.

Roistacher told the court that Thayer had lied in denying that he had passed on “secret, non-public information” to Harris and a second associate, Sandra K. Ryno, about possible acquisitions being planned in 1982 by Anheuser-Busch and Allied. Ryno was identified in the formal charges as a 38-year-old former LTV receptionist with whom Thayer had maintained a “close personal relationship.”

Harris Told Lie

Harris admitted lying when he denied that Thayer had passed along secret data to him in 1981 about a tender offer that LTV was prepared to make for the stock of Grumman Corp.

Under federal securities law, it is illegal for anyone to pass along, or act on, non-public information that may affect the value of corporate stocks if that information originates from a so-called “insider” or company official.