Justice Dept. Urges Jail Term for Thayer in Stock Case

The Justice Department urged a federal judge Friday to imprison former Deputy Defense Secretary W. Paul Thayer for his admitted role in what the government called “an egregious insider-trading scheme and rampant obstruction of justice.”

U.S. Atty. Joseph E. diGenova, in a 28-page pre-sentencing memorandum, said that Thayer and his co-defendant, prominent Dallas stockbroker Billy Bob Harris, “clearly should be sentenced to jail as punishment for their criminal conduct.”

They pleaded guilty March 5, with Thayer admitting that he lied under oath to federal investigators and obstructed justice. Each faces up to five years in prison and $5,000 in fines. Sentencing is scheduled for April 18.

In reaching a plea-bargaining agreement, the government agreed “not to ask for substantial incarceration,” Assistant U.S. Atty. Charles H. Roistacher said. However, the government decided not to recommend “minimal incarceration,” he said.

A former federal prosecutor, speaking privately, said that a judge probably will not “give a guy like Thayer the maximum” punishment. But, he added that “when they’ve got the goods on a public figure, it would be irresponsible for the government not to ask for time” in prison.

In his recommendation to U.S. District Judge Charles R. Richey, DiGenova reviewed the Securities and Exchange Commission’s efforts to investigate Thayer and Harris and said that the two “never told the SEC the truth about key areas of inquiry.”

The case should not be seen as “ordinary ‘white-collar’ crime” but rather as “an egregious insider-trading scheme and rampant obstruction of justice by an individual who served at the pinnacle of corporate and governmental power,” the prosecutor said. He added that the crimes were “particularly repugnant when committed by a well-respected corporate leader and high-ranking government official.”

Thayer, a former chairman of the U.S. Chamber of Commerce whose net worth was put at $10 million when he joined the Reagan Administration, resigned as the Pentagon’s No. 2 official on Jan. 4, 1984, one day before he was charged by the SEC.

$1.9 Million in Profits

The commission alleged that his friends and associates had gained $1.9 million in illicit stock profits from tips that he gave them about possible acquisitions by Anheuser-Busch Cos. and Allied Corp., on whose boards he served. Thayer was never accused of profiting personally from insider trading.

Federal securities law makes it illegal to pass along or to act on non-public information that may affect a stock’s value if that information originates from a so-called “insider” or company officer.

Thayer, 65, was chairman of LTV Corp. of Dallas, a major defense contractor, for 12 years before becoming deputy defense secretary in 1983. Among those tied to the case was Sandra K. Ryno, a 38-year-old former LTV receptionist with whom Thayer had maintained a “private personal relationship,” according to the document prepared by DiGenova.