U.S. Accuses 10 of Taking Kickbacks on Defense Pacts
Ten employees of three major aerospace companies were charged Wednesday with taking kickbacks on more than $1 million worth of contracts in what U.S. Atty. Robert Bonner said was “just the tip of the iceberg” in widespread bribery in Southern California’s defense industry.
At the time the kickbacks were allegedly solicited and paid, eight of the defendants worked for Hughes Aircraft Co. in El Segundo, one was a vice president of Teledyne Camera Systems in Arcadia and another was employed by Northrop Corp. in Pico Rivera.
The contracts involved parts ordered from subcontractors by defense contractors manufacturing sophisticated military aircraft and weapons systems, Bonner said. He specifically identified only the A-6 Navy airplane and said some of the equipment was too secret to identify.
Illegal Acts
Most of the illegal acts listed allegedly occurred in 1984, but Bonner told reporters that the scheme “probably goes back at least until 1981.”
He said the kickback cases announced Wednesday at a press conference were the result of “an extensive and intensive FBI investigation” that is continuing.
“It is painfully clear that the practice of paying and accepting kickbacks in the defense contracting community in Southern California is widespread and altogether too common,” Bonner said. “What we are revealing today is just the tip of the iceberg.”
The 10 people charged in three federal grand jury indictments and five criminal informations had jobs that allowed them to assist suppliers in obtaining subcontracts to provide machine parts on Department of Defense prime contracts, according to Asst. U.S. Atty. Fred Heather, who is prosecuting the case.
Bribes “totaling in the vicinity of $100,000” were paid to these individuals, “mostly in cash and usually amounting to 5% the value of the contract,” Bonner told reporters.
In one case, the money was channeled to a dummy corporation and in another instance, the bribe was “in the form of an all-expenses-paid trip to Europe,” he added.
Mail Fraud
One of the indictments announced Wednesday charged 42 counts of mail fraud and receiving kickbacks against Philip R. Kaiser, 48, of Los Angeles; Richard G. Moretine, 52, San Pedro, and Michael K. Johnston, 37, Hawthorne.
They were employed at Hughes Aircraft when the alleged offenses occurred. Kaiser supervised a group of buyers at Hughes, two of whom were Moretine and Johnston, the indictment alleges.
At an arraignment for three of the 10 defendants, prosecutor Heather identified Kaiser as the “ringleader of the kickback scheme which he devised.”
A second indictment, listing eight similar felony counts, charged Emile Brousseau Sr., 45, a former Buena Park resident now living in Colorado Springs, Colo., with taking a $4,000 kickback while employed as procurement administrator for the Advanced Systems Division of Northrop.
The third indictment alleges 20 counts of mail fraud and kickback counts against William Benites Huerta, 54, of the Lennox area, who worked as a subcontract administrator at Hughes.
Others charged in the case are Richard Floyd Herbert, 52, of Sepulveda; Daniel J. Gordon, 62, El Segundo; James K. Rowe, 66, Los Angeles; John R. Hamilton, 54, Lakewood, and Joseph R. Canfield, 63, Woodland Hills.
Herbert was employed by Teledyne as a vice president and general manager of its Arcadia operation. Rowe and Hamilton are employed by Hughes as subcontract administrators. Canfield and Gordon formerly had similar positions with Hughes.
According to evidence gathered by FBI Agents Kevin Poole and Philip Sprick, all of the defendants, except Teledyne’s Herbert, solicited kickbacks from Richard Haskell, part owner of R H Manufacturing in Chatsworth.
Haskell, who was not charged, reportedly told investigators he usually paid the bribes in cash, after receiving contracts for a variety of machine parts.
European Trip
Haskell said he also furnished Kaiser and his wife with a European vacation, paying for air fare, hotel rooms and a rental car.
The indictment against Brousseau charges that while he was a procurement administrator at Northrop, he engaged in a practice known as “courtesy bidding,” in which suppliers would give him artificially high bids that would allow him to buy from a supplier willing to pay a kickback.
The charges against Herbert accuse him of having Simo Turkich, who operates the Progress Engineering machine shop in Westminster, make kickback payments to Profit Makers Enterprises in return for receiving contracts from Teledyne. Heather said Profit Makers was a shell company Herbert set up expressly for that purpose.
The defendants face a maximum penalty of five years’ imprisonment and $1,000 fine on each mail fraud count and two years in prison and a $10,000 fine on each kickback count.
