Thayer Receives Four-Year Term : Former Defense Official Sentenced in Stock Case

Former Deputy Defense Secretary W. Paul Thayer and an associate, Dallas stockbroker Billy Bob Harris, were sentenced Wednesday to four years in prison and fined the maximum $5,000 each for obstructing justice in a federal stock fraud investigation.

The surprisingly stiff sentences were handed down to Thayer, 65, former chairman of LTV Corp., and Harris, 45, in an effort to deter thousands of stockbrokers and corporate officers across the nation from also engaging in such “insider trading” deals, U.S. District Judge Charles R. Richey said.

Similarly, U.S. Atty. Joseph E. DiGenova, who handled the case for the Justice Department, said that the sentence “obviously sends a signal . . . that this kind of conduct is going to be dealt with severely.”

Richey rejected pleas of leniency for Thayer and Harris, who had pleaded guilty, by their attorneys and a number of prominent friends of Thayer, including former President Gerald R. Ford and many senators, congressmen, business leaders and retired military officials. In an effort to bolster those pleas, the pair earlier this week had agreed to repay $830,000 in illicit profits from the fraud.

But “despite your many accomplishments and many distinguished friends, we must always endeavor to treat people equally for our system of justice to have any credibility,” Richey said.

Assistant U.S. Atty. Charles H. Roistacher had urged Richey to give the two defendants “a period of incarceration, although not a substantial one.” However, he characterized the pair as “rich and privileged men” who should not receive “a free ride” by escaping jail time.

Appeared Stunned

After the sentencing, Thayer and Harris left the U.S. courthouse, silent and appearing stunned, under orders to report Monday to a federal prison in Texas. They could have received maximum terms of five years based on their admissions last March that they repeatedly had lied under oath to Securities and Exchange Commission investigators probing the “insider trading” charges.

Under the four-year sentence, each will have to serve more than a year in jail before he can be considered for parole.

In brief pre-sentencing remarks, Thayer and Harris expressed remorse for their conduct and told Richey that their lives already had been ruined.

Thayer 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.

He resigned from his Pentagon post just 24 hours before the SEC charged in a civil complaint last year that he, Harris and seven others had conspired to use illegal inside information to reap $1.9 million in profits in the stock market, although Thayer’s lawyer maintained that his client “did not receive a penny” of that money.

Admitted Telling Friend

Thayer at first lied about his role, but ultimately he acknowledged that he had passed secret information to Harris and another friend, Sandra K. Ryno, about possible acquisitions being planned in 1982 by Anheuser-Busch and Allied. He was LTV chairman at the time and a director of both Busch and Allied. Ryno was identified in the formal charges as a 38-year-old former LTV receptionist whom Thayer had supported and with whom he had maintained a “close personal relationship.”

Roistacher said that the stock tips that Thayer gave Ryno helped her make money, thereby reducing the funds that Thayer had to provide for her support. “He was a multimillionaire. He could have given her money in a legal way,” the prosecutor said.

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.