19 Indicted After Defense-Industry Crackdown on Bribes, Kickbacks

Nineteen former defense-industry purchasing agents and suppliers involved in subcontracts on a dozen of the nation’s most sensitive military projects were indicted on bribery and kickback charges Thursday in Los Angeles as part of a federal crackdown on “widespread and longstanding” defense industry corruption.

Describing bribery and kickbacks as “a cancer on the defense industry,” U.S. Atty. Robert C. Bonner said the indictments were only the first in an intensified government effort to eliminate routine cheating in the awarding of defense contracts.

“These cases are the result of the largest, most sweeping investigation ever undertaken into defense-industry bribery and kickbacks,” Bonner said. “The corrupt practice of giving kickbacks on defense subcontracts is a disgrace.”

Bonner spoke at a news conference announcing the indictments of former employees of such major defense-industry firms as Hughes Aircraft Co. and Rockwell International Corp. of El Segundo and Airesearch Manufacturing Co. of Torrance, as well as several smaller subcontracting firms.

They were involved in a variety of kickback schemes in subcontracting work on programs that included the space shuttle, the B-1 bomber, the cruise missile system and “numerous sophisticated military aircraft,” including production of the Air Force’s F-15 and F-16 fighter jets, Bonner said.

Bonner and Assistant U.S. Atty. Fred D. Heather, who will prosecute the kickback cases, were joined at the news conference by Richard T. Bretzing, agent in charge of the Los Angeles office of the FBI; Ronald E. Saranov, chief criminal investigator for the Internal Revenue Service in Los Angeles, and Charles W. Dodge, one of the Defense Department’s top criminal investigators.

“This group represents a joint task force code-named Operation DEFCON, formed in the past six months to end defense industry frauds,” Bonner said. “The collective forces of the federal government are going to pursue this until we bring an end to kickbacks and bribery.”

Bonner said the 19 defendants charged Thursday were involved in kickback schemes totaling “hundreds of thousands of dollars,” and added that industry corruption over the years has cost taxpayers “tens of millions.” He said most were no longer employed by the companies.

‘Undercover’ Activity

Details of the investigation that led to the indictments were kept secret Thursday, but Bonner said “undercover” activity was involved.

The Times learned that 14 of the defendants were charged after dealing with a man who acted as a sales representative for several supply companies and cooperated with investigators. He was identified in the indictments both as Rex B. Niles and Rex Rep.

According to the indictments, Niles made cash payments to the defendants in exchange for subcontracts awarded to the suppliers he represented. The indictments said the kickbacks were usually 4 1/2% of the value of each subcontract.

Among those indicted was Rosemead City Councilman Louis Tury Jr., 47, a machine shop owner and former mayor of Rosemead, accused of paying more than $20,000 in kickbacks between 1980 and 1984 to an official of Teledyne Camera Systems Inc. in exchange for a contract supplying components for the camera systems in B-52 bombers.

Numerous Charges

Also indicted on a variety of kickback, fraud and tax-evasion charges were two former Hughes Aircraft Co. employees, Walter E. Glass, 43, of Sun City, and Ralph Affinito, 45, of Rolling Hills Estates, both former Hughes supervisors.

Glass was charged with accepting about $9,000 in kickbacks from a subcontractor on the Navy’s A-6 “Intruder” bomber while a Hughes employee. Affinito, who also worked at Rockwell International, was accused of participating in kickback schemes at both firms.

Others charged Thursday included James Paul Huckabey, 51, of Cypress, a senior buyer for Kaiser Electroprecision in Irvine; John Robert Rennert, 62, of Panorama City, purchasing supervisor for Rantec Division of Emerson Electronic Co., Chatsworth; Stephen Rowland, 36, of Oxnard, a senior buyer at Systron Donner, Van Nuys; Kenneth Leroy Pipho, 43, Sun Valley, a senior buyer for Whittacker Controls Inc. of North Hollywood, and Carl Andy Romero, 70, of Westminster, a senior buyer for Datron Systems Inc. of Simi Valley.

Other Buyers

Also indicted were Richard Henry Van Praag, 57, of Torrance, a senior buyer for Magnavox Advanced Products and Systems Co., Torrance; Ward Finch, 61, of Rancho Palos Verdes, owner of Draw Industries, Carson; Albert V. Dinger, 53, of Garden Grove, a former purchasing agent for Airesearch Manufacturing Co. in Torrance, and Donald Lloyd Watkins, 39, of Huntington Beach, a former buyer for HTLKK West Co. of Santa Ana.

Bonner identified others indicted as Ronald Ellsworth Gilbert, 53, of Canoga Park; David Allen Lewis, 49, of Granada Hills; Donald Andrew Halliday, 53, of Chatsworth; Christopher Kay Pappas, 42, of Simi Valley, Frank Joseph Mento, 58, of Covina, Ralph Leo Guerin, 34, of Los Angeles, and Warne Leon Bates, 38, of Newbury Park.

The indictments and launching of Operation DEFCON followed the successful prosecution of 18 other defense kickback cases by the U.S. attorney’s office in the last two years. As part of the intensified probe, Bonner and Bretzing announced establishment of a telephone hot line by the FBI for reporting “allegations or suspicions” of fraud in the defense industry.

Bretzing said the number for callers in California is 1-800-843-8828. He said the number outside California is 1-800-424-9098.