Chance Talk Led to Sale of Planes to Libya, U.S. Reveals
Carl Lilly was repairing computers at Armoflex, Inc., a small military hardware firm here, when he overheard a conversation. Several officers of Armoflex were discussing the possibility of selling armored vests to Libya, but complained about their lack of contacts.
Lilly, who worked for a nearby computer firm, mentioned that his father-in-law was in the oil business in Libya and could possibly help.
This chance meeting three years ago, according to a federal law enforcement source, led to the events that resulted in the indictment of Lilly, his father-in-law and the owner and two executives of Armoflex for illegally selling two U.S. transport planes worth almost $60 million to Libya.
The five Californians were indicted Wednesday by a federal grand jury in Atlanta in what U.S. Customs Service officials described as “the largest diversion of military equipment” to Libya ever uncovered. U.S. policy prohibits commercial sales of American aircraft to Libya.
Arrested in Honolulu
Lilly, 31, of Visalia, who was arrested in Honolulu, is being transported by federal marshals to Atlanta, said Assistant U.S. Atty. Richard Kunianski. Lilly’s father-in-law, Franklin Corcoran, 53, of Pismo Beach, is being held at Terminal Island prison awaiting a bail reduction hearing next week.
The three Armoflex officials, who pleaded not guilty, were free Friday on bonds totaling $2.5 million. Edward J. Elkins, 42, of Bend, Ore., owner and president of Armoflex, paid his $2-million bond in Atlanta--it was set high because federal prosecutors said they feared that he would skip the country if his bail were lower.
His two employees, David E. Baskett, 43, a retired U.S. Army major and decorated Vietnam veteran, and Thomas J. Burnham, 40, both of Santa Maria, were released after posting their $250,000 bonds.
None of the defendants could be reached for comment.
Also named in the seven-count indictment were two Libyan nationals, Abdurrahmen Badi and Abdulraheem Badir, who were last known to be in West Germany. U.S. authorities are currently searching for them, Kunianski said.
According to the federal source and information contained in the 32-page indictment, the following events led to the sale of the planes to Libya:
Lilly mentioned that Armoflex needed contacts in Libya to Corcoran, who was employed in Tripoli by Libya’s national oil company. Corcoran introduced Badir, his business partner, to Lilly in order to open business negotiations between Armoflex and the Libyan government.
“The parties were now in place, but the deal with the vests fell through,” the federal source said. “Then the Libyan government, through Badir and Corcoran, asked about the possibility of buying planes.”
The defendants attempted to purchase C-130 Hercules military transport planes from Lockheed-Georgia Co. But Lockheed informed them that the plane could not be sold to civilians.
Bolivia Denies Connection
“They attempted to convince Lockheed that they were with the Bolivian government and that’s why they needed the planes,” said the source, who asked not to be identified. “But the Bolivian government denied it, so the deal didn’t go through.”
Then “Option II,” the indictment stated, was implemented. The defendants purchased two L-100-30 transport planes--civilian versions of the C-130--from Lockheed. Elkins formed a company, AFI International Ltd., “to handle the planes and as a tax dodge,” the source said.
The defendants claimed that the aircraft would be used for oil exploration in the tiny West African nation of Benin. But the planes were diverted to Libya to be converted to aerial refueling craft that could be used to extend the range of Libyan fighter jets.
Badir had attempted to buy aerial refueling systems from Aero Union Corp. of California, but that deal failed, prosecutors said.
The two planes were purchased at Lockheed’s Marietta, Ga., plant and flown to Newfoundland, France, Africa and eventually to Libya.
Stop Second Purchase
Investigators said they uncovered the plot in time to stop the men from buying two more planes worth about $64 million.
The three officers of Armoflex, after their release on bond, spent Friday in Atlanta searching for local lawyers. No trial date has been set in U.S. District Court.
Each of the men could face 35 years in prison if convicted of fraud and for trying to sell aircraft to Libya. The men and the companies could be fined either $500,000 or twice the amount each made on the deal, whichever is greater.
There is no known connection between the suspects from Santa Maria and nearby Vandenberg Air Force Base, federal authorities said. The investigation was based in the Atlanta area where the purchases of the planes were made.
