El Cajon Jet Parts Firm Officials Deny They Defrauded Air Force
Two officials of an El Cajon jet parts manufacturing firm pleaded innocent in federal court in San Diego Friday to charges that they falsified documents and conspired to defraud the government on a $250,000 Air Force contract.
George T. Straza, owner of Jet Air Inc., and Joao Jaime Costa, a salesman for the firm, pleaded innocent before U.S. Magistrate Harry McCue to all charges included in a 31-count indictment issued Thursday by a federal grand jury in San Diego. Jet Air, which also was named in the indictment, also pleaded innocent Friday.
Straza, who faces 17 felony counts of conspiracy, making false statements and theft, posted a $100,000 personal surety bond and gave the government a trust deed on certain real estate to secure his release. Costa, named in all 31 counts, posted a $50,000 personal surety bond. Both men are scheduled to appear in U.S. District Court on Aug. 25 to have a trial date set.
The indictment alleges that Straza and Costa ordered Jet Air employees to cover up the company’s failure to complete required quality inspections on engine seals used on the Air Force’s F-15 and F-16 jets. The two men and Jet Air also are accused of stealing $25,000 worth of gold from the Air Force by failing to return gold sludge extracted from the engine seals as part of the refurbishment process.
At the request of Assistant U.S. Atty. George Hardy, McCue ordered Straza not to physically visit Jet Air’s El Cajon facility.
“We feel his presence at Jet Air Inc. could pose potential problems for witnesses in the case,” Hardy said.
Straza’s attorney, Peter Hughes, agreed to the condition, but said there was no cause for concern. “In truth and fact, there are no problems with respect to any personnel or witnesses from Mr. Straza,” he said.
In an interview after the court hearing, Hardy explained: “If you have the man who’s been boss of the company, and he’s been indicted, and if he knows some of his employees out there may or may not be witnesses, you want to curtail any effect it may or may not have on them as far as their testimony.”
Straza, who Hardy said is paid $350,000 a year as a consultant to Jet Air, will be permitted to telephone company President James Mills, the company’s general manager and his secretary.
Neither Straza nor Costa would comment after the hearing.
If convicted on all the charges, Straza faces a maximum sentence of 105 years in prison, while Costa faces a maximum penalty of 175 years in prison. Jet Air also faces $15.5 million in fines.
Straza, a flamboyant 57-year-old businessman with extensive ties to San Diego politicians, is on probation from a 1984 conviction stemming from improprieties involving a $2.4-million contract with the National Aeronautics and Space Administration to manufacture parts for the space shuttle.
In that case, Straza was accused of telling NASA that Jet Air had manufactured the shuttle parts--as the firm’s pact with primary contractor Rockwell International required--when he actually had subcontracted the work to a Burbank company.
Under a plea bargain with federal prosecutors, Straza agreed to serve six months in prison and pay a $690,000 fine to NASA. The space agency subsequently barred Straza from personally obtaining further contracts, but permitted Jet Air to continue as a contractor, with the understanding that Straza would serve the firm only as a consultant, not an officer.
U.S. Atty. Peter K. Nunez said Thursday that the new charges also could result in the revocation of Straza’s probation on the 1984 conviction, which could lead to his imprisonment for 4 1/2 years.
Jet Air employs 240 workers and has annual revenues exceeding $12 million, according to Mills, a former state senator who became president of the firm in June, 1985--after the illegal acts cited in the indictment allegedly occurred. About 50% of Jet Air’s business consists of government contracts, while the remainder is private work for airlines, Mills explained.
Several other San Diego area politicians also have become involved with Jet Air and Straza in recent years. Prosecutors have said, however, that a 13-month investigation by the Defense Department and Air Force turned up no evidence of wrongdoing by any current or former elected officials.
Mills’ predecessor as Jet Air president was former Rep. Bob Wilson (R-San Diego). In addition, both Reps. Bill Lowery (R-San Diego) and Duncan Hunter (R-Coronado) have interceded on the company’s behalf with federal officials in Washington in the wake of Straza’s 1984 conviction.
Lowery, for example, spoke with former NASA administrator James Beggs and other NASA officials in an effort to ensure that Jet Air would not be precluded from bidding on government contracts because of Straza’s conviction. Similarly, Hunter, saying that he wanted to make sure that Jet Air was “not officially left in limbo,” asked federal officials to clarify the company’s status as a potential bidder.
Both Lowery and Hunter insisted that their actions were motivated by their concern over the possible loss of local jobs if the company had been barred from performing government work.
“My job is to fight for defense jobs in my district,” Hunter said. “There’s 200 people who carry lunch buckets in my district who work at that company, regardless of what happens with the individuals involved.”
“I think preserving employment for several hundred people in San Diego . . . is worthy,” Lowery said. “There has never been any allegations that any of them had done anything wrong.”
Lowery, who does not own a house in San Diego, said that he has rented a Jet Air condominium during visits to San Diego. Lowery said that he stayed in the company’s condo about 20 days in both 1984 and 1985, paying an average of about $50 per day.
“I’m not responsible for the personal conduct of my landlord,” Lowery said. “We had an arm’s-length transaction.”
