Tougher Sentences for Defense Fraud Still Being Sought

U.S. Atty. Robert C. Bonner was in a tough mood last July as he announced a record number of defense industry fraud indictments in Los Angeles and denounced defense kickbacks and bribery as a “cancer” on the nation.

Nineteen former purchasing agents and suppliers involved in subcontracts on some of the nation’s most sensitive military projects had been caught in what Bonner described as “the largest, most sweeping investigation ever undertaken” into defense industry fraud.

Flanked by top officials of the FBI and other federal agencies at a crowded news conference, Bonner not only vowed that the investigation would continue but pledged to fight for stiff penalties for defense industry cheats.

“The practice of paying and taking kickbacks must end,” he said. “We intend to continue investigating and prosecuting these cases until it does end. We also plan to ask the federal courts for tough sentences in these cases.”

Bonner’s tough talk in July, however, was not as persuasive as he had hoped in convincing most federal judges in Los Angeles that convicted defense cheats merit long prison terms.

For a combination of reasons--including reluctance by the U.S. attorney’s office to push in court for the tough sentences Bonner vowed to seek--many of the defendants in the defense fraud crackdown have received only minimal prison terms.

In an interview last week, Bonner expressed disappointment at many of the recent sentences--frequently six months or less in prison--and charged that “watered-down” sentences may end up “encouraging” defense fraud.

“Some of the sentences have not been severe enough to send out the message that is needed to deter this kind of crime,” he said. “To the extent that the sentences get watered down, it can have a negative effect both in terms of deterrence and our ability to effectively prosecute future cases.”

Bonner was willing to accept part of the blame for the situation because of a hesitancy in some instances to make specific sentencing recommendations to judges.

“That may be a valid criticism,” he said. “Maybe we haven’t pushed as hard as we should for the sentences.”

Bonner’s criticisms were supported last week by Justice Department officials in Washington and by federal prosecutors in other major cities, who said there is a national trend by federal judges to impose light sentences in defense fraud cases.

While criticizing the record of judges in Los Angeles, however, they pointed out that federal judges elsewhere have taken an even more lenient attitude toward kickback cases generally.

Deputy U.S. Atty. Gen. Victoria Toensing said that Justice Department statistics since 1982 show that of 43 people sentenced throughout the nation in defense fraud cases, 21 have received no prison time and 11 have received sentences of less than a year.

Of another 11 defendants nationwide who were given more than a year in prison, six were sentenced by Los Angeles judges.

“We may be doing better than some other places, but we’re not doing well enough,” Bonner said. “This is where the problem is most severe, where most of the cases are originating and where the message that defense fraud must be stopped has to be delivered most clearly.”

Several federal judges in Los Angeles responded to Bonner’s criticisms by pointing out that many of the defendants sentenced to date were relatively “low-level” defense industry workers with no previous criminal records. Others were elderly, with serious health problems.

“They’ve been bringing in a lot of small fry so far,” one judge said. “That’s often the case at the start of an investigation like this. If Bonner expects a lot of heavy sentences with the kind of cases I’ve seen so far, he’s going to be out of luck.”

15 in Two Years

The 19 indictments in July were preceded by the indictments of 15 other defense suppliers and purchasing agents over a two-year period, including 10 defense subcontractors charged in April, 1985. In those cases, the maximum sentences imposed were five and three years, and many others were between a year and six months.

In the more recent wave of cases, however, the overall sentencing pattern has been more lenient. The toughest punishment has been two years, and six defendants have received sentences of four months or less.

“I think we need sentences in the two- to five-year range. We have gotten some good sentences,” Bonner conceded. “It is a fact that in the first wave of cases in 1985, we obtained sentences that I thought were reasonably adequate. But in the second round, some of the sentences are more watered down.”

Denying that the sentences have significantly hurt the continuing federal probe of defense industry fraud, Bonner said, however, that the sentencing pattern has encouraged some defendants to refuse to cooperate with the government and could have an even more serious effect if judges continue to lower the typical punishment.

“I think it’s safe to say that because of the leniency of sentences, people have eliminated our ability to get full cooperation,” Bonner said. “If it reaches the point where probation becomes routine, the courts will actually be encouraging the conduct. That’s what I’m concerned is happening in these cases.”

Community Leaders

Both Bonner and Assistant U.S. Atty. Fred D. Heather, who has prosecuted most of the defense kickback cases, agreed that part of the sentencing problem for judges is that many of the defendants have otherwise clean records and, in many cases, have been community leaders.

Although Heather has occasionally pushed strongly for specific prison sentences--with mixed success--he said he has more often simply recommended “significant” or “substantial” jail time for defendants at the time of sentencing.

“I have in a number of the cases asked the judges to impose more time than they did, but I am pleased the courts have imposed jail time in virtually all these cases,” Heather said. “You have to realize that a number of these people are in their 50s and 60s, with no prior records, often very active in civic affairs. Judges take those things into consideration.”

Heather also said that in most of the cases, defendants have readily admitted their guilt, shown considerable remorse for their crimes and, in some cases, cooperated with the government in its investigation, winning government support for leniency at the time of sentencing.

“A lot of these people suffered terribly just from being indicted and convicted,” Heather said. “I have seen a virtual destruction of their lives in some cases: medical problems, heart surgery, strokes, brain surgery, abandonment by friends and disbarment from ever again working in the aerospace industry. Sentencing is only part of the punishment in some of these cases.”

Prediction Declined

Of the 19 defendants indicted in July, two have pleaded not guilty and are awaiting trial in January. They are Cal Andy Romero, 70, a former buyer for Datron Systems Inc. in Simi Valley, and Ralph Affinito, 45, a former supervisor for both Hughes Aircraft Co. and Rockwell International Corp.

Although Heather declined to comment on what he expects in these cases, he predicted that before the latest wave of kickback cases ends, the sentencing pattern will be closer to that in the first round of defense fraud cases.

“These still are the early rounds, and I think there will be a significant number of additional cases,” Heather said. “Congress recently recognized the seriousness of this problem by increasing the maximum penalty for defense kickbacks from two to 10 years. I think the judges will take clear notice of that as future cases are prosecuted.” That law takes effect next month.

Heather also disputed the view expressed by some judges that most of the defendants in the kickback cases so far have been “low-level” figures.