Sgt. York Gun Fraud Charges Back on Track
A federal appeals court on Friday gave prosecutors the green light to proceed with criminal conspiracy and fraud charges against General Dynamics Corp. and four officers in connection with the development of the Sgt. York weapon system.
The firm and the officers were indicted in 1985 in Los Angeles on seven counts of conspiring to lie about $7.5 million in cost overruns on a nearly $40-million contract to produce prototypes of the York anti-aircraft gun.
The government claimed that the loss due to alleged fraud was $3.5 million, according to General Dynamics attorney James Gallagher.
A three-judge panel of the 9th U.S. Circuit Court of Appeals, on a 2-1 vote, lifted a stay imposed on the indictment of the company, former Vice President James M. Beggs and now-suspended officers Ralph Hawes, David McPherson and James Hansen Jr.
U.S. District Judge Ferdinand Fernandez in Los Angeles stayed the criminal case last year and referred the interpretation of the contract language to the Armed Services Board of Contract Appeals.
The appeals court was convinced “that deferral to the (contract board) was an impermissible delegation of . . . the judge’s decision-making function and an unwarranted interference with prosecutorial discretion,” wrote Judge Betty B. Fletcher. She was joined by Judge Charles E. Wiggins. Judge Melvin Brunetti dissented.
General Dynamics Corp. and Ford Aerospace were awarded Army contracts in 1979 to develop two prototypes of the Sgt. York gun.
Ford ultimately won the contract but the entire project was scrapped by the Department of Defense in 1985, according to Gallagher.
Anti-Helicopter Gun
The Sgt. York was the name given to the DIVAD, Division Air Defense weapon, an anti-aircraft gun mounted on a tank and designed to shoot down helicopters, Gallagher said.
The indictment contends that General Dynamics illegally attempted to offset losses on the York by charging the costs to accounts for “bid and proposal” and “research and development.”
Gallagher said the company contends that the charges made to those accounts were legal under the contract.
Beggs, a former General Dynamics vice president, left to take the post as administrator of the National Aeronautics and Space Administration. He left that post in 1985 after return of the federal indictment, Gallagher said.
Three Suspended
The other three remain on the General Dynamics staff but were suspended after the indictment, Gallagher said.
All four face potential five-year prison terms if convicted on the seven counts.
The indictment includes one count of conspiracy and six charges of making false statements.
The contract appeals board maintained that it did not have jurisdiction and refused to rule on the case referred by Fernandez. The criminal case has since remained legally adrift.
