B-1 Subcontractors Plead Guilty to Fraud Charges
The former president of Butler Industries Inc. and the company’s general manager pleaded guilty Monday to conspiracy, tax and false claims charges stemming from an illegal check-cashing scheme and fraudulent overbilling for construction of parts on the B-1 Bomber.
Robert F. Butler, former owner of both Butler Industries and Purkey Co. Inc., and Steven Wooten, former general manager, entered guilty pleas under a provision of law that allows them to continue to proclaim their innocence.
The two men admitted that the government could prove many of the allegations against the Valencia-based aerospace company but claimed they never intended to violate the law, said Butler’s attorney, Gerson S. Horn. The specially structured guilty pleas allow the two men to present their defense in any civil litigation stemming from the allegations.
The first of three federal grand jury indictments charged the two men with cashing 18 company checks made out to fictitious payees. The checks, valued at more than $144,000, were then fraudulently claimed on corporate tax returns as a deduction as a cost of goods sold, according to Assistant U.S. Atty. J. Stephen Czuleger.
A second indictment accused Butler of a similar check-cashing scheme totaling more than $259,000 involving Purkey Co. Inc.
A third indictment accused the two men of overbilling Rockwell Inc., contractor on the U.S. Air Force’s B-1 Bomber project, for the cost of change orders on parts that Butler was making as a subcontractor.
According to Assistant U.S. Atty. William Price, Butler overcharged Rockwell by $200,000, inflating estimates of the amount of time the change orders required by up to eight times the actual time spent.
Butler entered the provisional guilty plea to charges of conspiracy, presenting false claims to the United States, subscribing to a false corporate income tax return and assisting in the preparation of a false tax return.
Wooten pleaded guilty to similar charges in two of the three indictments.
But Horn said the two men still claim they were writing the phony checks in order to obtain cash for legitimate business expenses. The company was habitually overdrawn and would otherwise have been unable to obtain the money, he said.
With respect to the overbilling charges, Horn said, the two men could present testimony from several company employees, countering government witnesses, to show that the amount of time devoted to the change orders was not overestimated.
U.S. District Judge Stephen V. Wilson set Butler’s sentencing for June 20. He faces a maximum of two years in prison and $240,000 in fines under a plea agreement with the government.
Wooten, who will be sentenced April 25, faces one year and a $130,000 fine.
Butler Industries has been sold, and the current company management has no connection to any of the alleged wrongdoing.
