Military Parts Called Inferior; Two Firms Charged

Two California defense contractors were charged Thursday with supplying the U.S. government with inferior, or untested, parts on key military projects--including a critical missile guidance component and stability systems for a wide range of military aircraft.

Genisco Technology Corp. and three of its employees were indicted by a federal grand jury in Los Angeles, and Consolidated Aeronautics Corp. and two top executives were named in separate criminal charges filed by U.S. Atty. Robert C. Bonner.

Consolidated Aeronautics officials said late Thursday the company planned to plead guilty to the charges.

Though the charges against the two companies are unrelated, Chief Assistant U.S. Atty. Gary Feess said they both allege that company officials defrauded the government by substituting substandard components on aircraft, missiles and testing equipment, which in some cases relied on the components to operate safely.

Genisco, it is alleged, provided untested parts on a critical guidance system for the High-Speed Anti-Radar (HARM) missile, whose failure could cause the missile to miss striking enemy radar installations.

Consolidated Aeronautics is accused of providing used, altered and refurbished hydraulics parts for a variety of military aircraft--including the A-7, B-52, F-104 and C-141.

Among the parts supplied were selector sets for the Navy’s A-7 attack aircraft, which are a key component of the plane’s tail assembly. Their failure could send the aircraft into a tailspin, said Assistant U.S. Atty. William Fahey.

When the parts supplied were subsequently tested during the criminal investigation, “all of them failed,” Fahey said.

“I think it’s fair to describe this as a very important case,” Feess told reporters at a news conference announcing the charges. “These are important components, they’re sophisticated, they went into sophisticated weapons systems. So these are not top-10 defense contractors, it’s true, but we view it to be a very significant case.”

Genisco’s attorney, Thomas Holliday, in a statement issued Thursday, called the indictment unwarranted.

“The improprieties alleged in the indictment that all took place at Transducer Products Division, a small and isolated Genisco division located in Simi Valley,” Holliday said.

“There is no evidence that Genisco upper management was in any way involved in, or had any knowledge of, the allegedly improper actions of certain employees of that division. The company vehemently denies that it should be the subject of this prosecution and intends to defend itself vigorously.”

Also named in the Genisco indictment are Werner Brinkschulte, 50, former general manager of the transducer products division; Danny K. Evans, 34, former supervisor of the division; and Robert L. Kersnick, 51, current quality assurance manager of the division.

Consolidated Aeronautics, in a company statement, said the firm and its officers planned to plead guilty to the charges.

“Consolidated regrets this mark on its otherwise excellent prior record serving the government’s needs for over 30 years,” the statement said. “Consolidated has given its complete cooperation to the government during the investigation and has initiated and implemented internal controls to prevent any recurrence of this problem.”

According to Assistant U.S. Attys. Brian J. Hennigan and David Katz, who are prosecuting the Genisco case, the “transducers” described in the indictment provide a variety of functions on several different military systems.

In addition to providing altitude guidance information on the HARM missile, they measure oil pressure data on the Coast Guard’s Dolphin search and rescue helicopter, and measure the depth of Navy torpedoes during testing.

The indictment alleges that Brinkschulte specifically ordered that the transducers not be subjected to high- and low-temperature tests as required under product specifications, and instead directed that test data be fabricated to show that such tests had been conducted.

Evans, according to the indictment, developed computer-generated “cheater programs,” which manufactured test data and then created false documentation to show that the transducers met contract requirements.

Kersnick is accused of signing false certifications to the government indicating that the tests had been conducted.

The charges against Consolidated Aeronautics allege that, in addition to supplying used, altered, or refurbished parts and certifying them as new, the company filed a series of false claims with the government.

Charged in addition to the company are its president, Gordon Strube, and Ronald Guy, vice president of sales.

Feess said there is no evidence of any parts failures as a result of the allegedly faulty components.

“The potential for possible damage to military readiness is low because it was caught early on,” said Rod Hanson, special agent in charge of the Defense Criminal Investigative Service, which conducted the probe along with the FBI and the Naval Investigative Service.

However, a lengthy and expensive retesting process is under way to assure that no future failures occur, he said.