L.A. Lobbyist Reportedly Rejects Fraud Probe Deal

Government prosecutors, convinced that Woodland Hills aerospace-salesman-turned-lobbyist Fred H. Lackner is a “small fry” in the massive Pentagon fraud scandal, offered him a deal if he would help them build cases against others, his lawyer told The Times.

But the offer was rejected, Lackner’s Orange County attorney, William Dougherty, said in an interview, because “my client never paid a cent to anyone.”

Dougherty met last week with assistants to U.S. Atty. Henry E. Hudson, who is directing the criminal investigation from his office in Alexandria, Va.

Dougherty’s comments are the first specific indications of the government’s willingness to strike a deal with defense industry lobbyists and others who have figured in what is believed to be the largest-ever investigation into Pentagon procurement bribery and fraud.

The lawyer’s comments provided also some new details of the federal prosecutors’ line of attack in unraveling the complex relationships among Pentagon insiders, consultants and defense contractors.

The implication of the suggested deal is that the government is looking for cooperation from some of the lower-profile consultants to help build cases against more prominent individuals.

The deal called for Lackner to plead guilty to two counts of bribery and stealing government property and to cooperate in the continuing investigation. In exchange, government prosecutors offered to “remain silent” at Lackner’s sentencing, Dougherty said. Government prosecutors were unavailable for comment.

Lackner, along with about 275 others, has been subpoenaed to appear before a federal grand jury in Alexandria on July 19. He did not return phone messages requesting an interview. Dougherty said he has advised his client not to talk to reporters.

Dougherty said prosecutors are especially interested in the friendships and business relationships Lackner built with other defense consultants and, most particularly, with Pentagon procurement official Stuart E. Berlin.

Berlin, whose friendship with Lackner dates to the early 1970s, was removed as a contracting official at Naval Air Systems Command last month after his Pentagon office was searched in connection with the investigation. He is a civilian Pentagon employee who worked his way up in the Navy bureaucracy in Washington to a position in which he was drafting contacts for electronics systems.

Aircraft Testing Devices

According to Dougherty, a retired Marine Corps colonel who made a name for himself a decade ago defending convicted spy Christopher J. Boyce, prosecutors have zeroed in on the role Lackner might have played in the development and awarding of contracts for two military aircraft testing devices.

One contract was awarded to Teledyne Inc. of Los Angeles for a hand-held device that enables maintenance crews to test radar-like equipment in some Air Force and Navy planes. Dougherty denied that his client played any role in the contract award.

The second contract, for a similar testing device for Navy aircraft, has not been awarded yet, but the finalists are Gould Inc. of Rolling Meadows, Ill., and Hazeltine Corp., based in Greenlawn, N. Y. Until his removal, Berlin had been involved in this contract.

Dougherty acknowledged that Lackner was apparently helping William Parkin, a consultant working to obtain the Navy contract for Hazeltine.

According to a report in Time magazine, which Dougherty did not deny, Parkin, a former Navy contracting official-turned-lobbyist, gave Lackner half of his $24,000 annual fee from Hazeltine in exchange for “marketing intelligence” of use to his client. Lackner and Parkin have apparently been friends for the last 10 years.

Never on Payroll

Hazeltine executives acknowledge that Parkin was retained as a consultant and charged with helping to land the Navy contract. However, the company said Lackner was never on its payroll and that it is unaware of any relationship between Lackner and Parkin.

Dougherty said that, when prosecutors searched Lackner’s house on June 13, they played snippets of wiretapped telephone conversations involving his client in an apparent effort to prove their contention that the information Lackner passed on to Parkin originally came from Berlin.

Investigators left Lackner’s house with a copy of the agreement between Parkin and Hazeltine, some records of the business dealings between Lackner and Parkin and some bills for services between Lackner’s consulting firm, Acris Associates, and Parkin’s firm, Crest Inc., Dougherty said.

Parkin’s Alexandria, Va., offices also were searched in mid-June.

Berlin’s name was prominently mentioned in the search warrant for Lackner’s home. According to a report in Aviation Week & Space Technology, a trade publication, the search warrant served on Berlin asked for records of Berlin’s bank accounts that might show payments allegedly deposited by Lackner in connection with government contracts from 1986 to 1988.

Still, Dougherty contended, prosecutors have yet to prove that his client paid Berlin for the information later passed on to Parkin.

Bribery Denied

“They are trying to prove bribery, that Lackner gave something of value to Berlin, that something of value changed hands,” Dougherty said. “But nothing changed hands. . . . They don’t have any link of bribery.”

However, sources told The Times that prosecutors have photographs of Lackner with Berlin leaving a Washington-area bank with cash.

Dougherty said only that there is no evidence that the cash was part of anything illegal.

Instead, Dougherty maintains that Lackner regularly met with Berlin on a social basis, usually for lunch, and, in the course of table talk, might have picked up some information that could have been of use to someone else.

But he stressed that this information-sharing did not break any laws.

“There was no classified information involved. Most of the information (Lackner) got was public information. He was just able to correlate it.” Dougherty said. “I don’t think he got anything anyone else couldn’t get. He just knew how to find things out.

” . . . Lackner never gave Berlin a cent; Berlin never took a cent,” Dougherty added. “The worst he might have done is have lunch with him (Berlin) . . . . They’ve known each other socially. Somewhere in conversation my client must have picked up some intelligence.”

Dougherty said investigators were also interested in determining whether Berlin passed on to Lackner advance word of the disqualification of Tel Instruments, a small New Jersey-based manufacturer, in the competition for the portable aircraft radar testing device. Ultimately, the contract was awarded to Teledyne. The devices are being made at the company’s electronics unit in Newbury Park, Calif.

Sought Copy of Memo

According to the search warrant for Lackner’s home, investigators wanted to find a copy of a Berlin memo to the Air Force about Tel Instruments. Investigators were also interested in finding evidence of Lackner’s relationship with Michael Savaides, a Washington-based lobbyist for Teledyne. Dougherty said no such materials were found and that Lackner was not involved in the competition between Teledyne and Tel Instruments.

Berkley Baker, a Teledyne spokesman, said Savaides probably worked on the portable testing device contract in his capacity as the company’s Pentagon consultant.

Baker said he did not know how many of the testing devices have been sold to the government since sales began in about 1979.

Dougherty said that, although Teledyne has had the contract for nearly a decade, Tel Instruments has recently entered the competition in an effort to obtain a portion of it.