Vote-Fund Extortion Suspected in Defense Probe

Federal investigators in the Pentagon fraud case suspect that campaign contributions were extorted from defense industry firms for congressmen with influence over military defense programs, newly released court documents show.

The documents indicate also that agents believe the Kane Paper Co. of Baldwin, N. Y., was involved with Unisys Corp. employees and others in a scheme to bribe federal officials to obtain defense contracts.

The brief mention of extortion in the documents was the first time that such a charge has been raised in the widespread Pentagon fraud probe. Until now, the investigation appeared to center on bribery of Pentagon officials, theft of classified documents and bid-rigging by military contractors.

Documents Unsealed

The documents, released Thursday by a federal judge in New York, are the warrants used by federal agents last month to search the homes or offices on Long Island of Kane Paper Co. President James T. Kane, Unisys employee Dennis Mitchell, former Unisys executive Charles F. Gardner and Hazeltine Corp., a defense contractor in Greenlawn, N. Y. Prosecutors made significant deletions from the documents before they were unsealed.

The warrants say agents were seeking evidence that Kane, Mitchell, Gardner, defense consultant William M. Galvin and Richard W. Seelmeyer, once an aide to the late Rep. Joseph P. Addabbo (D-N. Y.), were involved in or aware of a scheme to “extort campaign contributions” from unnamed companies.

Kane, whose office was searched on June 21, is also head of the Long Island Aerospace Political Action Committee, called Aeropac, which raises funds from Long Island defense contractors and contributes to members of Congress, particularly those who serve on defense-related committees.

The Kane search warrant lists a variety of items seized from his office, including one folder marked “fund raising and Congressman (name deleted)” and another that included a “fund raiser memo from Charlie Gardner.” Federal agents took also a folder containing details about golf tournaments apparently staged by Aeropac from 1984 to 1987 to raise funds for political donations.

An employee who answered the phone at Kane Paper Co. on Thursday said that Kane was traveling and could not be reached for comment. Kane’s son, James Jr., who also works at the company, did not return phone calls, nor did executives at Unisys.

Contributed to Candidates

Aeropac contributed a total of $129,680 to political candidates and election committees between January, 1985, and April, 1988, according to Federal Election Commission records. The money was raised from dozens of mostly small Long Island firms that are subcontractors to larger Pentagon suppliers, the records show. Most donations to Aeropac were of $500 to $1,000.

Among the recipients of Aeropac political contributions were Rep. Bill Chappell (D-Fla.), chairman of the House Appropriations subcommittee on defense, who has been named in wiretapped conversations of key figures in the procurement case, according to federal investigators. Aeropac gave the Bill Chappell Campaign Committee $2,000 in February of this year.

Rep. Roy Dyson (D-Md.), a member of the Armed Services Committee, received $1,000 from Aeropac last July. Dyson, like Chappell, has a close relationship with defense industry lobbyists, although neither has been accused of illegal conduct.

Addabbo, who until his death in 1986 preceded Chappell as chairman of the Appropriations subcommittee on defense, got $2,000 from Aeropac in December, 1985. Federal agents last month searched the Maryland home of Seelmeyer, Addabbo’s former chief aide, as part of the investigation.

Trash Confiscated

At Gardner’s home in Malverne, N. Y., materials confiscated by agents included a box of trash in Gardner’s study, the newly released documents show. The search turned up a $600 check, three other unspecified checks, a business license, a briefcase and an agreement with Armtec Inc., a Florida electronics firm that works as a subcontractor to Unisys, according to the documents.

Gardner, a former Unisys vice president, was forced to step down earlier this year during an internal company investigation, Unisys executives have said.

Mitchell, whose Unisys office in Great Neck, N. Y., was searched, worked for Gardner as a marketing manager.

Agents who searched Mitchell’s office said in the search warrant that they were looking for evidence that Gardner and Mitchell, along with defense consultants Galvin, Thomas E. Muldoon and William Sanda and Air Force official Victor D. Cohen, were involved in a scheme to “illegally influence the defense contracting process.”

The warrant says agents suspected Gardner and Mitchell of giving “benefits and things of value” to “public officials known to have been involved in the authorization of defense contracts.”

Official’s Office Sealed

Cohen has been a deputy assistant secretary of the Air Force for acquisitions since 1980. His Pentagon office was sealed and searched by the FBI in mid-June. He is one of six Pentagon officials who have been stripped of all contracting responsibilities because of suspicions raised by the Justice Department investigation.

The agents seized 132 items from Mitchell’s office, but most of the details about what was taken were deleted before the documents were released.

In the search of Hazeltine Executive Vice President Joe Colarusso’s office, investigators sought documents “showing how Hazeltine wanted the Navy to weight the evaluation factors for the UPM-150 proposals,” according to the Hazeltine warrant.

Hazeltine has been competing against Gould Inc. of Rolling Meadows, Ill., for a multimillion-dollar contract to make the UPM-150, a radar-testing device for Navy aircraft. The contract has not yet been awarded.

In addition, the Hazeltine warrant sought files on the company’s efforts to win work on two other Navy programs: the MRC 139 battlefield radio and the Bancroft secure radio for amphibious vehicles and tanks.

Job Worth $75 Million

The MRC 139 contract, which has not yet been awarded, is potentially worth $75 million, and the Bancroft radio is a $30-million program, a Navy spokesman said Thursday. No estimate of the value of the UPM-150 program was available.

Also sought in Colarusso’s office were records of Hazeltine’s dealings with defense consultants Muldoon and William L. Parkin. Both of them were served with search warrants on June 14 and are considered by federal investigators to be key figures in the procurement inquiry.

Hazeltine executives have acknowledged that they hired Parkin, a former Navy contracting official and now a lobbyist, to help them obtain the UPM-150 contract. Parkin, who had worked for the Navy’s Joint Cruise Missile Project Office, was paid $2,000 a month for his services.

Reportedly Split Fee

According to published reports, Parkin split his Hazeltine fee equally with Fred H. Lackner, a Woodland Hills, Calif., consultant whose home was searched last month.

Lackner’s attorney has confirmed that the FBI took materials about his client’s relationship with Parkin when they searched Lackner’s house.

The newly released papers were edited to protect individuals and companies not previously named in court papers. This was a condition set by U.S. District Judge Edward Korman, who ordered their release at the request of the Long Island newspaper Newsday.

Staff writer Carla Lazzareschi contributed to this story from Los Angeles.