Fraud, Bribery Trial Reached High Levels of Government : Jury Gets Wedtech Case After 5 Months
The Wedtech Corp. fraud and bribery case was sent to the jury Friday afternoon, ending five months of testimony involving a purported scandal that attorneys say has reached high levels of government.
Rep. Mario Biaggi (D-N.Y.), his son Richard and five former Wedtech executives are on trial in U.S. District Court in Manhattan on charges that they turned a South Bronx machine shop into a $100-million-a-year racketeering enterprise that paid large sums of money to public figures in exchange for their help in securing government contracts.
In a 50-count indictment, the prosecution has charged that Biaggi was paid shares of Wedtech stock for lobbying fellow members of Congress on behalf of the company. Biaggi’s defense lawyers have maintained that the stock was paid to Biaggi’s law firm to settle fees that were overdue.
The jury begins deliberations in the massive case today after hearing testimony from 138 witnesses since mid-March.
Suggestions of Intrigue
While the case has focused largely on Biaggi and charges that he sold his influence to help win government contracts for Wedtech in exchange for $3.6 million in Wedtech stock, suggestions of intrigue have extended even to the White House. Among those allegedly linked to the case have been some of President Reagan’s closest aides, including Lyn Nofziger, Reagan’s former political adviser and counsel, and James E. Jenkins, then-counsel to the President and later a Wedtech employee.
In addition, beginning the first week of January, 1989, two associates of Atty. Gen. Edwin Meese III will stand trial for their purported roles in the Wedtech scandal. They are E. Robert Wallach, Meese’s close friend and former attorney, and W. Franklyn Chinn, the attorney general’s former financial adviser.
Wedtech began as a tiny machine and tool shop and grew to be the biggest single employer in the Bronx. Before collapsing in bankruptcy, it won praise from the President of the United States as a symbol of all that is good about the nation’s system of free enterprise.
The company was founded in 1965 by a high school dropout, John Mariotta, who called it the Welbilt Electronic Die Corp. It was renamed in 1970, when a second partner, Fred Neuberger, joined the firm.
Wedtech’s troubles began five years later when, according to the prosecution, Mariotta and Neuberger devised a scam by which the company could qualify for a Small Business Administration program that sets aside government contracts for minority-owned firms that might otherwise not get the business they deserved.
To qualify for this status, more than half of the company had to be owned by a minority, so Wedtech’s founders allegedly structured its ownership on paper to give two-thirds control to Mariotta, whose parents were born in Puerto Rico, although the partners actually continued to share ownership equally.
The company continued to operate under this allegedly fraudulent scheme after it went public in 1983, according to testimony by the prosecutors’ four key witnesses--all former Wedtech employees who pleaded guilty to charges of bribery, extortion and fraud and agreed to cooperate with the government in return for more lenient sentences.
Mariotta, whom President Reagan once hailed as a “hero for the ‘80s,” took the stand in mid-July claiming that his illiteracy prevented him from understanding the nature of the charges of impropriety at his company and that his co-workers kept him in the dark about their schemes.
“My reading ability will go as far as a comic book is concerned. Don’t try to tell me to read the (New York) Times or any technical thing. That’s not my game,” Mariotta told the courtroom.
However, U.S. Atty. Edward J. Little noted in his summation that Mariotta made the most money of all the defendants in the Wedtech scandal--$12 million.
The prosecution argued that Wedtech’s fraudulent scheme for qualifying as a minority-owned company succeeded because it had a friend at the SBA, namely the SBA’s acting chief of staff, Peter Neglia, who validated the paper work in exchange for a $100,000-a-year job and stock options that were paid to another defendant in the case, Ronald Betso.
Wedtech had hired Biaggi’s law firm, Biaggi & Ehrlich, in 1979 after Biaggi had spent a year writing letters to Pentagon officials on behalf of the firm. The government alleges that Biaggi used the firm as a front to garner 5% of Wedtech’s stock, supposedly as payment for legal fees.
From the outset of the trial, defense attorneys have argued that Wedtech did not need to bribe Biaggi and lesser public officials when they had the ear of close aides to the President. In his opening remarks, Biaggi’s attorney, James M. LaRossa, said Wedtech “corrupted an entire Administration,” and he charged that it was Nofziger, Chinn and Wallach who organized the scheme, not Biaggi.
‘Network of Corruption’
“You think about whether they needed this Bronx congressman, with the network of corruption they had going for them,” LaRossa told the jury.
At times the testimony took bizarre turns, such as when defense attorneys brought up an assassination plot to kill Mariotta, who, Wedtech officials feared, might sue the company and expose their alleged wrongdoing. The witnesses were asked whether Neuberger, Mariotta’s original co-partner, who was born in Israel and still maintained contacts there, had ever said he could arrange for an Israeli agent to kill Mariotta.
But each witness has contradicted the testimony of others.
