Teledyne Industries Inc. Thursday pleaded guilty to fraud and conspiracy charges in the Pentagon Ill Wind corruption case and agreed to pay more than $4.3 million in fines, reimbursements and court costs.
In addition, the first government official indicted in the case, former Navy purchasing officer Stuart E. Berlin, pleaded guilty to three felony counts of bribery, fraud and conspiracy for his role in a scheme to illegally steer a Navy electronics contract to Teledyne. Berlin faces up to 25 years in prison and $750,000 in fines.
Los Angeles-based Teledyne said that it agreed to plead guilty to the charges because a former executive had designed a “corrupt and illegal arrangement” to buy secret government contract data from Berlin through two defense consultants, Fred H. Lackner and William L. Parkin, who remain under indictment.
Trial Was Imminent
Teledyne and Berlin entered the pleas in U.S. District Court in Alexandria, Va., 10 days before their trial was to begin.
Teledyne’s plea contained a provision under which the firm will reimburse the Defense Department for nearly $1.1 million in illegally obtained profits on electronics test gear. The company agreed also to forgo any future profits on the tainted contract and to surrender to the military all technical data on the equipment so that other firms can take over the work.
The guilty pleas outline a scheme that is at the heart of the government’s investigation into corruption in the Pentagon’s $150-billion-a-year procurement system. The probe, which broke open last June, centers on the sale of inside Pentagon information to consultants working on behalf of some of the country’s largest defense contractors.
The case, built largely from wiretaps and surveillance by agents of the FBI and Naval Investigative Service, has been described as the broadest inquiry ever into fraud and bribery in military procurement.
Berlin admitted Thursday that, beginning in 1985, he sold confidential information on a Navy electronics contract to consultants Lackner and Parkin, who in turn allegedly sold it to officers of a Teledyne subsidiary for $160,000.
Teledyne, in a statement Thursday, acknowledged that the purpose of the plan “was to subvert the lawful operation of the government’s procurement process.” The company said that it reached the agreement with prosecutors “for financial and business considerations” and to serve the interests of the firm’s shareholders and 44,000 employees.
Subsidiary Broke Law
Teledyne is the nation’s 36th-largest defense contractor, with sales to the Pentagon in fiscal 1988 of $470 million. The subsidiary involved in the illicit activity is Teledyne Electronics, a small unit based in Newbury Park, Calif., that employs 500 people and accounted for less than 2% of the parent firm’s sales last year.
The Defense Department on Jan. 11 suspended Teledyne Electronics from receiving any new government contracts. The company said that it hopes the guilty plea will hasten the lifting of the suspension.
Teledyne blamed Teledyne Electronics’ former Washington marketing manager, Michael Savaides, for involving the company in the illegal scheme. Savaides pleaded guilty to fraud charges in January and is awaiting sentencing.
Executives Facing Trial
Three other Teledyne executives are scheduled to be tried on bribery and fraud charges with Parkin and Lackner, beginning April 3. A Teledyne spokesman said that the company will support defense efforts of the three executives, who currently are on paid leave.
Parkin was released from a suburban Washington hospital earlier this week after apparently attempting suicide with an overdose of sleeping pills. His attorney, Gerard F. Treanor, said that he may not be physically able to stand trial in 10 days.
Treanor said that Berlin’s confession appeared to incriminate his client, but he contended that the government could not prove that Parkin had paid bribes to Berlin or anyone else. Parkin has maintained his innocence.
Neither Lackner, of Woodland Hills, Calif., nor his lawyer could be reached for comment.
Headed Engineering Unit
Berlin was the $74,304-a-year chief of the Navy’s Ship Systems Engineering branch with broad authority for buying Navy electronics equipment. According to court documents, in late 1985 he agreed to help Teledyne obtain a contract for radar test gear known as AN/APM 424.
Berlin has said he fed inside information on the contract to Lackner, a longtime friend. Lackner reportedly passed the data to Parkin, a retired Navy official operating as a free-lance defense consultant in Washington, who allegedly sold it to Savaides and the other Teledyne executives.
Parkin reportedly was to be paid $6,250 a month for his services, and he allegedly agreed to share his fees with Savaides, Lackner and Berlin.
In wiretapped telephone calls between the consultants and corporate officers, the arrangement is discussed indirectly, with payoffs referred to as “a little green” and “a lot of spaghetti and meatballs.”
Provided Data on Competitor
Berlin helped write specifications for the equipment to match Teledyne’s capabilities and leaked critical information to Teledyne about a competitor’s bid. In addition, he gave Lackner detailed data about the Navy’s future electronics budget and procurement plans.
The Navy official, who has been dismissed by the service, stated also that he had been involved in a similar scheme with Parkin and Lackner to help Hazeltine Corp. obtain a different Navy electronics contract. Berlin’s confession states that Parkin was to receive between $2,000 and $5,000 a month from Hazeltine, which he would share with Lackner and Berlin.
In both cases, according to court documents, Lackner lied to Berlin about the size of the fees paid by the corporations and Berlin’s share of the take. In all, the government could document only about $6,000 received by Berlin, of a total of nearly $200,000 paid to Parkin, Lackner and Savaides.
Firm to Pay $2 Million
Hazeltine pleaded guilty in January to charges of fraud, conversion of government property and filing false statements. The Long Island-based company agreed to pay nearly $2 million in fines and costs.
On Berlin’s plea, a veteran defense attorney involved in the case acknowledged that persuading a defendant to plead guilty to three felonies is unusual for the government, but noted: “They have heavy evidence on him--everything but putting the money in his pocket.”