3 Teledyne Executives Charged With Conspiracy, Bribery : First Defense Fraud Probe Trial Opens
The first trial in the federal government’s massive Ill Wind defense fraud inquiry opened Monday with prosecutors alleging that the case against three Teledyne Industries Inc. executives is “about bribery, about cheating, about lying.”
The executives went on trial in U.S. District Court here, 2 1/2 years after federal agents began gathering evidence that defense consultants were bribing Pentagon officials for inside information on military contracts.
Lawyers for the defendants told the jury that their clients were unaware of any illegal activities by consultants hired to help Teledyne obtain a $24-million Pentagon electronics contract.
On trial are George H. Kaub, a vice president in charge of contracts at Teledyne Electronics, a unit of Teledyne Industries based in Newbury Park, Calif.; Eugene R. Sullivan, Teledyne Electronics’ former vice president for finance; and Dale Schnittjer, the current Teledyne Electronics vice president for finance.
They were indicted on Jan. 6 on charges of conspiracy, wire fraud and bribery of a public official. Each faces at least 50 years in prison and fines of $1.5 million. All three have been suspended with pay, a Teledyne spokesman said.
In his opening statement, Assistant U.S. Atty. Robert J. Dehenzel Jr. said the government would prove that the three Teledyne executives participated in an elaborate scheme to bribe a Navy official to obtain confidential data on Navy plans to buy the electronics gear, which is used to test radar sets on aircraft.
Dehenzel cited extensive wiretapped conversations between the Teledyne executives and the consultants as proof that the Teledyne officers were aware that the consulting fees they authorized were used to corrupt the Pentagon procurement process.
At one point, the prosecutor said, consultant William L. Parkin of Alexandria pressed Schnittjer for payments for his confederates in the scheme.
“Nobody works for nothing anymore,” Parkin allegedly told the Teledyne executive in one wiretapped telephone conversation. “It takes a lot of spaghetti and meatballs to grease the skids on some of these things.”
Four individuals and two companies--including Teledyne--already have pleaded guilty to charges of conspiracy, fraud, bribery and filing false statements in the case.
$8.4 Million in Penalties
Teledyne admitted its role in the conspiracy last month and agreed to pay fines and reimbursements of as much as $8.4 million.
The company blamed its involvement on its former Washington marketing manager, Michael Savaides, who also has pleaded guilty to charges in the case. Woodland Hills, Calif., defense consultant Fred H. Lackner and Navy Deparment electronics procurement supervisor Stuart E. Berlin also have admitted to the federal charges.
Attorneys for the three Teledyne executives acknowledged that the procurement system had been corrupted but said that their clients were unaware of the conspiracy and had in fact been its victims.
“This conspiracy was directed at Teledyne as much as at the government,” said George O’Connell, representing Sullivan. “This was a conspiracy not only to defraud the United States but to conceal, to actively hide from Mr. Sullivan what they were doing.”
Prosecutors alleged that Sullivan, Kaub and Schnittjer agreed to pay Parkin $160,000 for his role in helping Teledyne obtain the Navy contract.
Although Parkin has admitted using the money to pay Lackner and Berlin for inside information on the contract, the Teledyne executives contended Monday that they had no idea what he was doing.
