Wallach Gets 6-Year Term for Fraud in Wedtech Case : Sentence: Judge fines Meese associate $250,000 and orders the forfeiture of $425,000 he illegally received from defense firm.
E. Robert Wallach, a close associate of former Atty. Gen. Edwin Meese III, was sentenced Monday to six years in prison and fined $250,000 for racketeering and fraud in the Wedtech scandal.
U.S. District Judge Richard Owen, calling Wallach’s conduct “sickening,” also ordered the San Francisco lawyer to forfeit $425,000 that the jury found he had received illegally from the New York-based defense firm.
The judge gave two of his convicted associates, former Wedtech consultants R. Kent London of Honolulu and W. Franklyn Chinn of San Francisco, prison terms of five years and three years, respectively.
The judge, peering down at the defendants over half-frame reading glasses, said that the three had been “happy to milk Wedtech” through transactions that helped plunge the fledgling South Bronx firm into bankruptcy two years ago.
Wallach, 55, called the sentence “a predictable end to this case because the government is desperately trying to make me look like a criminal.” He said that he is confident of overturning the conviction on appeal and would seek permission to resume his law practice, which the California Supreme Court has suspended effective Oct. 28.
In the midst of the sentencing, one of Wallach’s grown daughters began sobbing audibly. Wallach started to move toward her but was restrained by his lawyer.
Wallach, London and Chinn were the latest to be sentenced in the three-year-old Wedtech scandal, which has resulted in criminal convictions of more than 20 persons, including federal officials, businessmen and lawyers--on charges of bribery, conspiracy, racketeering and theft.
Wedtech grew with the help of influence-buying from a small machine shop to a $250-million defense contractor before looting of its assets by its officers and associates caused its collapse. The plant closing caused the loss of hundreds of jobs in the economically depressed South Bronx, as well as stock losses by thousands of investors. Stockholders are seeking partial restitution from those convicted in the scandal.
In addition to the prison terms levied against London and Chinn, Owen fined them $250,000 and $100,000, respectively, and ordered them jointly to forfeit up to $1.1 million in illicit payments from Wedtech, some of it used to further an illegal stock scheme.
As Owen imposed the three sentences, a jury in the same courthouse deliberated the fate of the last two defendants in the scandal, Rep. Robert Garcia (D-N.Y.) and his wife, Jane Lee. They are accused of having extorted $185,000 in payoffs from Wedtech.
Wallach, who was convicted last August, and his defense attorney, Gary P. Naftalis, pleaded for leniency from Owen. Wallach said that he had built a successful law practice that provides free representation for many low-income clients and does legal work for civic causes, such as human rights and conservation issues.
“Do I feel remorse? Of course I feel remorse,” Wallach said, noting the impact of his conviction on his wife and three daughters.
“There is a phrase, ‘Too much success can bring failure.’ I am the epitome of that and I am paying for that.”
But Owen responded with a stern lecture, citing Wallach’s “litany” of offenses, including receiving $300,000 from Wedtech after telling company officials that his close friend, Meese, planned to name him to a high post in the Justice Department. He noted that Wallach “covered up” a $125,000 payment for lobbying Meese by attributing it to fictitious legal work for Wedtech.
Noting trial testimony that Wallach helped the company obtain a $32-million Army engine contract and more than $140 million in Navy pontoon work, Owen declared: “Major government decisions were being made because of your activities on the backstairs of the White House.”
During much of Wallach’s lobbying, Meese was White House counselor. Meese, who became attorney general in February, 1985, testified that he never showed Wallach any favoritism, despite their 35-year friendship dating from law school days at UC Berkeley.
Owen also told Wallach that “you obviously knew there was a bribe involved” in a proposed $1-billion Iraqi oil pipeline project that he helped promote for Swiss businessman Bruce Rappaport. The judge referred to a memo indicating that the Israeli Labor Party of then-Prime Minister Shimon Peres would share in the anticipated $700 million in proceeds if Peres approved the pipeline. Wallach and the other principals denied that the proposed share constituted bribery in the project, which was never built.
Wallach, London and Chinn will be allowed to remain free while their appeals are being decided, a process that may take 18 months to two years.
